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How unions lost, and business interests won, the prevailing wage battle

ALBANY – The state Legislature, grassroots groups and even a decent high school social studies class all offer to teach something basic: how a bill becomes law.

In Albany, it can be a far more instructive civics lesson to understand the flip side: how a bill does not become law.

In this lesson over one such bill in the 2019 session, one will learn about poison pills, the walking of tightropes in Albany, the powers and limitations of well-connected stakeholders and how politics often trumps policy at the state Capitol.

Consider this year’s debate over the “prevailing wage." That’s a program that sets an hourly salary – usually higher than area market wages – that must be paid to construction workers on public works projects, from bridges to college dormitories.

This year, the forces were aligned to give construction unions a political gift: expanding prevailing wage rates to private projects that get a certain level of public financing. Think of, for instance, a museum project, such as the Albright-Knox Art Gallery expansion, or some historic preservation development or an affordable housing project.

On the surface, it should have been an easy lift. All the key players were on board: Gov. Andrew M. Cuomo and the Democrats who run the Assembly and Senate. The public rhetoric was the same: Expanding prevailing wages is a fair idea for workers and a fair idea for developers who benefit from tax breaks and other public financial incentives for their private projects.

Yet, the idea died.

How?

Chalk it up to several factors:

• Limitations of organized labor’s power at the Capitol, especially when there are divisions – including geographical – within the union movement on a measure that did not broadly affect unionized workers in non-construction industries.

• Cold feet by Cuomo and some Senate Democrats, who became increasingly worried about warnings from business groups, especially developers and builders, that economic development in some areas, including Buffalo, could be sharply undermined by new and higher wage edicts.

• June 11. That’s the day lawmakers came to a historic deal to dramatically change rental housing laws to more favor tenants. It was a major defeat for the real estate industry. Completely unrelated to the prevailing wage debate, sources say lawmakers and Cuomo were nervous about handing the politically potent real estate industry a second major setback – on prevailing wage – so soon after the rent deal.

A special New York City carve-out

Since the June 21 session end, The Buffalo News has interviewed players on all sides of the prevailing wage issue. Some would talk publicly, many would speak only privately for fear of alienating other politicians, the real estate and construction industry or labor leaders. Some key players – such as the state AFL-CIO or Senate Labor Committee Chairwoman Jessica Ramos, a Queens Democrat whose panel has jurisdiction over the issue – declined to comment. In the case of the state AFL-CIO, it referred a reporter to the Albany-based New York State Building & Construction Trades Council. But its officials declined comment on an issue that directly affected thousands of its members.

About the only aspect all those people could agree on: Labor leaders feel burned by state officials they have come to count on as their political allies, and business leaders say they narrowly avoided being hit by another expensive mandate from the state.

The wounds remain raw among labor groups who represent everyone from carpenters and laborers to steamfitters and sheet metal workers. Some blame Cuomo, some blame Cuomo and Senate Democrats.

It was Cuomo, in the final days of session, who floated changes. One required prevailing wages if a project costing $750,000 or more got at least 30% of its funding from any kind of public source, such as grants, tax breaks or other means. More dramatically, he added a sentence saying where the wage law would not be expanded: “Construction work performed in a city with a population of one million or more.’’

In New York State, only one place fits that description: New York City.

As a result, some labor groups got divided along geographic lines. And upstate and Long Island business interests suddenly got a new argument to try to kill the bill: map-drawing unfairness that would cost developers more money everywhere except the five boroughs of New York.

“It certainly fired up our side," Michael Kracker, executive director of Unshackle Upstate, a coalition of business-related groups, said of the new Cuomo provisions.

Unions got beat on signature issue

Some union leaders, loathe to criticize Cuomo, are still fuming. Some believe Cuomo leaked his ideas late in the session as a poison pill.

Paul Brown, president of the Buffalo Building & Construction Trades Council, which has 18 construction-related unions as members, said if Cuomo had been serious about its passage, he should have demanded it be addressed in March during state budget talks when the governor held far more leverage over lawmakers.

“The governor, quite frankly, is full of crap. He said if you put the bill on his desk he would sign it. He then did everything to not get it on his desk," Brown said.

Suggestions were made in Albany that the Assembly version, amended just days before session’s end, went too far in siding with unions and could jeopardize jobs. “They kind of blamed it on the Assembly," Brown said of prevailing wage’s death. “But, really, the Senate and the governor are the ones who put the kibosh on this whole thing."

Did the governor have the power to kill the bill? Lawmakers could have struck their own deal without Cuomo. The governor could then have been put in the position of choosing between signing or vetoing a wage bill.

The Cuomo administration put the onus on the Legislature for the bill’s death. “It’s simple," said Jason Conwall, a Cuomo spokesman. “The Legislature could not reach consensus on a framework for modifying prevailing wage and did not advance a bill.”

Mike Murphy, a spokesman for Senate Majority Leader Andrea Stewart-Cousins, said Senate Democrats are “deeply disappointed that a three-way agreement could not be reached." He said Senate and Assembly Democrats “will work tirelessly to achieve a prevailing wage agreement that the governor will support and sign.’’

Powerful interests at play

Three days after the session’s end, Cuomo mingled with donors – who paid up to $25,000 apiece to his campaign – at the Manhattan home of Scott Rechler, a mega downstate real estate developer who owns RXR Realty and once served as a Cuomo appointee to a state authority that operates airports, bridges, tunnels and marine terminals in New York City.

Besides serving as fundraising host to Cuomo, Rechler played another role in June: negotiator on behalf of business interests fighting the prevailing wage bill. Multiple sources in and out of government say he was on a number of conference calls with legislators and their aides in the session’s closing weeks pushing against the wage measure in a series of high-level negotiations. Sources say he sounded the alarms: big, job-producing projects RXR is developing faced an uncertain future if prevailing wage was expanded to private projects.

Rechler was traveling and unavailable for comment.

But Rechler alone did not kill the bill. Business groups from Long Island to Buffalo mobilized to halt its progress, and some sweated in the Capitol hallways until well after midnight ensuring that a rising-from-the-ashes prevailing wage bill did not emerge before the Senate closed its session at 2 a.m. that Friday.

Legislative campaigns – not just Cuomo’s – have also benefited from donations from business interests that worked to stop prevailing wage.

And organized labor has been among the most reliable campaign helpers for Cuomo and Democrats in the Legislature. A look at just a handful of construction-related unions show they gave Cuomo’s campaign and his state Democratic Party more than $320,000 last year, according to state records.

Unions lost two prevailing wage fights

Curiously, and little-known, is that unions lost not one, but two, prevailing wage fights. They lost the broader one and they lost a key paragraph in a climate change bill that would have, in a first version, applied prevailing wages to jobs created by ambitious greenhouse gas emission limits the state is setting for the coming decades.

People involved in both bills say unions were told to not worry about the climate change legislation’s amendments; they would be taken care of in the broader prevailing wage effort, the sources said.

“I can’t confirm that for sure," said Assemblyman Steve Englebright, a Long Island Democrat and sponsor of the climate bill. He said his original climate bill had “more aggressive” language on prevailing wages, “but it did not survive in the final adjustment.’’ He said the Cuomo administration sought the ejection of the language.

On the Sunday before the session ended June 21, Assemblyman Harry Bronson, a Rochester Democrat, introduced a new prevailing wage version that he said represented where he thought things stood between the Assembly and Senate negotiators. But the Senate did not introduce the bill and Cuomo began floating his own new version.

“It’s the old adage that there’s no agreement until there’s a complete agreement," Bronson said.

The governor’s plan called for no new prevailing wage requirements for New York City. It said unions and business interests there could negotiate among themselves over the next year and offer suggestions to state officials in 2020. “That was a real sticking point to those of us who believe prevailing wage should be a statewide issue," Bronson said.

Was it an intentional poison pill by the governor to punt the matter for another session? “I’m not going to ascribe what were the motivations of the governor. What I would say is that the constitution requires prevailing wages to be paid on public works projects. ... The constitution doesn’t just apply to Long Island, the downstate suburbs and upstate. The constitution also applies to New York City," he said.

The prevailing wage law does drive up the costs of public works projects, numerous studies have shown. The mean hourly wage for carpenters in the Buffalo area, according to federal labor statistics, was $21.38 last year. Contrast that with the prevailing wage rate paid to carpenters in the same area working on building projects by government agencies: on July 1, the state labor department reported the prevailing wage hourly rate for that trade has risen to $32.40 per hour, according to a 2,586-page document that outlines the various rate schedules by job and region.

As sure as the wage issue died in 2019, it is just as certain to return as a matter for Albany to deal with in 2020 – an election year for state lawmakers.

Lawmakers say a deal might have been possible had not so many other big, unrelated issues taken up so much of their time in the final couple weeks of session. “Ultimately, I think we will be successful," Bronson said.

Cuomo has already vowed that the matter will be a topic to resolve in 2020.

Kracker, whose Unshackle Upstate group includes a number of Buffalo-area business groups, including the Buffalo Niagara Partnership, said the opposition was helped in June by a diverse coalition of nonprofits, minority workforce representatives, chambers of commerce, industrial development agencies and groups representing counties and city and village mayors.

“Our pushback for 2020 begins now," Kracker said. "We certainly enjoyed the victory but we’re not naïve to think this isn’t a battle that’s not going to take place in 2020."

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