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Another Voice: Benefits add hidden costs to prevailing wage projects

By Brian Sampson

The May 10 article, “Expanding prevailing wage: a help to region’s fortunes, or hindrance?,” was well written and identified both sides of the issue. But the article didn’t mention an important factor, perhaps the most important, in the prevailing wage calculations: the excessive cost of the supplemental benefits tied to prevailing wage projects.

The cost of the benefit package is grossly out of line with the regular marketplace. For most employers, the cost of benefits (workers compensation, health insurance, retirement and statutory expenses) is somewhere around 25% to 40% of the cost of the salary.

For example, if someone is paid $50,000 annually, the cost of their benefits could range from $12,500-$20,000, depending on what the employer offers. But when looking at prevailing wage in New York, and in particular in Erie and Niagara counties, it’s a vastly different story.

When you examine the wage and benefits tables from the New York State Department of Labor, the numbers are staggering. A laborer classification in Erie County receives a wage of $29.61 per hour and the supplemental benefits are $25.70 per hour.

That means the cost of the benefits is 86% of the hourly wage. That’s more than double the highest average in private industry.

In Niagara County it’s even worse. A similar laborer will receive $26 per hour in wages and $38.06 in supplemental benefits. The cost of the benefits is 146% of the wage, quadruple that of private sector employers.

The unfortunate reality is, as taxpayers, we’re already paying these inflated benefits on traditional public work like roads, bridges, sewers, schools, etc. That’s a hefty burden to bear and is reflected in the poor quality of our infrastructure.

Yet now some would like us to place that same burden on private projects that need financial assistance. If our roads and bridges are bad, what do you think will happen to our private job market?

The negative impacts of the proposed law are very clear. Ulster County passed a law applying prevailing wage to private work supported by the industrial development agency about a decade ago. What happened? For two years, no one submitted a project to the IDA for consideration. Upon repeal of the law, projects flowed again.

Let’s not be fooled. Proponents of the expansion of prevailing wage are already doing great damage to taxpayers. They shouldn’t be allowed to ruin what little positive job growth we now have in New York.

It’s time for New York to follow its laws and reevaluate how it calculates prevailing wage.

Brian Sampson is president of the Empire Chapter of Associated Builders & Contractors.

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