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Study finds prevailing wage proposals would hurt New York's competitiveness, increase costs that are already above average

ALBANY— New York's above-average construction costs would increase even more under new proposals which would impose prevailing-wage requirements on development projects funded by local economic development agencies, a new study released by the New York State Economic Development Council (NYSEDC) has concluded.

The study, Prevailing Wage in New York State: The Impact on Project Cost and Competitiveness, found that prevailing wage requirements would "significantly" increase the cost of local economic development projects.

Business Council President Kenneth Adams said the report makes a strong case against a new prevailing-wage mandate.

"As the Upstate economic crisis continues to slow development to a crawl, now is not the time to further drive up construction costs by imposing new wage-rate mandates," said Business Council President Kenneth Adams. "The Governor and legislative leaders have rightly emphasized the need to improve New York's job-creation climate, especially Upstate. That's why we need policies that will reduce costs."

The study, which was put together by the Rochester-based Center for Government Research, compared the cost impact of prevailing-wage requirements in seven areas in New York State (Albany, Buffalo, Long Island, New York City, Poughkeepsie, Rochester, and Syracuse) as well as seven others around the country: Tampa, Indianapolis, Raleigh, Cleveland, Providence, Scranton, and Austin.

Brian McMahon, executive director of NYSEDC, sharply criticized the prevailing-wage mandate proposals.

"With the nation's economy teetering on the brink of recession and New York's economy especially vulnerable to fluctuations on Wall Street, some legislators and advocates are considering legislation that would make New York's already high costs even higher," McMahon said. "The prevailing-wage requirement that is being touted as IDA 'reform' amounts to an effort to extinguish an economic fire with gasoline."

"This is economic-policy folly, and it contrasts sharply with Washington's reactions to economic challenge," he said. "Congress and President Bush are working together to adopt a stimulus package that includes $50 billion in business investment incentives. But some in New York's state Legislature want to increases costs for private employers that want to invest in New York State."

They study showed that:

Kent Gardner, CGR's president and chief economist, said, “While higher wages are good for the workers who get them, the big question is whether forcing higher wages across the board will cost jobs. With fewer jobs, the labor force could end up with less income overall."