Hail the Prevailing Wage
This is New York. We don't do "race to the bottom" here.
We don't invite in bottom-fishers and corner-cutters to build our buildings. And we don't scapegoat workers.
That's because we need the best. So we build the best.
As a Commercial Observer reader, the same goes for you, too.
You don't "race to the bottom" when it comes to staffing up your brokerage, your development company, or your investment firm.
Yet in the world of public-sector construction, prevailing wage laws have again come under attack from advocates of bottom fishing.
But prevailing wage laws are not just good for construction workers and the agencies undertaking public projects. These laws are also good for all New Yorkers.
For more than a century, New York State has maintained an important and progressive social compact: fair wages for fair work. The pay of workers engaged in public projects must align with local prevailing wage and benefit levels. Hard-working New Yorkers thus have access to good-paying jobs and proper protection from unsafe working conditions.
And with the State's FY 2018 capital budget exceeding $14 billion, it's critical to shake off faulty assumptions-and recognize that prevailing wage requirements also save taxpayers money.
New data now show how these rules ensure effective cost management on public projects.
The Economic Policy Institute, a nonprofit, nonpartisan think tank, recently completed a thorough cost-benefit analysis based upon independent, peer-reviewed research. It examined the work of academic economists nationwide who specialize in assessing the impact of prevailing wage laws. The analysis concluded that the policy carries little or no added burden for taxpayers. In fact, such laws increase tax revenues since better-paid construction workers pay more in sales and income taxes.
Similarly, in 2016, the Illinois Economic Policy Institute analyzed peer-reviewed studies nationwide. Seventy-five percent of them found that prevailing wages had "no statistically significant impact" on public costs.
And lower costs per hour for each worker doesn't automatically lower project costs. This is a logical fallacy, because project costs decline by hiring more-efficient, higher-pay workers. Such workers possess the skills to work faster-and their superior commitment to the job reduces turnover.
Plus, more productive workers are efficient because they're more likely to possess the skills and sophistication to work with first-class equipment and technologies.
This high-wage, high-skill approach is a common workforce management strategy called "efficiency wages." It minimizes project cost through superior efficiency and is a basic management concept listed on the syllabus of labor economics courses nationwide.
