The Business Council strongly opposes this legislation that would extend the state’s public sector prevailing wage requirements to certain private sector housing projects.
This legislation would alter existing labor law provisions that were created to establish wage requirements for public sector projects, and apply them to a broad new category of private sector construction not contemplated by the original legislation. The extension of the prevailing wage to these projects would be inappropriate and result in enormous increases in construction costs as illustrated below.
After determining prevailing wages schedules mandate considerably higher average wages than private employees, The Citizens Budget Commission (CBC) matched U.S. Bureau of Labor Statistics to NYC prevailing wage rates. The CBC determined that the prevailing wage rates tended to be significantly higher than the regional hourly private sector wage.
Hourly Wage Comparison1
New York City Prevailing Wage
NYC Regional Mean Hourly Private Sector Wage
Ratio of Prevailing Wage to Private Sector Wage
In addition, the requirement to pay a supplemental rate for fringe benefits adds even more to the total compensation costs. The CBC determined in the same study that supplemental pay generally adds at least a third to the cost of wages.
Supplemental Pay For Fringe Benefits Comparison2
Hourly Wage Rate
Supplemental Rate As a Percent of Wage Rate
This bill continues a disturbing trend to mandate prevailing wage requirements to any private sector project that receives any type of public incentive. Spending taxpayers’ money on a project should require close scrutiny of the efficiency and effectiveness of the money spent. Requiring the payment of prevailing wages on such a job needlessly increases the cost of the job and does not work to these ends.
As we work toward improvement of the state’s economy and the creation of jobs lost in the last several years, the Legislature needs to send loud and clear positive messages to businesses in and out of the state. Enactment of this bill sends no such message. In fact, it sends the all too familiar message that the New York State Legislature stands ready to find new and different ways to interfere with business and worsen the business climate.
For these reasons, The Business Council opposes this legislation and urges that it not be enacted by the New York State Legislature.
1 "6 Things New Yorkers Should Know About Prevailing Wage," Citizens Budget Commission, Feb. 14, 2012
2 "6 Things New Yorkers Should Know About Prevailing Wage," Citizens Budget Commission, Feb. 14, 2012