THE CPC WAY / Housing Policy and Legislation

Prevailing Wage: A Price We Can’t Afford

By Rafael E. Cestero, President & CEO

The New York State Legislature has proposed big changes to our rent regulation laws with the intent of protecting tenants. We believe many of those proposals will have serious unintended consequences that would in fact end up harming tenants by stripping away the ability of owners to find financing that would keep their properties well maintained. For those interested, the New York Daily News sums it up nicely.

That said, while the Legislature focuses on protecting tenants, they’re also looking to protect another class, though one that many would argue doesn’t need protecting in the way they’re intending; the construction industry.

The push for a mandated Prevailing Wage on State subsidized projects, which would regrettably include affordable housing projects, doesn’t make sense. As the debate over rent regulation reform has reached a boiling point, prevailing wage has taken a backseat. But with its potential impact on the creation and preservation of affordable housing across our state, we shouldn’t be taking our eyes off of this issue.

In February, I joined five former commissioners from the NYC Department of Housing Preservation and Development (HPD) in an op-ed in the New York Daily News making the case against prevailing wage for affordable housing. A few weeks later, five former commissioners from New York State Homes and Community Renewal (HCR) issued the same warning in an op-ed on Syracuse.com.

The argument for prevailing wage is that taxpayer funded projects should provide the people building them with good paying jobs. That’s something I wholeheartedly agree with, but for many construction trades that’s already the case.

The big takeaway is that the State’s prevailing wage scale would push already substantial wages into much higher territory, drastically increasing the costs of creating affordable housing.

In my February op-ed we cited: U.S. Department of Labor (DOL) data shows that the New York City mean wage, for full-time work in 2018, for bricklayers was approximately $82,000; under prevailing wage, that would jump to $114,600. A plumber made $78,000 in 2018; under prevailing wage, that would increase to $141,000.

In New York City, the current administration has an ambitious plan to build and preserve 300,000 affordable units. If prevailing wage were implemented, the result would be to either add approximately $875 million in additional costs (taxpayer funded) to the City's affordable housing program annually, or to reduce the amount of affordable housing created and preserved by 9,200 units annually.

New York is a city that has been in the midst of an affordable housing crisis for decades, where the private market - left to its own designs - only builds for the wealthy, and in a political era where affordable housing subsidies are being slashed left and right. We simply can’t afford to spend more to build less.

Everybody deserves fair pay for an honest day’s work – that’s something we can all agree on. And we should recognize that there are some construction jobs where the pay significantly lags. Instead of using prevailing wage to increase all construction jobs across the board, maybe it’s time to consider a minimum wage that would bring the lowest paid jobs up to par, without over-inflating the pay at the highest end of the spectrum?

I encourage you to read both of the op-eds I mentioned earlier (Daily News and Syracuse.com). They offer a detailed and clear-eyed look at the issue using independent data sources, and they offer a look at other unintended consequences of prevailing wage.

Additionally, the nonprofit housing research organization, Citizens Housing and Planning Council (CHPC), helped to pull together some of data used in the op-ed. They’ve recently created a Prevailing Wage Portal on their website to help provide clarity to the issue and public access to multiple data sources.

By Rafael E. Cestero, President & CEO
Rafael E. Cestero is the President and Chief Executive Officer of the Community Preservation Corporation (CPC), and a member of its board of directors.

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