Brighton Town Board member Ray Tierney testifying at the COMIDA public hearing for subsidizing a hotel renovation in Brighton. Last year, under the guise of job creation, the Brooks administration gave tax breaks to corporations totaling millions of dollars. Instead of creating jobs, thirty percent of the businesses actually shrank their workforces after pocketing the tax breaks.
Now COMIDA is considering a deal to subsidize the renovation of a hotel in Brighton. The tax breaks add up to $395,000 and only one job is required to be created. The Brighton town board opposes the deal. Will the Brooks administration listen?
Tell COMIDA to reject the deal. Join Metro Justice at the next COMIDA Board meeting on May 15 th at 11:30am at the Ebeneezer Watts building, 49 South Fitzhugh Street, downtown Rochester.
Prevailing Wage Rules – Useful or Exorbitant?
Edited by John Keevert
Metro Justice continues the fight for corporate accountability, working with the local coalition, Initiative for Development Accountability (IDA). The coalition is calling for the state to require the use of local labor and pay scales based on prevailing wage rates for all construction projects aided by Industrial Development Agency tax breaks. New York State Labor Law now requires that "prevailing wages" and "supplemental benefits" be paid on most public works construction projects. In practice, prevailing wage rates and benefit contributions are usually those established by collective bargaining agreements covering at least 50% of workers in a given area. A superficial look might lead one to think this just raises costs to the public, but a careful examination yields a different conclusion.
James A. Parrott, Ph.D., Chief Economist, Fiscal Policy Institute, argues “Prevailing Wage is Good for the Economy.” In the report he writes, “Research shows that skilled construction workers are 20 percent more productive than less skilled workers. Higher productivity means lower unit costs. When workers are better paid, construction companies save because they have less need for supervisors or unskilled labor, and recruitment costs are less. In addition, higher wages encourage companies to use labor-saving technology and more innovative work practices to reduce unit labor costs without reducing wages. Studies of the repeal of state prevailing wage laws have found that the consequences of repeal have included lower quality construction and increased cost overruns.”
Furthermore, “Most construction workers change employers when they move from construction project to construction project. In this context, construction employers have little incentive to invest in worker training. Economists refer to this as a "market failure" since the normal working of the market leads employers to under-invest in worker skills. Using data for a large number of states from the U.S. Labor Department's Bureau of Apprenticeship and Training, economist Cihan Bilginsoy found that state prevailing wage laws increase the supply of apprenticeships and worker skills.”
Safety is also a concern, since “Construction is a dangerous industry. Nationally, construction accounts for about 6% of private sector employment but 23% of workplace fatalities and about 10% of non-fatal occupational injuries. Research shows that state prevailing wage regulations reduce injuries on construction sites and reduce worker compensation costs.”
Health care coverage is often absent since many jobs involve small employers, short projects, and seasonal employment. Parrott reminds us “Collective bargaining overcomes this ‘market failure’ by establishing multi-employer and jointly managed health and welfare funds that provide health and pension benefits. By establishing wage and benefit standards, prevailing wage requirements take the costs of providing health and pension benefits out of the bidding process.” Without health care coverage, costs are shifted from the company to the community when workers use Medicaid or receive uncompensated care at safety-net hospitals.
Parrott concludes, “An extensive economics literature shows that prevailing wage in construction means more cost-effective construction, and more skilled and better-paid workers. It discourages construction companies from competing based on driving down wages and cheapening the quality of construction, i.e., from a "race to the bottom." Prevailing wage is good for construction employers and workers and makes good economic sense overall because it fosters higher construction wages, greater health and pension coverage, greater apprenticeship opportunities for less educated workers, and the more effective functioning of the construction labor market overall. Prevailing wage standards are a fundamental building block for a strong local, "high-road" economy based on high skills and high wages.”
Prevailing wage and local labor requirements ensure that more of the money spent on public construction projects stays in the community, and gives workers, who may be your neighbor, a decent standard of living.