Economic growth, new tax revenue and the means to attract new businesses to the region are all built on the idea that New York state actually welcomes investment. In the state capital, in the wake of the failed Amazon headquarters deal, that simple assumption continues to be shredded.
This lethal threat to the economy comes from a bill now being considered in Albany that would mandate a 30 percent increase in construction costs across New York, which would drastically impact economic activity. The Long Island Housing Partnership, a nonprofit focused on affordable housing, cautions that there could be as much as a 40 percent increase in construction costs on the Island under the proposal. The bill is an effort to expand the definition of public works so that any privately financed project would be required to pay the highest possible wages and benefits, otherwise known as “prevailing” wages. The architects of this bill have little to no experience in construction, the realities of securing financing for construction or how corporate boards decide whether to invest in Long Island or relocate their jobs out of our high-cost, high-tax region.
As advocates fighting to protect Long Island’s economic viability, we agree that substantial public benefits should correlate to prevailing wages or other wage-rate requirements. But the original bill language and subsequent drafts, provided by the Albany lobbyists of the bill’s supporters, would substantially increase construction costs and significantly threaten builders’ ability to attract private financing. The original bill and subsequent variations would not guarantee additional jobs for labor unions, and would prohibit economic development to address Long Island’s critical needs. The bill would create a situation in which projects that are 95 percent privately financed would be required to pay prevailing wages, while projects that are 60 percent publicly financed would be exempt from the rule.
In response, we’ve made several counter-proposals that would increase the number of prevailing-wage jobs while ensuring that our region’s critical needs, like diverse housing options and safeguarding our ability to attract and maintain jobs, are preserved. While current law requires the payment of prevailing wages only if 100 percent of the project is publicly funded, our proposal would make projects that are more than 50 percent publicly funded pay construction workers the standard public-works wage. If the public is subsidizing the majority of the project, then it’s only right that those working on the job be paid the public-works wage.
In addition, projects that are less than 50 percent publicly funded should pay the same percentage of the standard public-works wage to those working on the job. It is our position that if a project receives X percent in public funds, then it is only appropriate that such projects pay the same percentage of public-works wages.
We agree that these projects should hire locally, because it is equally important to us that New Yorkers, who live and contribute to our local economy, work on any project that gets public funds and/or benefits. Lastly, we agree that stronger enforcement is required to protect labor from bad actors who might try to undercut any agreement or avoid hiring outside labor.
Unfortunately, our common-sense proposal was rejected.
At a time of shortfalls in the state budget, we are too economically vulnerable to be encouraging companies to leave our region, thereby reducing our ability to generate new tax revenue.
The good news from Albany, however, is that Gov. Andrew Cuomo and the state’s legislators now more fully understand cause and effect. Once a bill is passed, the economic development community’s response will be swift and certain. If this legislation were approved as is, investment money would be quickly redirected to states that understand the forces of the marketplace and the need to find incentives that welcome investment.
We grew up on Long Island, and have raised families here. We hope to leave it a better place than we found it. Ultimately, we hope there is common ground and compromise, because everyone should know that failure would harm everyone.
Kyle Strober is executive director of the Association for a Better Long Island. Mitch Pally is CEO of the Long Island Builders Institute.