The Business Council opposes this legislation that would impose significant additional costs on private sector projects financed or supported in whole or part by industrial development agencies, the Job Development Authority, and other state or local entities.
Specifically, this bill would define private sector and charter school projects receiving financial assistance from these state and local entities as “public works” for purpose of Labor Law “prevailing wage” mandates for construction activity.
The Business Council opposes this legislation for several reasons.
- Recent research shows that prevailing wage mandates would significantly impair the ability of New York to compete for projects; driving costs for upstate projects 28 percent higher than in comparable out-of-state communities, and driving costs for downstate projects 76 percent higher than in comparable out-of-state communities. (see “Prevailing Wage in NYS: The Impact on Project Costs and Competitiveness,” January 2008 by Center for Governmental Research.)
- By expanding Article 8 of the Labor Law, this legislation would mandate wages equivalent to local union-negotiated wages, even if such wages represent less than a third of the local market for construction contracts. We believe this mandate would have a particularly significant cost impact on projects in Upstate New York, where true local prevailing wage levels are not dictated by union agreements.
- We also disagree with the rationale for this bill, which suggests that the State Constitution somehow requires prevailing wages for projects receiving state financial assistance. Article 1, § 17 of the State Constitution specifically requires payment of prevailing local wages to laborers engaged in “public works,” which by practice and by statute has been defined as public sector, not private sector, projects.
The Legislature and Administration are considering broad reforms in the state's economic development programs, including industrial development agencies. The Business Council believes that any new requirements related to wage levels or source of labor in state and local financial assistance programs should be done in this broader context. Likewise, we believe that the state should consider a range of alternatives for assuring adequate “return on investment” of state financial assistance and tax expenditures, instead of a one-size-fits all, state-wide “prevailing wage” mandate.
The implementation of any proposal that discourages new economic activity and adds costs in this economic climate is ill-advised and will only weaken New York's ability to participate in an economic recovery.
For these reasons, The Business Council strongly opposes approval of A. 3705/S.4912.