What is the Prevailing Wage?

In one shape or form, a mandate for “prevailing wages” has been associated with public works projects since the 19th century.  The law, in its current form, requires all contractors pay their workers a specific rate of pay for the type of job they are performing for any form of public work.  The New York State Department of Labor (NYSDOL) is responsible for calculating the prevailing wage for state and local government projects throughout the state – except in New York City, where the city comptroller publicizes prevailing wages.  The NYSDOL derive the wage schedules from labor union contracts covering specific building trades.

 

While the essence of the law is good in nature, making sure workers get paid a fair wage for the work they are performing, what actually is occurring is another story.  The law defines the prevailing wage as the amounts set forth in union contracts covering at least 30 percent of workers in specialized building trades titles in a locality.  Because these wages are based off union contracts, it also includes high-priced union fringe benefits, which can equal or even exceed a worker’s hourly cash pay.

 

With the NYSDOL including the costs of these fringe benefits in their prevailing wage schedules, it significantly increases the cost of public works projects across the state costing tax payers millions of dollars.  In a recent study conducted by the Empire Center, the impact on total construction costs comes to at least:

 

  • 13 percent more in the Albany-Schenectady-Troy area;
  • 14 percent more in the Rochester and Syracuse metro areas;
  • 15 percent more in the Dutchess-Putnam County area;
  • 20 percent more on Long Island and in the Buffalo metro area;
  • 25 percent more in the New York City region; and
  • Approximately 15 percent more in the Greater Binghamton region

 

It is expected that these cost estimates are on the low side, since the baseline used to compute them were regional medians of wages for all non-residential construction workers, including those paid union scale.  So if just using the paid union scale, these costs would be much higher.

 

Every year, including in 2017, there are efforts on the state level to broaden the definition of public work and expand the reach of the prevailing wage to more projects across the state.  Just in 2017 alone there were 2 bills introduced in the Senate and Assembly that would expand the prevailing wage to off-site fabrication of goods used on a public works job site and expansion of public work to all projects “paid for in whole or in part out of public funds.”  Fortunately these bills were never approved by the state legislators in the 2017 session.  It is expected that more bills similar to these will pop up again in 2018.

 

As taxpayers in New York State, we all owe it to ourselves to be educated and informed on this topic, in order to know where our taxpayer dollars are being spent.  It is also important to know the specifics so when bills come up next year to expand Prevailing Wage, we can form an educated opinion on those bills.  If you are interested in learning more about the prevailing wage in New York State, read the Empire Center’s study at: https://www.empirecenter.org/publications/prevailing-waste/

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