How NY Comes Back From Last Place
NY Ranked LAST in Pro-Construction Growth - Here Are Three Ways to Fix It
In her 2024 address, Governor Hochul renewed her commitment to building more affordable housing units and fixing our crumbling infrastructure; we fully support these goals. The current construction climate of New York,k unfortunately, means that these lofty goals will once again end in failure. Currently, NY ranked DEAD LAST 51/51 for pro-construction growth. Despite that, this ranking can quickly be improved with a few easy changes.
1: Stop Using Project Labor Agreements (PLAs)
PLAs are mandates that force contractors to hire most of the workforce for a project, typically three out of every four employees, from the union hall. Non-union companies won't bid on the work when a PLA is attached to these projects.
Cornell Professor Paul Carr conducted a study to understand the relationship between the final cost of a project and the number of bidders. He analyzed hundreds of public works projects in New York and found that reducing the number of bidders by just 2 adds more than 4% to the final project cost.
2: End the Use of Prevailing Wage (PW) Mandates
Prevailing wage mandates like PLAs also add significant costs to construction. According to the Empire Center for Public Policies study "Prevailing Waste" (https://www.empirecenter.org/publications/prevailing-waste/) prevailing wage:
"Drives up total construction costs by 13 to 25%, depending on the region, which will translate into billions of dollars in added taxpayer-funded spending under current multi-year capital plans."
Adding between 13 and 25% to the cost of an affordable housing project will put enough strain on budgets to either cause that project to be scaled down or abandoned altogether. That cannot happen; we agree with Governor Hohcul that the state must create 800,000 new affordable housing units in New York. That will not get done with PLA and PW mandates.
3: Repeal Scaffold Law
New York State is the only place in the country with this outdated and antiquated law, and we all pay a considerable price. Labor Law 240, better known as the "Scaffold Law," was passed and hasn't been updated since the 1800s. The law holds contractors liable for 'gravity-related' injuries that happen on the job. That means there is virtually no defense from a lawsuit, even if the worker's gross negligence contributed to the accident. The Scaffold Law costs an estimated $785m in public dollars annually.
A coalition of National, statewide, and local organizations who support Scaffold Law reform, such as Habitat for Humanity, the New York Conference of Mayors, and the New York State School Boards Association, released the following statistics:
The New York School Boards Association estimates that the Scaffold Law costs schools in Upstate New York $200 million yearly.
In New York City, the School Construction Authority (SCA) paid $240m in insurance costs, nearly triple that of the previous year, despite an excellent safety record.
New York has the nation's highest per capita lawsuit costs. In a given year, more than half of the highest lawsuit payouts were due to the Scaffold Law.
Supporters of the law claim it boosts safety on job sites, but that is untrue. Illinois repealed its Scaffold Law in 1995, and construction-related fatalities decreased by 28% over the next six years. The truth is that every single state resident will monetarily benefit from the low taxes that would result from the Scaffold Law being repealed.
ABC fully supports the budget goals laid out by the Governor. Our members are committed to doing what we can to see them accomplished. That's why fixing these glaring problems in our construction industry is so important. These three changes would go a long way towards addressing the construction affordability crisis New York is currently experiencing and improving its residents' quality of life.