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2024 Budget Testimony: Economic Development

Thank you for the opportunity to share our testimony with you and the members of the Senate and Assembly on economic development in our state.

The Associated Builders & Contractors, Empire State Chapter (ABC) is a construction trade association representing hundreds of open shop contractors, employing tens of thousands of workers across New York State. Our organization promotes fair and open competition and provides education and world-class safety services for our members. Additionally, we advocate for or against legislation and regulations impacting New York construction costs.

We applaud Governor Hochul for her proposed investments to bring economic development to our state, such as funding for Regional Economic Development Councils, $100 million for the Downtown Revitalization Initiative, and funds for the New York Forward Program. We also support her proposed funding of other major projects throughout New York. These investments can result in thousands of new jobs if leaders in Albany take the necessary steps to protect their investment by reducing the cost of construction in New York.

New York State must avoid falling into the same trap as before by mandating harmful Project Labor Agreements (PLAs) on state-funded projects. A PLA is a pre-hire bargaining agreement that forces contractors to hire most of their workforce from the union hall, typically 3 out of every 4 workers. When a local, qualified contractor is forced to use labor from the union hall instead of people they currently employ, they choose not to bid on the work. It is unfair to ask them to turn their back on people who have supported the company for years and have a vested interest in seeing it succeed. Asking any business to exclude 75% of their workforce would be ridiculous. Why is this so acceptable in construction?

This reduced competition leads to significant cost increases. A study by Dr. Paul G. Carr, P.E. looked at hundreds of public works projects in New York State and found that reducing just two bidders added more than 4% to the bid cost.

There have been substantial expansions of the use of mandated PLAs, and the fact is that unions in New York don’t have the manpower to fulfill the workload. PLAs have been mandated on the following major projects:

  • Micron
  • Buffalo Bills Stadium
  • Hunts Point Access Improvement
  • I-81
  • Kensington Expressway
  • Almost every publically funded renewable energy project in the state

Experts agree that when you lower the number of bidders, you increase the project's cost. Using the Buffalo Bills’ stadium as an example, this project has a projected cost of $1.4 billion. Using Paul Car’s Study means the PLA will add approximately $56,000,000 to the project's cost. New Yorkers are already facing record inflation, skyrocketing utility costs, and some of the highest tax rates in the country. We cannot afford to compound our affordability crisis with self-inflicted wounds.

New York is also experiencing a mass exodus; our elected officials can’t continue to compound the problem. According to 2022 Census numbers, 101,984 people left, the largest decrease in the nation. That’s coming from 180,341 people leaving in 2021 and a 319,020-person drop in 2020. Something must be done to keep people in this state. Making construction and housing projects more expensive by attaching expensive and exclusionary mandates shows a lack of awareness about the problems that affect our state. New York is too expensive to live and do business in, and as a result, there are fewer and fewer “good” job opportunities. Young people and companies are leaving New York for better opportunities elsewhere; our leaders need to read the writing on the wall and start using policies that encourage investment and improvement, or the state will continue to collapse slowly.

In a 2023 report, New York ranked dead last for pro-construction growth, 51 out of 51. The Scorecard reviews and ranks state-specific information significant to the construction industry, such as job growth rate and workforce development. That rating is primarily fueled by costly mandates such as PLAs, which increase the cost of construction, creating a nightmare for those in the construction industry. Despite this ranking and overwhelming evidence that PLAs and other mandates negatively impact the industry, our legislature still regularly pushes for them. New York is standing on a ledge right now, and our elected officials are more interested in checking their bank accounts rather than putting out a hand to help.

New Yorkers are leaving. We need to stop this if there is any hope of economic recovery. Stop implementing PLAs, which increase the tax burden on New Yorkers, and begin taking steps to make construction more affordable. This would be an enormous improvement to the state’s business climate. With a housing crisis, affordability crisis, and large-scale population decline happening right now, it’s time for Albany to start taking care of the people who voted for them.