construction-150x150-1847218New York’s local governments are falling behind in “meeting their responsibilities to adequately maintain and improve” their physical infrastructure, says a new report from state Comptroller Thomas DiNapoli’s office.

However, as the report points out, the problem isn’t just a lack of money. For example, in the road and bridge area, construction-related costs are rising in part because of the state’s own longtime insistence on pegging wages paid by all contractors to the supposedly “prevailing” union rate in each region. The money graf from the comptroller’s report (p. 10):

Prevailing Wage Rates – Under New York State Labor Law, contractors and subcontractors must pay the prevailing rate of wage and supplements (fringe benefits) to all workers under a public work contract. Increases in prevailing wage rates impact local governments’ construction costs, as the increases in costs do not necessarily correlate with increases in available funding. Upgrades to waste water and water treatment plants as well as general construction and large paving projects are particularly affected.38 For example, prevailing wage rates in Albany County for Carpenters – Heavy Highway, Electricians, and Plumbers increased 33, 36 and 40 percent, respectively, over an eight year period from 2005 through 2013.

So, even DiNapoli-—a politician warmly embraced by labor unions—is willing to at least implicitly recognize the obvious: local governments could stretch their dollars further if they weren’t stuck with the prevailing wage mandate in its present form.

New York is not unique in having a prevailing law; the federal government still enforces the Depression-era Davis-Bacon Act, after all. However, New York is unique in basing the prevailing wage rate for every trade on union contracts.

Under state law, the prevailing wage for any given trade is based on a union contract that covers at least 30 percent of the workers in the designated trade and locality. The statewide unionization rate is just 24 percent. While that threshold is met in the metropolitan New York area, “it is surely going unmet in many cases” upstate, according to “The Complex Worlds of New York’s Prevailing Wage,” a 2012 report from the Center for Urban Real Estate at Columbia University.

Bottom line: meeting the infrastructure challenge isn’t simply a matter of spending more, but of spending more intelligently.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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