suny-poly-air-150x150-3533904The state subsidy package for a just-announced $1.5 billion chip fab plant outside Utica includes a sweet giveaway that will drive up the project price tag—at taxpayer expense—to give an edge to union contractors.

Cree, Inc., a Durham, NC-based semiconductor manufacturer, has “agreed” to voluntarily be “subject to the prevailing wage requirement” in constructing a silicon carbide fab on SUNY Polytechnic Institute’s Marcy campus, according to a passage buried in the press release from Governor Andrew Cuomo.

That agreement no doubt was greased by a $500 million state capital grant to help underwrite construction costs—which, in turn, will add to a growing, multi-billion dollar pool of tax-backed bond proceeds administered by the Empire State Development Corp. In other words, it’s borrowed money—shifting part of the cost for the gift to this private company to future taxpayers.

The union cartel label

The prevailing wage law, Section 220 of state Labor Law, requires contractors on public works projects—generally infrastructure and buildings owned by the state and local governments—to abide by all the compensation terms set in local union contracts. “Prevailing wage” is a misnomer, however, since the contract terms imposed by Section 220 are neither truly prevailing, since unions represent barely one-fifth of New York construction workers, nor limited to the “wage,” since the mandated compensation levels include health insurance, pension and supplemental benefits. Section 220 also effectively grafts union job title limitations and work rules onto covered projects, eroding productivity.

Section 220 has been estimated to add at least 14 percent to project labor costs in Central New York—which, on a project the size of Cree’s 480,000 square foot chip fab, could easily range from $50 million to $100 million added dollars. And that’s likely where the $500 million capital grant comes in: Cree, which would never voluntarily inflate construction costs to indulge unions, has agreed to the Section 220 mandate because the taxpayers are picking up enough of the tab.

This isn’t the first time Cuomo has dangled public funds to secure Section 220 work for unions: his abortive attempt to woo Amazon to Long Island City in Queens included an almost-identical $505 million grant, seemingly tailor-made to subsidize the company’s added cost of hiring the governor’s allies in the unionized building trades sector.

To the extent Section 220-mandated compensation is higher than the norm among construction workers, it doesn’t even flow directly into workers’ pockets. For example, for a laborer in the Utica region, half of the Section 220-dictated “wage” of $46 would be diverted into benefit funds.

As E.J. McMahon noted in this space a few weeks ago, updating a key point in the Empire Center’s 2017 “Prevailing Waste” report, many construction union pension funds are dangerously underfunded. They need larger contributions from union paychecks, and are pushing up Section 220 mandate public works wages as a result.

That’s a big part of why union executives are begging state officials to force more builders to pay it.

About the Author

Ken Girardin

Ken Girardin is the Empire Center’s Director of Strategic Initiatives.

Read more by Ken Girardin

You may also like

Cahill Charges Are An Indictment Of Cuomo’s Policies

Yesterday’s indictment of the state’s top construction union official on federal corruption charges raises a big question: if private companies are paying bribes to avoid having to work with certain construction unions, why is Governor Cuomo insisting that the state keep doing it? Read More

Lawmakers Look To Dump More Public Cash On Teamsters

State lawmakers this week moved to make public construction more expensive in a bid to steer work to one of New York’s struggling construction unions. Read More

Union pay remains non-“prevailing”

Barely one in five private construction workers in New York State was covered by a union contract last year, according to newly released statistics that call into question a state public works "prevailing wage" mandate that assumes 30 percent union coverage of building trades occupations across New York. Read More

Offshore wind to soak upstate

Upstate electricity customers could shell out more than $1 billion to cover the state’s initial round of subsidies for offshore wind turbines, the Cuomo administration’s energy agency has now revealed. Read More

Cuomo makes case against PLAs

In cutting the figurative ribbon on a big Capital Region highway project, Governor Andrew Cuomo made a convincing argument against his own policy of steering state work to building trade unions. Read More

The pension piece of “prevailing wage”

New York’s AFL-CIO has issued a statement blasting the “misinformation campaign” by business groups fighting organized labor’s push to impose union pay levels on private developments receiving public subsidies. There is, indeed, plenty of misinformation wafting around this issue—but virtually all of it originated  in the union camp. Read More

One-house megabucks

With the clock ticking toward the April 1 start of the next state fiscal year, Assembly Democrats just laid out their budget preferences—and, as usual, they add up to a massive tax-and-spend fantasy. Read More

New data point up “prevailing” myth

Barely one in five private construction workers in New York State was covered by a union contract last year, according to newly released statistics that call into question a state public works "prevailing wage" mandate that assumes 30 percent union coverage of building trades occupations across New York. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries:

Press Inquiries:


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!