Gotham Gazette Thu, 22 Apr 2021 23:12:59 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) Expanding Construction Prevailing Wage Mandates Would Worsen Our Economic Crisis bk nycha sheepshead

Construction and the coronavirus recession provoke key questions (photo: Demetrius Freeman/Mayor's Office)

As the coronavirus crisis continues to hit New York harder than any other state in the nation, Governor Cuomo, Senate Majority Leader Stewart-Cousins, and Assembly Speaker Heastie have undoubtedly answered the call and stepped up in a big way to protect New Yorkers and address statewide needs.

But as they consider ongoing negotiations over the state budget – amid a partial shutdown of New York’s massive construction industry – state lawmakers must ask themselves whether it makes any sense right now to ram through a controversial expansion of construction prevailing wage mandates.

That answer is an obvious and resounding no.

The proposal to expand prevailing wage mandates to many private construction projects was always a bad one – but it is even worse as we enter an economic downturn that may very well become a recession. That’s because it would eliminate good construction jobs and contracting opportunities when they will be most needed to help New York rebound from the COVID-19 outbreak and its ramifications.

We already know that this proposal would raise construction costs by around 30 percent – which translates to billions in additional costs – and make it impossible to advance major projects in New York City, Long Island, and throughout upstate communities. We already know it would inevitably leave tens of thousands of workers jobless and prevent small local contractors – especially MWBEs – from getting the business they need to keep the lights on. That’s why this proposal has been sensibly rejected year after year. 

Now, just imagine those negative impacts hitting the construction industry a few months from now, as New York emerges from this public health crisis and attempts to jumpstart our economy by getting people back to work.

We already know we’re in uncharted territory. Amid a record-setting 3.3 million unemployment claims nationwide, New York State Comptroller DiNapoli has already sounded the alarm on an ensuing “deep recession,” with the comptroller and other state budget officials warning that the COVID-19 pandemic is projected to cost New York state government $9 billion to $15 billion in lost tax revenue, indicative of a massive loss of economic activity. And the $2 trillion stimulus bill the federal government passed in response to COVID-19 only provides $3.1 billion for New York – not nearly enough to offset the subsequent costs of the economic calamity.

Simply put, any special interests that support a prevailing wage expansion right now are essentially arguing that New York should address crushing economic challenges and rising unemployment by taking away more jobs and making it harder for businesses to operate. That would just be irresponsible.

And remember that when we say this isn’t just a downstate issue, we mean it. Our recent letter to state officials was signed by more than 20 groups statewide, including regional organizations from Buffalo, Albany, Binghamton, Plattsburgh, Brooklyn, and Long Island.

So, as state lawmakers finalize a budget that will hopefully help us rebuild New York’s economy, we hope they stay focused on just that – rebuilding. That won’t happen if they impose controversial new mandates that do more harm than good to workers and businesses alike.

Kyle Strober is executive director of the Association for a Better Long Island and Mitch Pally is CEO of the Long Island Builders Institute. On Twitter @KyleStrober & @MitchPallyLIBI.

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Expanding Construction Prevailing Wage Mandates Would Worsen Our Economic Crisis Mon, 30 Mar 2020 04:00:00 +0000
Prevailing Wage is Economic Stimulus - New York Should Expand It Now gov cuomo moynihan

Construction workers, and many others, can benefit from prevailing wage expansion (photo: governor's office)

Massive unemployment following a period of slow recovery left 19 percent of Americans out of work. That was in 1938, when New York officially wrote the prevailing wage into the State Constitution, requiring projects that receive taxpayer funds to pay fair wages to their workers. Still deep into the Great Depression, New Yorkers understood that blue collar workers were the foundation of the economy and key to sustained economic growth.

Fast forward to today’s crisis and opponents of the prevailing wage are recycling old arguments against current prevailing wage legislation — arguments that did not work then and should not work now.

New York has an opportunity to provide a powerful economic stimulus at a critical time in our history by closing a loophole in its prevailing wage law so that private projects receiving significant public subsidies are covered. The underlying principle of the prevailing wage is straightforward: when public funds are used to subsidize and incentivize construction, public assistance should not be used to drive down wages or undercut benefits. It should instead uphold a community’s labor standards. This policy protects local economies and small businesses by maintaining higher consumer demand for goods and services.

Much has changed in the way projects are procured and financed since the prevailing wage was enacted by statute in 1894 and written into New York’s Constitution in 1938.  Today public resources are leveraged creatively to attract private economic development. State policy needs to reflect this modern reality. However, New York is one of only 11 states that enable private developers to receive public assets without paying prevailing wages and benefits.

There are many reasons why expanding the prevailing wage is good public policy, especially during a weak economy. These standards provide a powerful economic stimulus for working families and local communities while generating much needed tax revenue for public programs. That’s how it helped spur New York’s economy during the tail end of the Great Depression.

The economic impact is significant. Total family income for construction workers is estimated to be at least 12.5% higher in prevailing wage states. Every dollar spent on prevailing wage jobs is estimated to generate $1.50 for local economies. Fair wages empower working families to buy cars, homes, appliances, and clothing. More discretionary income means larger turnout at restaurants and theaters and a greater ability to secure the necessary savings for education, health care, and retirement. 

Stimulating New York’s economy, increasing state revenue, and wise management of public resources has never been more important than now. One very practical and fair way for lawmakers to do that is by expanding New York’s prevailing wage law, and they should do it now.

Fred B. Kotler is a policy analyst at the New York State School of Industrial and Labor Relations, Cornell University. He is the author of New York State Prevailing Wage Law: Defining Public Work, a report prepared for the New York State Senate in 2018.

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Prevailing Wage is Economic Stimulus - New York Should Expand It Now Fri, 27 Mar 2020 04:00:00 +0000
Cuomo's Unfinished Business: 3 Issues the Governor Says Will Form Basis of His 2020 Agenda gov cuomo fare evasion enf policy

Gov. Cuomo (photo: Kevin P. Coughlin/Governor's Office)

Governor Andrew Cuomo celebrated the achievements of 2019 on Friday, calling the legislative session an “overwhelming success” at a wrap-up news conference in the Capitol. During the January to June session, Cuomo and the state Legislature, with its two Democratic majorities for the first time in a decade, moved legislation dealing with a long list of issues, from combating climate change to expanding voting and reproductive rights, new gun regulations to a cap on annual property tax increases, and much much more.

However, while Cuomo did achieve most of what he outlined for 2019 in speeches delivered late last year and early this year, he said on Friday that three big issues remained unresolved: the Legislature did not pass bills to legalize adult-use marijuana or paid gestational surrogacy, nor to expand prevailing wage requirements that govern how union workers are paid on projects that receive public dollars.

When asked about what did not get done and would thus form the basis for his 2020 agenda, Cuomo first joked about the question and said that almost everything he wanted to get done was achieved -- “Are you kidding me?” the governor half-joked, “you want to go through what we didn’t do?”

“We did 99.9%,” Cuomo said. “It was an overwhelming success.” With a smile, he held up a glass about half-filled with water and said that, usually, that’s representative of a session and it can be debated whether it is half-full or half-empty. He then filled the glass almost to the top, to represent his view of the session’s success rate based on the goals.

“What didn’t get done?,” Cuomo continued, getting serious, “I’m disappointed that surrogacy did not get done, and I will continue to fight for that. Legalization of marijuana. Prevailing wage. Those are really the issues that did not get done, and I will revisit all of them next year.”

While he identified those three issues, there were several other items he hoped to accomplish -- like raising the cap on charter schools in New York City -- also left off the final, very lengthy tally of what did get done.

A look at the three issues Cuomo named to set the table for the future:

After calling it a “gateway drug” not long ago, Cuomo began moving on marijuana legalization in 2018 and indicated support for its legalization during his successful campaign for a third term, though he didn’t run on the issue. He then introduced adult-use legalization in his beginning-of-the-year budget proposal, but said that the two houses of the Legislature did not have the “political support” to pass the budget with marijuana legalization as the April 1 deal came together.

Legalization efforts continued in fits and starts, with some sniping between lawmakers and the governor, but ultimately the votes were not there in the Senate, there wasn’t significant momentum in the Assembly, and Cuomo did not appear to make a big push for a policy he had called particularly important as both a social justice issue and revenue-raiser for the state.

“It was clear they didn’t have the votes for legalization, then we went to decriminalization,” Cuomo said at the Friday press conference looking back on the session.

A decriminalization deal was reached in the final days of the session, creating a system of fines for possession of “small amounts” of marijuana, “reducing the penalty for unlawful possession of marijuana to a violation,” according to a press release from the Senate Democratic majority. It removes criminal penalties for possession of under two ounces of marijuana, and adds a penalty of $50 for possession under one ounce and $200 for between one and two ounces.

It also creates a program to automatically expunge past and future convictions. And, it adds “marijuana to the definition of “smoking” under the Public Health Law so that smoking marijuana will be prohibited in any circumstances where smoking tobacco is prohibited by law.”

“This monumental legislation will decriminalize small amounts of marijuana and establish procedures for record expungements for both past and future convictions,” according to a press release from the Senate Democratic majority.

Cuomo has pushed for marijuana reform since 2012. In that time, he has twice proposed legislation to categorize possession of small amounts of marijuana as a violation rather than a misdemeanor. The legislature did not pass either proposal. In 2014, Cuomo and the Legislature made medical marijuana legal across the state.

In 2018, Cuomo began pushing for marijuana legalization. He ordered a Department of Health study on regulated marijauna legislation, which determined that legalization of recreational use would have positive ramifications across the board, including reducing racial disparities in criminalization and incarceration rates. The report found that there have been more than 800,000 arrests for possession of small amounts of cannabis in New York, with the majority of those arrested people of color.

The Legislature also failed to pass a bill legalizing paid gestational surrogacy. The bill would have allowed gay or infertile couples to contract with a woman to serve as a surrogate.

Paid gestational surrogacy is legal in 47 states, but not New York, where it was banned under Governor Mario Cuomo in 1992. Current state laws also fail to define who the legal parents are when a child is conceived with a gestational surrogate.

“Before the end of the legislative session, we need to fix these two violations that are repugnant to what we believe and who we are and an injustice to the LGBTQ community,” Cuomo said in May, speaking on gestational surrogacy and the ‘gay and trans panic defense’ that was ultimately banned before the end of session.

Cuomo called legalizing surrogacy the next logical step after he helped pass marriage equality in the state in 2011, allowing LGBT couples to marry and to have children through a surrogate if they so choose. But, there were significant concerns from some lawmakers, especially in the Assembly, about protections for potential surrogates and the notion that surrogacy can be viewed as taking advantage of women from lower socioeconomic backgrounds.

Cuomo and others disputed those concerns, touting the legal protections for surrogates in the proposed legislation and pointing to the idea of letting women decided what to do with their bodies, but his advocacy did not prevail.

Prevailing Wage
Discussing the prevailing wage bill before the end of the legislative session, Cuomo decried the Democrat-controlled state Assembly, claiming its members didn’t want the bill to pass.

“The Assembly does not want to pass because it has no immediate effect on New York City,” Cuomo said Thursday on WAMC radio’s The Roundtable, referring to the fact that an updated prevailing wage bill had carved New York City building projects out, giving in to a call from real estate industry leaders and some affordable housing developers who said that an expanded prevailing wage could really hurt housing production.

The prevailing wage is a state-set wage that says if a project gets government subsidies and support, then its developers must pay workers a wage set by the state. It is primarily applicable to construction projects, and is especially prevalent in New York City, where construction abounds. Cuomo has been especially close to the building trades union, though he also has close ties to the real estate industry.

Cuomo’s favored bill would have changed the prevailing wage on Long Island and upstate, but not in New York City. “And the Assembly then basically said why should we pass it, you don't have any interest if it does anything immediate in New York City that's it,” Cuomo said on WAMC Thursday. The bill at hand at the end of the session would have mandated a study on New York City to potentially expand the wage there in the future.

Cuomo promised to return to each of the issues next year.

“I’m going to get on with the other part of my job, which is actually doing things,” Cuomo said at the press conference. “This has probably been the most successful legislative session,” he said.

by Noah Berman, Gotham Gazette

Read more by this writer.

Cuomo's Unfinished Business: 3 Issues the Governor Says Will Form Basis of His 2020 Agenda Sat, 22 Jun 2019 04:00:00 +0000
Fair Wages are Good for the Economy, Albany Should Pass an Expanded Prevailing Wage may bdb nycha active construction

(photo: Demetrius Freeman/Mayoral Photography Office)

As the next state budget is being debated in Albany, increasing attention is being paid to the state’s prevailing wage laws. With so much misinformation out there, let’s set the record straight. Paying construction workers a middle class wage is a net positive for New York’s economy.

Specifically, the issue is how construction workers are paid for projects that receive public funds. Since 1897, projects receiving taxpayer funds are required by New York State law to pay fair wages to their workers. The problem is that developers are increasingly exploiting loopholes created by the growth of public-private projects, which blur the lines of what’s considered “public work.”

One recent example is the Chelsea assisted living facility on Long Island. The project received $15 million in public funding, but because that money came through the Brookhaven Industrial Development Agency (IDA), there was no requirement to pay workers a middle-class wage.

Legislation currently making its way through the legislature would close that loophole. The bill,

S1947(Ramos)/A1261(Bronson), would clearly define “public work” as any large-scale project that is paid for with public funds. By ensuring that projects subsidized with public funds support middle class wages, the law will strengthen the middle class and the state’s economy.

Chances are that you’ve seen folks in the business community argue the opposing viewpoint – but when you look under the surface, those arguments tend to rely on overly simplistic or just plain inaccurate information.

Take the industry-backed argument that paying workers a middle-class wage would force costs to skyrocket and immediately put an end to all development. When a wealthy developer complains that much about paying a fair wage, you have to wonder how little they’re actually paying their workers.

As an academic, I rely on data and evidence to form a judgment. The data show that labor costs for construction projects usually amount to about 23-24 percent of the total project cost. To keep the math simple, let’s say that a prevailing wage law results in a 10 percent raise for construction workers in a given region. At most, that would increase total cost by 2.5 percent. A 2.5 percent cost can be easily offset by the efficiencies gained from paying the highly-trained workers you attract with a prevailing wage. Trained, skilled workers mean higher productivity along with fewer accidents, errors and change orders.

Of course, that’s only looking at the prevailing wage from the point of view of big developers. If we look at the prevailing wage as regular New Yorker taxpayers, the benefits multiply.

The overwhelming body of research shows a strong positive connection between prevailing wages and economic development. Prevailing wage laws increase consumer demand, helping to build a strong middle-class community. That helps more than just those families. For every dollar spent on a prevailing wage project, $1.50 is generated for the local economy. In addition, when workers are paid a fair wage, they pay more in taxes and are less dependent on government assistance.  

In a state like New York, prevailing wage laws also protect local workers. When developers are forced to pay middle class wages, they hire skilled, local workers instead of trucking in cheap labor from outside the area.

Next time you hear developers make outlandish claims about the devastating impact of a prevailing wage, remember that the only impact they care about is to their own personal bottom line. By not paying fair wages, they’re forcing the rest of us to carry the burden of the inevitable consequences of lower pay and working class poverty. In economics we call this a “market failure” as builders shift costs to taxpayers to keep their wages low and profits high. As taxpayers, we’re the ones left holding the bag.

Kevin Duncan is a professor of economics at Colorado State University-Pueblo and has been a visiting scholar at the Institute for Research on Labor and Employment at the University of California, Berkeley.

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Fair Wages are Good for the Economy, Albany Should Pass an Expanded Prevailing Wage Thu, 28 Mar 2019 04:00:00 +0000
Proposal Would Subvert Efforts to Address Affordable Housing Crisis mayorsoffice aff

(photo: Michael Appleton/Mayoral Photography Office)

One of the greatest and most immediate challenges facing New York is a statewide affordable housing crisis that continues to affect millions of families. Elected officials must support and promote new legislation and policies that will help our state produce more affordable homes and, correspondingly, do no harm to much-needed housing efforts.

The reality today is that more than 3 million households across the state still pay more than 30 percent of their income on housing costs, which means they are “rent-burdened” and often struggle to afford housing and other necessities like health care and child care.

This crisis is what led Governor Cuomo and the Legislature to dedicate $2.5 billion to support an ambitious five-year statewide housing plan and preserve crucial low-income housing tax credits that were under threat by the federal government.

But our state’s ability to address the affordable housing crisis is now at risk of being undermined by new legislation that proposes to expand the definition of public work and the application of the prevailing wage mandate to private construction projects – including low-income housing developments – based on the public subsidies they rely upon to be built.

As an organization whose members deeply believe in supporting the needs of low- and middle-income New Yorkers, we also believe in good, fair wages for all workers. But the wide application of prevailing wage, which is far in excess of the median wage and can raise construction costs by 25 percent or more, is not actually a path to higher pay for construction workers. In fact, it is certainly a way to ensure there are fewer jobs, fewer new developments, and fewer affordable homes for New Yorkers.

This would be a step backward for New York, where construction costs are already the most expensive in the world, averaging $362 per square foot in New York City, according to Turner & Townsend’s 2018 report on international construction. The report also notes that those costs will only continue to rise and are expected to jump by another 3.5 percent over the next year. Other costs and regulatory burdens remain major obstacles all across the state.

Whether they live in Brooklyn or Buffalo, New Yorkers simply cannot afford to lose opportunities for new housing construction and the many good jobs that come with them. It is worth noting that the creation and preservation of affordable housing supported more than 300,000 total jobs throughout the state between 2011 and 2015.

The state Legislature now has an important choice to make. Rather than advancing well-intentioned but misguided legislation that would diminish new affordable homes and good jobs across the state, we hope lawmakers will fully consider these negative impacts before they proceed with imposing prevailing wages on the construction of affordable housing in New York.

The further that lawmakers explore this issue, the clearer it will become that it is unwise to hastily advance these proposals and risk undercutting New York State’s much-needed housing plan. And if they make the right choice, all New Yorkers will benefit.

Jolie Milstein is president and CEO of the New York State Association for Affordable Housing, a trade association that represents nearly 400 members responsible for the construction and preservation of affordable housing across the state.

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Proposal Would Subvert Efforts to Address Affordable Housing Crisis Tue, 12 Mar 2019 04:00:00 +0000
Prevailing Wage Extension Would Kill Jobs and Limit Housing for New Yorkers gov cuomo moynihan

(photo: governor's office)

If there’s one thing that New Yorkers can agree on, it’s that we should always strive to create new jobs, not take them away. Amazon’s recent decision to withdraw its planned “HQ2” from Long Island City is an example of us failing on this front. However, public officials still have an opportunity to redeem themselves by protecting local workers from a proposed prevailing wage expansion.

Discussions are currently underway in Albany to extend prevailing wage requirements to private construction projects and could cost New York City thousands of jobs. Elected officials should heed the warnings of community leaders and push back against powerful unions that are advancing their own agenda at the expense of New York’s working class.

The dangers of expanding the prevailing wage to private work projects are numerous. First, advancing this initiative neglects to consider the negative consequences it will have on the city’s working families. In the past, Governor Cuomo has said, “Construction with public subsidies should be subject to the prevailing wage so they’re built right, they’re built fairly, they’re built union.” However, there’s no guarantee that this requirement will result in projects being built right and fairly—instead, the only thing it assures is that non-union workers are forced out of the hiring pool as developers are forced to hire union.  

As a result, any efforts to extend the prevailing wage to private projects directly impacts workers of color, who make up the majority of the non-union workforce. Per industry data, roughly three quarters of non-union workers are either black or Latino and live in one of the city’s five boroughs. This is in part due to the fact that unions have historically imposed barriers to entry for people of color, which persist to this day. Just two months ago, for example, six African-American engineers at the LaGuardia Airport renovation project filed a lawsuit against the Operating Engineers Local 15 chapter for alleged discriminatory hiring practices and treatment by union supervisors.

Beyond the detrimental effects it would have on minority workers, instituting a prevailing wage requirement at private projects would actually diverge from the dominant trend in the city’s construction industry. According to our analysis of building permit numbers provided by the city, approximately 80 percent of private construction work is now being done by non-union workers.  

Additionally, these workers have secured benefits on par with those of union members. On average, they earn $20 per hour, competitive health care packages, and 401(k) packages that allow them to secure their futures. Therefore, contrary to some misconceptions, opposition to prevailing wage does not equate disregard for workers’ rights.

Expanding the prevailing wage would also have a harmful effect on housing opportunities for many of these non-union workers. New York has an affordable housing shortage, and a prevailing wage will only make this housing crisis worse. The Independent Budget Office found that a prevailing wage requirement would increase construction costs by 23 percent. Additionally, such an increase would significantly alter Mayor de Blasio’s plan to create 80,000 desperately needed new affordable housing units, or simply cost an additional $4.2 billion.   

Ultimately, those same hard-working New Yorkers who are being left out of prevailing wage discussions are the ones who stand to be affected most by it. Our elected leaders should stand up to powerful union interests and their agenda by securing the economic well-being of the construction industry and the workers that build it up.

Clark Peña is Director of Advocacy at the Construction Workforce Project. On Twitter @CWPNYC.

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Prevailing Wage Extension Would Kill Jobs and Limit Housing for New Yorkers Thu, 28 Feb 2019 05:00:00 +0000