Sparring in Albany Over Raising Wages to Build Lower-Cost Housing

by Manny Fernandez

Two seemingly like-minded political allies — labor unions and nonprofit developers of lower-cost housing — have taken opposing sides in Albany over a bill that would require the developers to pay construction workers the prevailing wage, essentially a union-level wage far higher than nonunion pay.

The developers, many of whom rely on government subsidies to build housing for low- and moderate-income families, say the bill would cut the production in half and increase rents at a vulnerable time for the industry, when the economic downturn has hampered the financing of low-cost housing. Supporters, however, argue that a prevailing-wage law would ensure quality construction and a decent standard of living for workers.

The bill, introduced in the Assembly in January and in the State Senate in April, would require developers of government-subsidized residential housing projects to pay the prevailing wage. It will be debated as part of committee hearings in Albany on Tuesday. Another bill in the Assembly and the Senate would require prevailing wages on projects financed by industrial development agencies.

Under state law, laborers on public works projects must be paid the prevailing wage, which varies according to the trade and location. The proposed legislation would expand the definition of public works to include all government-subsidized building projects by for-profit and nonprofit developers. Most workers who build subsidized low-cost housing in New York City are not currently required to be paid the prevailing wage. Projects receiving federal subsidies are required to pay it, under federal law.

“There is always arguing about what is public work and what is not public work,” Assemblywoman Susan V. John of Rochester, chairwoman of the Assembly’s Labor Committee, who introduced the bill, said in a phone interview on Monday. “This is an effort to try to clear it up.”

A report released last year by a nonprofit policy research group found that imposing prevailing wages on low- or moderate-cost housing projects could increase total development costs by about 25 percent and increase rents in a typical apartment by about $400 a month. The report was prepared by the Citizens Housing and Planning Council, which is made up of housing developers, construction company executives, bankers and academics.

The median nonunion wage for New York City construction workers in selected trades was $13.50 an hour in 2007, and the union median wage was $19.57, according to the report. Because of the increased costs associated with paying the prevailing wage, developers would need larger government subsidies to build the same number of units, according to the report.

“It will mean a lot of projects will not be feasible, or in order to make them feasible, they would be feasible for higher-income residents,” said Michael D. Lappin, president of the Community Preservation Corporation, a nonprofit lending consortium that has financed about 125,000 low-cost units around the state. “It will really have a direct impact on all the affordable housing being done. Much of that affordable housing is what has rebuilt New York’s urban neighborhoods.”

The New York State Building and Construction Trades Council of the A.F.L.-C.I.O., an influential labor group that represents the state’s major construction unions, has been pushing lawmakers to expand the prevailing-wage requirements for years.

“Is the cost of construction higher? Yes it is,” said Edward J. Malloy, president of the group. “But I think we deliver a better product, on time and in budget.”

Phillip Morrow, president and chief executive of the nonprofit South Bronx Overall Economic Development Corporation, which builds low-cost units, said the financial impact of paying the prevailing wage was only one concern. Mr. Morrow said he also worried that the nonunion, largely black and Hispanic work force that builds these projects would be replaced with mostly white union labor. “The unions don’t have the best record for employing minority workers and workers from the community,” he said.

Mr. Morrow said that if he had to pay the prevailing wage, his options would be limited. “We’re going to ask for more public dollars. In the Bronx, we don’t have the option of raising the rents. The market is not going to support these higher rents. We have to get more subsidy per unit.”

Opponents of the bill said federally financed projects receive additional money in order to pay the prevailing wage, but the proposed state legislation includes no extra financing. They said that because many of these projects receive private financing, they should not be considered public works, like schools or roads. “It’s absurd,” Mr. Lappin said. “Who thinks of public works as a 40-unit apartment building in the Bronx that needs some public help to keep it affordable?”

Assemblywoman John said developments such as Atlantic Yards in Brooklyn, a residential and commercial project for which the city and the state have agreed to provide subsidies, were clearly public works. “I do believe that it’s important that we uphold the provisions of our State Constitution that say that when we’re spending tax money, people are paid prevailing wage,” she said.

NYS AFL-CIO President Hughes On State Unemployment Insurance Legislation: NY’s Inaction Means Benefit Level Remains Lowest In Nation

Written by Administrator
Wednesday, 20 May 2009
New York State AFL-CIO President Denis Hughes today issued this statement following the state’s passage of Extended Unemployment Benefits (A8273/S4110):

Thanks to leadership from the Obama Administration, New York State has now added an additional 13 weeks of extended unemployment insurance benefits. This means thousands of individuals who have been victimized by the current recession and were on the verge of exhausting their unemployment benefits will continue to be eligible for unemployment in the near term. Congress and the Obama Administration’s swift and decisive action with regard to economic stimulus and unemployment benefits were intended to jump-start the economy and spur the states into action of their own.

Unfortunately, Governor Paterson and the State Legislature have yet to build on the President’s initiative by enacting necessary reforms at the state level. This includes increasing the state’s embarrassingly low maximum benefit, indexing that benefit and restoring our chronically underfunded Unemployment Trust Fund to solvency.

The New York State AFL-CIO looks forward to working with our state elected officials to improve our benefit, which ranks 2nd to last in the Nation in terms of wage replacement, and is the lowest of all of our surrounding states. The current maximum benefit of $405 per week has not been raised in a decade and amounts to just over $10 an hour, one of the lowest in the Nation. It is also important to increase the low unemployment premium paid by employers that has left our Unemployment Trust Fund insolvent, forcing New York to borrow an average of $90 million per week in order to fund our sub-par benefits.

Our unemployment system is set up to help struggling Working Families make ends meet when the economy cannot produce jobs. As a result, and in addition, the system has a great impact on the state’s economy as a whole. For example, unemployment insurance benefits provide Working Families the money needed to pay the mortgage, so in effect it helps our banks. The system provides recipients with money to help buy groceries and other necessities, so it helps our retail and Mom and Pop stores. And it helps our overall economy during a recession because it increases the tax base of our local communities when unemployed workers spend their unemployment benefits at the aforementioned local retail outlets.

Unfortunately, the Federal Government cannot do everything. Thanks to President Obama and Congress, the Federal Government did its part to help the unemployed. During the Great Depression it was the combined efforts of President Roosevelt and Governor Lehman that helped working New Yorkers. Now, we need our Governor and state legislature to take action themselves on the issues that only they can fix.

This includes an immediate increase in the maximum benefit rate of $405 per week to 50% of the average weekly wage. It means indexation of this benefit, so that Working Families who are victimized by a recession never again have to face a benefit structure that is outdated, and subject to the political whims of the times.

And finally, we need to be responsible and pay for this benefit, slowly and gradually increasing what employers pay, so that never again is the state forced to borrow billions to pay for those benefits. In the long run, this will save employers and taxpayers millions of dollars.

The New York State AFL-CIO is willing to continue to work with Governor Paterson and both houses of the legislature to pass meaningful Unemployment Insurance legislation that accomplishes the goals of helping individuals who have been victimized by the current recession, and bringing our economy out of this historic economic downturn.”

NEW YORK STATE COMMISSION ON ASSET MAXIMIZATION DELIVERS FINAL REPORT TO GOVERNOR PATERSON

Report Contains 27 Major Recommendations to Help Create Jobs, Generate Economic Activity, Benefit Colleges and Universities across New York State

Governor Calls for Creation of State Asset Maximization Board to Provide Oversight Process for Potential Public-Private Partnerships

Governor David A. Paterson today accepted the final report from the New York State Commission on Asset Maximization. The Commission was charged with broadly examining whether asset maximization can benefit the State, as well as whether any specific New York assets are suitable candidates for Public-Private Partnerships (PPPs). The final report contains 27 major recommendations to help create jobs, generate economic activity and benefit colleges and universities across New York State. Some of the key recommendations include: school construction and renovation in Syracuse and Yonkers; 300 bridge renovations in all corners of the State; wind power on the Great Lakes; and high speed rail.

In addition to outlining specific project ideas that could be effective long-term projects, the report also recommends the creation of a State Asset Maximization Board to screen, oversee and implement PPPs. The State Asset Maximization Board will serve as an entry point for new ideas, provide continuous oversight and transparency, and enable New York State to tap into New York’s best and brightest minds – across the public and private sectors. The Board would be unsalaried.

Read the entire press release: June 1, 2009 Press Release

Read the full report from the State Asset Maximization Board: SAM