President Trump and Gov. Andrew M. Cuomo both voiced their concerns Monday about putting the economy back on its feet after the stagnation much of the U.S. is experiencing due to the novel coronavirus.
At a time like this, the governor’s plan to expand New York’s prevailing wage requirements for construction projects should be a nonstarter. And mashing it into the state budget, rather than debating its merits in stand-alone legislation, is doubling down on a bad idea.
The proposal would require union-rate wages and benefits to be paid to all who work on a private project that costs more than $5 million and is financed with at least 30% in public funds.
The prevailing wage already applies to many public works projects in the state. There was a push in the Legislature last year to expand it to private projects receiving any public funds. That bill was defeated, fortunately. This year’s version softens the provisions, but would still burden developers unnecessarily. Business groups estimate that prevailing wage adds 20% to 30% to construction costs.
Many private projects already offer wages that are competitive with union rates. The requirement to match union benefits – including pension contributions, health care coverage and workers' compensation – drives costs up to the point where developers will abandon projects rather than accept severely reduced profit margins.
Taking construction projects off line is the opposite of economic stimulus, of which our pandemic-paused economy will need massive doses. Rebooting New York State’s businesses is not as simple as plugging them back in after the coronavirus shutdown.
Cuomo’s plan also would create an 11-member public subsidy board, appointed by the governor, to study the impact of prevailing wage requirements and recommend needed adjustments. That’s a “just trust us” proposal that assumes authority that is best left to our elected representatives in the Legislature.
Michael Kracker, executive director of Unshackle Upstate, told the Albany Business Review that developers are wary of the uncertainty created by having the subsidy board.
“A developer or private business that wants to make long-term investment strategies would be concerned about what the road map would look like without the ability for an elected body to make those changes,” Kracker said.
The state budget deadline is April 1, though coronavirus concerns may motivate the Legislature to get it finished early. In normal years that itself would be front-page news. This year is anything but normal, but a public health emergency is no excuse for putting business-unfriendly regulations into the budget. The last thing New York needs in 2020 is a speed bump slowing our economic recovery.
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