Memo to Lawmakers on Proposed Changes Prevailing Wage Mandates

STAFF CONTACT :

Director of Communications
06
Jun
2019

TO:    Members, New York State Legislature
FROM:    Ken Pokalsky
SUBJECT:    Prevailing Wage Legislation
DATE:    6/4/19


Earlier this week, a New York City-based business organization suggested that legislation to extend the state’s public works “prevailing wage” mandate to private economic development projects should focus on upstate New York.  It argued that regional economic challenges including, in their words, “chronically weak economic conditions,” having a “lot of . . . out of work or under-employed” construction workers, and “little private construction activity” could be solved, interestingly enough, by making economic development projects receiving state or local financial assistance up to 30% more expensive.  

This is consistent with comments we have heard from various legislators, who argue that this prevailing wage mandate is justified by low wages paid to upstate construction workers.

These arguments regarding lack of employment and low wages simply are not supported by New York State Labor Department data.

It is widely recognized that much of New York’s post-recession job growth has been downstate, in New York City, Long Island and the northern suburbs, with a few upstate bright spots (e.g., the Capital Region, Tomkins County, Erie County).  That job recovery pattern applies to construction jobs as well.  

Statewide, construction jobs in 2018 were 11.1% (or 40,000 jobs) above their 2008 pre-recession levels, but more than 70% of that growth was in New York City alone.

In upstate (which we are defining as NYS excluding NYC, Long Island and Orange, Rockland and Westchester counties), construction employment in 2018 was actually up slightly from pre-recession levels, with an increase of about 1,000 jobs.  The upstate construction job growth rate was just under 1%, slightly below the growth rate for all upstate private sector jobs over the same period, but nearly matching the 1.4% national growth rate for construction employment.   (Note, compared to 2010, the recession’s job low-point for most areas and industries, upstate construction jobs are up by 13,823, or 14%).

Even so, the construction sector in upstate has shown modest job growth, not massive job loss.

Equally important, as shown in the following chart, the construction sector remains a relatively high wage sector across upstate New York.  In seven of eight upstate labor regions, average annual construction sector wages exceed overall private sector wages by at least 22 percent (in the eighth, construction is more than 12%, or $6,000, above average regional private sector wages.)  The construction wage differential is as high as 44 percent in the North Country region.

In short, the upstate construction sector is recovering, albeit somewhat more slowly than the overall sluggish job recovery rate across upstate New York.  Even so, it remains one of the region’s top wage paying sectors.

For these and other reasons, imposing significant, mandatory construction wage and benefit increases on an industry and region with low growth rates, and relatively high labor costs, makes no sense.

 

 

 

Upstate    Region

2018 Average Construction Employment

# Change from 2008

% Change from 2008

Average Construction Earnings

Average Private Sector Earnings

Average Construction versus Private Sector Earnings

Capital

21,678

694

3.3%

$65,616

$51,757

+26.8%

Finger Lakes

22,085

2,008

10.0%

$59,807

$48,666

+22.8%

Central

14,496

278

1.9%

$59,284

$48,284

+22.9%

Hudson Valley (excluding Orange, Rockland and Westchester)

11,562

-413

- 3.5%

$60,140

$46,421

+29.5%

Mohawk Valley

5,061

-598

-10.5%

$52,832

$40,452

+30.6%

North Country

6,069

-641

-9.5%

$57,726

$40,040

+44.2%

Southern Tier

8,003

-580

-6.7%

$55,111

$49,018

+12.3%

Western NY

22,814

163

0.7%

$57,153

$45,836

+24.7%

Total

111,768

915

0.8%

$59,746

$47,476

+25.8%

 

Data Source: Quarterly Census of Employment and Wages (QCEW) https://www.labor.state.ny.us/stats/LSQCEW.shtm