Is it worth paying increased utility costs so that elected representatives can secure the support of New York City unions in an election year? With Albany's hands already deep in your pockets, are you willing to invest even more in politically motivated, anti-business regulations?
The New York State Senate recently passed legislation that would mandate utility companies to pay "prevailing wage" to service workers. That's not for regular employees, who generally already exist under collective bargaining agreements, but for vendors (i.e. janitors, guards, maintenance workers, caterers). Estimates say this legislation would cost utility companies more than $50 million to implement -- costs that would be passed on to business and residential consumers.
Prevailing wage mandates are debated regularly statewide. They require union wages specific to various occupations to be paid, typically on government-funded projects. Albany special interests, however, continue to push for these requirements on contracts with any link to government, such as economic development incentives, permits or leases. Unfortunately, the wage rates are often high enough that they strangle employers. Since prevailing wage generally has a government connection, it's the taxpayer who picks up the cost.
For instance, a painter working for a public agency in Albany currently is paid a prevailing wage rate of more than $30 per hour including supplemental benefits. This legislation would require that wage to be paid any time a utility company in New York uses a painter. For perspective, the Bureau of Labor Statistics, U.S. Department of Labor in 2009 reported that the median hourly salary in Buffalo Niagara is $15.57.
A couple things to remember: First, utility companies are shareholder-owned, private entities that are already heavily regulated to ensure they have accountability to the public that relies on them. The Senate's legislation treads into dangerous territory where the government tells private companies what to pay their employees. Second, the increased costs for personnel will have a dire effect on the many small businesses that currently do work with utility companies, but will not be able to afford the higher wage rates.
In addition, companies that fail to keep accurate records of how much each of their contractors and subcontractors pays its employees (think of the logistics) which results in an underpayment will potentially be subject to serious criminal penalties. And who says New York isn't business-friendly?
At a time when Albany should be doing what's needed to create jobs in the private sector, the State Senate is instead focused on adding more costs onto the already second-highest utility costs in the nation. The pay-off? The support of New York City labor unions. Buffalo Niagara utility ratepayers should pay close attention to how our representatives vote on this one.
Craig W. Turner is vice president of the Buffalo Niagara Partnership.