Broad coalition fears negative outcomes from prevailing wage expansion

A broad coalition has come out in opposition to the expansion of prevailing wage applied to private projects that receive any form of public support.

The wide breadth of opposition represents how far reaching the disruption to New York’s economy from this mandate would be. In Buffalo, where construction costs exceed the national average and rent rates fall far below the national average, many incentives have been the key to making projects financially feasible. In nearly every case, public incentives account for less than 20% of project costs and would be entirely negated by the prevailing wage mandate. The expansion would put a near halt to the types of development and necessary incentives that have helped to revitalize our legacy city over the last 10 years.

This mandate would halt the revitalization of Buffalo’s historic fabric. Ten years ago, Buffalo was blighted by its abandoned historic structures and industrial polluted properties. The state’s brownfield clean-up program and historic structure funding, alongside the adaptive reuse program, has led the way in our city’s restoration. Under the proposed bill, all these programs would be negated by the mandated increase in costs, and halt revitalization.

Related: See why the Partnership opposes the prevailing wage expansion

The proposed mandate would substantially increase construction costs for affordable housing projects and result in fewer affordable units being built. Studies show requiring the payment of prevailing wages would increase construction costs by about 20% in Western New York. These additional costs would offset or exceed any public financial assistance incentives to construct affordable housing. Mary Robinson, CEO for the not-for-profit Habitat for Humanity, has stated that the mandate could force the organization to “serve fewer families.” Affordable housing project would not occur if not for these incentives.

The proposed expansion would hinder Minority and Women-Owned Businesses (MWBEs), and economic development programs geared toward low-income communities. Compliance with prevailing wage is administratively complex and can be costly. Small contractors, including many MWBEs, will not be able to absorb these costs the way large contractors can, and will be forced to forgo opportunity. In fact, the New York Chapter of the NAACP has come out against the mandate, stating that it would, “take good jobs and opportunities away from workers of color and MWBEs.”

Finally, wherever HUD financial assistance is expended for housing or community development, to the greatest extent feasible, economic opportunities are prioritized to Section 3 residents and businesses. The sporadic nature of securing public works projects would frustrate contractor’s designation under Section 3 of the HUD Act of 1968 that directs federal project funds to employers of low-income residents, causing more opportunity to be lost for hardworking people.

Despite a drive to increase renewable energy in New York, the state legislature’s proposal would only stymie the renewable energy sector. Both solar and wind projects rely on state subsidies to get built. Further, many community-owned solar facilities also rely on these incentives and would hurt communities trying to secure their energy future. Under such a legal scheme, New York businesses and residents would bear the cost-burden of the artificially increased price of renewable energy due to the prevailing wage expansion.

In so many ways, the prevailing wage expansion would frustrate the State’s other initiatives to revitalize Upstate New York’s lagging economy. It is vital that lawmakers understand how counter-intuitive this proposal is, and the dramatic cooling of development and employment that would ensue.

 

Join the Partnership in the fight against prevailing wage

Add your voice to those opposing the prevailing wage expansion by taking action through the Buffalo Niagara Partnership’s advocacy center.

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