What’s pushing prevailing wage into the 'Big Ugly'

Supporters of a bill that would require higher wages at state-funded projects are making a final push to get the proposal through the Legislature before the end of this year’s legislative session.

A June 11 rally outside the Capitol highlighted support among organized labor, elected officials and Gov. Andrew Cuomo for the proposal, which would require more recipients of state financial support to pay workers a prevailing wage.

Some Democrats are holding out on supporting the bill because they worry that it would hinder the construction of new affordable housing. However, if lawmakers prioritize renewing the state rent laws before they expire on June 15, that leaves little time for them to reach a deal on the prevailing wage, making it more likely that the proposal will be included alongside other issues like climate change and MWBE in a “Big Ugly” – a batch of bills that lawmakers would aim to pass before they adjourn for the year on June 19.

“There’s conversations going on at various levels to find a way forward so we have a measure that will pass by the end of session,” said Assemblyman Harry Bronson, sponsor of the legislation in the Assembly. “My preference is to do it outside a large three-way agreement – only because in doing so we can get a better policy statement for the whole state, but I’m also a realist.” The state constitution mandates that workers on “public works” receive a prevailing wage, which is the rate of compensation that a sample of workers within a specific trade receive within a locality, according to the state Department of Labor.

The bill would expand the definition of “public works” to include virtually anything that receives some form of state financial support, whether it is grants or subsidies. Opponents of the bill have said that it would drastically increase the costs of construction projects and deter development of affordable housing, undermining a top priority for many Democratic lawmakers. Similar concerns have also been raised about how expanding the use of the prevailing wage would affect state renewable energy projects where the “cost drivers are unique,” Bronson said.

Lawmakers aim to resolve these concerns by allowing exemptions to the proposed prevailing wage rules based on either the size and location of a project, or the types of financial assistance it receives from the state. The Wall Street Journal reported on June 6 that $1 million was a possible threshold below which projects in New York City would not be subject to the new wage rules. Lawmakers have used similar approaches when adopting minimum wage rules for different areas of the state, which depended on the size of a company. Lawmakers could also decide to make certain types of grants or subsidies exempt from prevailing wage rules. A commission, the Journal reported, could be used to determine what types of support from industrial development agencies would require the prevailing wage.

While the bill would apply to projects built with both union and non-union labor, critics have also alleged that more needs to be done to ensure that public dollars promote diversity within organized labor. An analysis by the Fiscal Policy Institute states that about 55 percent of blue-collar union members in New York City are minorities, compared to about 36 percent 25 years ago. Bronson said the issue of ethnic diversity in construction would be better address through MWBE legislation that lawmakers hope to vote on this week.

Cuomo has listed passage of the prevailing wage issue as a top priority in recent months, though he has not specifically said how he would want to change the present bill. While the governor did not bring the issue up at a June 11 press conference, New York State Department of Labor Commissioner Roberta Reardon spoke on his behalf at the rally outside the Capitol, signalling that the administration is still seeking to reach a deal on the issue. “He has called for strengthening New York’s prevailing wage laws to ensure greater responsibility for vendors on our public projects,” she said of the governor at the rally.

So it appears likely that an expansion of the prevailing wage will be approved before lawmakers adjourn on June 19. Even critics concede that if lawmakers do not pass a standalone bill in the next week, a “Big Ugly” is likely to include some form of the proposal. However, opponents of the bill are making a last-ditch effort of their own to stop the bill. This mainly consists of raising the same arguments against the bill as before, including how the proposal would increase costs and disincentivize economic development.

A lack of public hearings on the issue and the rush to get the bill passed by the end of session also means that final details of the bill will be determined behind closed doors, according to Brian Sampson, president of Empire Chapter of the Associated Builders and Contractors. “The potential impact of this bill, as drafted, could stop economic development in parts of this state for a long time,” he said. “Why aren't we talking about this bill more openly, and having more discussions and dialogue about it, instead of wrapping it up with a pretty little bow in the ‘Big Ugly?’”

Clarification: An earlier version of this story mentioned that paid family leave laws depend on the size of a company. This is true on the federal level, not the state level.