We remain strongly opposed to legislation to extend the state’s existing prevailing wage mandate for public works projects to private sector projects receiving state and/or local economic development assistance. These measures are simply contrary to the state’s economic development objectives, adding significant additional costs and regulatory obligations to projects recognized as needing assistance to move forward. This concern is especially true upstate, where many counties have seen flat economic growth. Driving up project labor costs will hamper a wide range of investment and job creation projects, including those sponsored by for-profit businesses as well as non-profit service providers on which our communities rely. Comparing total mandated prevailing wages and supplemental benefits to actual average wages for specific construction occupations in upstate labor regions shows differentials rarely under 40 percent, and as high as 100 percent or more.
We recognize that this Executive Budget proposal is more limited than other pending legislation in several significant ways. It would impose the prevailing wage mandate only on those projects valued at $5 million or more where public assistance is at least 30 percent of project costs. It exempts several specific incentive programs, including those for brownfields, historic preservation, downtown revitalization, affordable housing, and others. It also exempts incentive programs that are primarily intended to support non-construction expenditures (e.g., those based on job creation), as well as those whose value cannot be calculated at the onset of the project.
Even so, the Executive Budget proposal includes other issues of concerns, in addition to our threshold concerns about any prevailing wage expansion into private sector projects.
Part FFF would subject these projects to the state’s Article 15-A MWBE requirements, which were expanded and extended in 2019 without necessary reforms, resulting in the imposition of MWBE participation targets that are unrealistic for some labor regions.
Part FFF also proposes the creation of a subsidy board which would have expansive, and we believe inappropriate, authority to revise the “covered project” applicability thresholds without having to resort to legislative changes or formal rulemaking. For example, under this language, the subsidy board is authorized to, at any time, adopt an across-the-board reduction of the project cost and financial assistance percentage thresholds proposed in the bill, resulting in an even more expansive, and damaging, extension of prevailing wage.
Data shows that average construction wages already exceed average private sector wages in all regions of New York State outside of New York City (where wage data is skewed by the financial services sector), calling into question one of the main premises of this legislation.
Instead, a prevailing wage mandate will reduce the value of state and local economic development assistance programs, and therefore will be contrary to the state’s economic growth objectives.
For these reasons, the Business Council opposes a prevailing wage mandate for economic development projects.