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A new report released by the Empire Center for Public Policy on April 24 found that prevailing wage requirements inflate the cost of publicly funded construction projects in New York by between 13 percent and 25 percent. The varying percentages are based on the area or region of the state. Taxpayers can expect to pay billions in extra costs, given the tens of billions the state plans to spend on public projects over the next five to 10 years.  

Last year, the New York Independent Budget Office (IBO) released a report on the impact prevailing wage requirements would have on affordable housing projects built with the 421a property tax break. IBO estimated wage requirements would cost the city an additional $4.2 billion, increasing affordable housing construction costs by 23 percent or $80,000 per unit.

The report, entitled “Prevailing Waste: New York’s Costly Public Works Pay Mandate,” also notes that the New York prevailing wage rates include fringe benefits, the entirety of which do not go directly to workers but instead are being used to bolster underfunded and struggling union pension plans. 

ABC opposes wasteful prevailing wage laws because they contain outdated job restrictions that do not match the needs of today’s competitive construction business environment. Prevailing wage requirements discourage many qualified small and minority-owned contractors from bidding on public projects. State governments’ complex and inefficient wage rate determinations and work restrictions make it difficult for them to compete with better-capitalized corporations.