New York’s public building costs are the most expensive in the world partly because taxpayers are subsidizing skyrocketing pension and health care costs for the construction industry, according to a study released on Monday.
State and local governments paid double the 17 percent inflation rate to cover “prevailing wage” costs for union construction workers on public works projects from 2007 to 2017, said the report by the Empire Center for Public Policy.
A lot of those funds covered fringe benefits, which zoomed even for laborers — the building trades’ lowest- paid workers — from $22.74 to $40.60 an hour.
By comparison, wages for those same workers jumped from $34.89 to only $41.50 an hour.
In New York, fringe benefit costs now account for 41 percent of prevailing wage compensation, double the 20 percent for all private construction workers, the study said, citing U.S. Labor Department data.
“The law effectively provides a taxpayer bailout of under-funded union pension and retiree health care plans,” said Empire Center’s E.J. McMahon.
“The law drives up building construction costs by at least 13 to 25 percent….the actual payments for fringe benefits alone have translated into hundreds of millions of dollars in added taxpayer cost.”
Under state law, contractors bidding on government-funded building projects must abide by the prevailing wages for union contracts– which includes fringe benefits as well as wages.
On average, 56 percent of the increase in prevailing wage compensation covered supplemental or fringe benefits over the past decade for all 228 job titles in metro areas.
Last year, a survey by Turner&Townsend found that New York City was the most expensive city in the world for construction, boosted in part by the Big Apple’s average $100-an-hour wage for construction workers.