New York’s Costly Public Works Pay Mandate
PREVAILING WA$TE
What you’ll learn from this report:
ü State and local government construction costs are inflated by New
York’s “prevailing wage” law, which requires contractors on public
projects to pay their workers the amounts required by union
collective bargaining agreements.
ü The “wage” mandated by the law includes expensive union fringe
benefits, which can approach or exceed the cost of hourly pay.
ü The law also effectively requires contractors on public projects to
organize and assign work as required by inefficient union rules.
ü The law drives up total construction costs by 13 to 25 percent, de-
pending on the region, which will translate into billions of dollars in
added taxpayer-funded spending under current multi-year
capital plans.
ü The law is supposed to apply only when union contracts cover at
least 30 percent of the workers in a given building trade in a given
“locality”—but the New York State Labor Department doesn’t verify
that the threshold is being met, and localities are defined on the
basis of union jurisdictions.
ü The public works pay mandate effectively serves as a taxpayer
subsidy to shore up underfunded construction union pension and
welfare plans.
ABOUT THE AUTHORS
E.J. McMahon is research director of the Empire Center. His professional background includes
more than 30 years of work in both the private and public sectors as an Albany-based analyst and
close observer of New York State government, during which he has authored or co-authored
major studies on the state budget, tax policy, public pension reform, collective bargaining, and
population migration in New York. His past positions included director of minority staff for the
Assembly Ways and Means Committee and deputy state tax commissioner for tax policy analysis.
He also is an adjunct fellow with the Manhattan Institute for Policy Research.
Kent Gardner leads the economics and public finance practice of the Center for Governmental
Research, a 501(c)(3) non-profit founded by Kodak’s George Eastman in 1915. Dr. Gardner brings
a quarter century of experience in state and regional economic analysis, assessing the impacts of
public policy and supporting local government reorganization in New York and neighboring
states. In addition to his duties at CGR, Gardner is Adjunct Professor of Health Policy at the
Rochester Institute of Technology. He holds BA, MA and Ph.D. degrees from the University of
Wisconsin at Madison.
PREVAILING WASTE
New York’s Costly
Public Works Pay Mandate
By
E.J. McMahon and Kent Gardner
Empire Center for Public Policy
www.EmpireCenter.org
Cover illustration by Mike Shelton
© 2017 Empire Center for Public Policy, Inc.
CONTENTS
EXECUTIVE SUMMARY
1
1. ORIGINS AND BACKGROUND
3
Empire State mandate
4
Figure 1. Union Membership and Workforce Coverage in
New York's Private Construction Industry, 1983-2016
5
“Wages”— and then some
6
2. HOW THE WAGE MANDATE AFFECTS COSTS
7
Union practices and productivity
7
Fungible “localities”
9
3. MEASURING THE COST IMPACT
10
Less affordable housing
10
Other recent studies
11
Our methodology
11
Table 1. Occupational Employment Shares, Nonresidential Construction
12
Methodology Note: a thumb under the scale
13
Interpreting prevailing wage determinations
14
Impact on total project cost
14
Table 2. Regional Impact of Labor Cost Differentials on Total Project Cost
15
Implications
15
Big Apple premium
16
Figure 2. Union Pay Scales for Common Building Trades
New York, Chicago, Los Angeles and Boston, 2015-16
17
4. THE FRINGE FACTOR
18
Why are union benefits so pricey?
18
Digging a hole
19
Per-hour impact
20
Table 3. A Prevailing Pay Breakdown
21
Table 4. Financial Status of 25 Top NY-Based Construction Union Pension Funds
22
Shoring up a flawed model
23
A nationwide problem
23
A bad benefit fit
24
CONCLUSION
25
APPENDIX A
i
APPENDIX B
iii
EXECUTIVE SUMMARY
New York State, its local governments and public authorities are committed to
spending tens of billions of dollars on public works in the next five to 10 years. But a
sizable chunk of that money will be spent unnecessarily—subsidizing the above-
market compensation of a shrinking but privileged cadre of construction workers.
The culprit is New York’s requirement, rooted in the late 19
th
century, that contrac-
tors pay the local “prevailing wage” on publicly funded construction projects.
The phrase is both antiquated and misleading—since the pay levels mandated by the
law are neither truly prevailing nor limited to wages, in the normal sense of either
word. The law defines “prevailing” as the amounts set forth in union contracts cov-
ering at least 30 percent of workers in specialized building trades titles in a locality.
And the mandated “wage” includes high-priced union fringe benefits, which can
equal or even exceed a worker’s hourly cash pay.
In an era of increased emphasis on transparency
in government, the process for determining and
implementing New York’s prevailing pay man-
date is extraordinarily opaque. For example, the
Labor Department does not release contract doc-
uments that form the basis for setting the wage.
And it apparently does nothing to verify that the
30 percent union coverage threshold is actually
being met in all localities.
To estimate the net impact of the law on public works project costs, this report calcu-
lates total building construction costs at prevailing union pay rates, compared to
median private-sector construction wages in major metro areas of New York State.
Based on employee compensation differences alone, we find that the prevailing
wage law has a significant cost impact throughout the state, varying by area and re-
gion. The impact on total construction costs, we estimate, comes to at least:
• 13 percent more in the Albany-Schenectady-Troy area;
• 14 percent more in the Rochester and Syracuse metro areas;
• 15 percent more in the Dutchess-Putnam County area;
• 20 percent more on Long Island and in the Buffalo metro area; and
• 25 percent more in the New York City region.
These cost differential estimates are surely on the low side, since the comparative
baselines used to compute them were regional medians of occupational wages for all
non-residential building construction workers, including those paid union scale.
Applied to New York’s current and projected capital budgets, these findings trans-
late into billions of dollars in excess costs over the next few years. This, in turn, trans-
lates into both fewer projects and higher taxes, increasing the challenge of making
the Empire State a more affordable, attractive and competitive place to live, work
and do business.
The “prevailing wage”
law adds billions to tax-
funded capital costs by
mandating that labor
rates on public works
projects match the pay
scales in union contracts.
PREVAILING WASTE
2
Not just wages
The law doesn’t just put more cash into the pockets of current workers. By under-
writing union fringe benefit rates, it also subsidizes high-priced construction union
pension and welfare plans—most of which are grappling with long-term funding
shortfalls exacerbated by aging demographic profiles. Taxpayers are simultaneously
supporting future pension benefits earned by current workers and bailing out under-
funded pension plans for retired workers.
As shown in this report, according to the most recently available federal filings:
• Twenty-five top New York-based construction union pension funds covering
nearly 188,000 workers, retirees and their beneficiaries had unfunded liabili-
ties totaling nearly $12 billion, and most of the pension funds had less than
half the money needed to make good on their benefit promises to current and
future retirees, when measured on a market-rate basis.
• One-third of employer contributions to construction union pension plans
were needed to cover the actuarially determined “normal” cost of benefits
earned by active workers. The rest—two thirds of pension contributions—
were billed in order to cover the plans’ unfunded liabilities.
• Employer contributions required solely to backfill union pension and welfare
fund liability shortfalls can account for more than 10 percent of the total
hourly compensation required by the prevailing wage law.
The social contract obligation to past generations is a serious one, of course. But the
high and rising cost of meeting that obligation for unionized building trades is never
acknowledged when prevailing wage policy is discussed in New York.
Beyond higher compensation, the prevailing wage law imposes added contract ad-
ministrative costs and union work rules that can erode productivity. While difficult
to quantify, the productivity impact of work rules should be considered by policy-
makers as a potential counterweight to claims that union members save money
through superior, more efficient workmanship. As also shown in this report, the un-
ion pay scales for New York City’s construction trades easily exceed those even in
other high-cost, union-friendly cities such as Boston, Chicago and Los Angeles.
In addition to Governor Andrew Cuomo’s recent push to expand the prevailing
wage law to New York City affordable housing projects, some state lawmakers want
to further widen the law’s reach. For example, as of 2017, two Senate Republicans
joined with two members of that chamber’s Independent Democratic Conference to
co-sponsor legislation applying prevailing wage requirements to all projects “paid
for in whole or in part out of public funds,” including those receiving tax-exempt
financing through industrial development authorities.
1
The findings of this report
highlight the enormous potentially added expense associated with such proposals.
New York’s prevailing wage mandate is rooted in the state Constitution, but the
costly details are stipulated in Section 220 of the state Labor Law. The final section of
this report lists Section 220 reforms that will allow many more construction firms
and workers in New York to compete for public works contracts while paying wages
reflecting the truly “prevailing” labor market conditions across the state.
New York’s Costly Public Works Pay Mandate
3
1. ORIGINS AND BACKGROUND
Laws mandating “prevailing wages” for public works projects originated on the
state level in the late 19
th
century, a period marked by rapid industrialization, in-
creased worker mobility across state lines, and an influx of foreign immigrant labor.
New York was the second state to pass such a law, in 1894, and others quickly fol-
lowed suit.
The federal government’s prevailing wage law can be traced to a 1927 project on
Long Island, where a non-union Alabama builder won the federal contract to build
the Northport Veterans Bureau hospital. Because it was federally sponsored, the
hospital construction was not subject to New York’s prevailing wage law, so the con-
tractor was able to import a cheaper, racially mixed work crew from Alabama.
U.S. Rep. Robert Bacon (R-Westbury), in whose
district the hospital was located, complained
that the construction workers had been “housed
in shacks” and “paid a very low wage.” As a
result, he said, “the labor conditions in that part
of New York State where this hospital was to be
built were entirely upset.”
2
Bacon’s initial proposal for dealing with the is-
sue was a bill creating local hiring preferences on federal projects, which went no-
where in the 1928 session, when the economy was still booming. Three years later,
with the Great Depression deepening, Bacon and U.S. Sen. James Davis of Pennsyl-
vania successfully co-sponsored legislation requiring that workers employed under
federal construction contracts be paid “based on the wages that the Secretary of La-
bor determines to be prevailing for the corresponding classes of laborers and me-
chanics employed on projects of a similar character to the contract work in the civil
subdivision of the State in which the work is to be performed.”
For nearly 50 years, federal regulations defined the Davis-Bacon Act prevailing wage
as the wage (and, after 1964, combined wages and benefits) paid to at least 30 per-
cent of workers in a given craft in a given locality, or as a weighted average of all
wages and benefits if no single amount was paid to at least 30 percent of the work-
ers. This became known as the 30 percent rule.
In 1981, the Reagan Administration issued new regulations that raised the Davis-
Bacon Act compensation threshold to “the majority (more than 50 percent) of the la-
borers or mechanics in the classification on similar projects in the area during the
period in question,” or to a weighted average if no single wage was paid to more
than 50 percent of workers.
3
The Labor Department argued the change was justified on the grounds that the 30
percent rule “does not comport with the definition of ‘prevailing,’ that it ‘gives un-
due weight to collectively bargained rates,’ and that it is inflationary,” according to a
1983 federal appeals court decision, which upheld the regulation in the face of a chal-
lenge from construction unions.
4
The Davis-Bacon Act,
mandating “prevailing
wages” on federally
funded public works, can
be traced to a 1920s
Long Island project.
PREVAILING WASTE
4
As currently applied to federal projects, Davis-Bacon compensation rates are deter-
mined by the U.S. Labor Department’s Wage and Hour Division, using voluntary
employer surveys compiled by the Construction Industry Research & Policy Center
at the University of Tennessee. The resulting wage and benefit determinations vary
in timeliness, representativeness of the sample and other considerations.
5
New York is among 31 states that still have prevailing wage laws
6
; 19 have either
never passed one or have repealed their statutes, with the most recent such repeal
taking effect in January in Kentucky.
7
The surviving state laws vary, but all extend
the Davis-Bacon approach—defining “wages” to include benefits—to projects creat-
ed for a public entity or classified as a public works project.
Empire State mandate
In 1938, 44 years after enacting its first law on the subject, New York added a pre-
vailing wage requirement to its State Constitution. Article I, Section 17, reads as fol-
lows:
No laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged
in the performance of any public work, shall be permitted to work more than eight hours
in any day or more than five days in any week, except in cases of extraordinary emergen-
cy; nor shall he or she be paid less than the rate of wages prevailing in the same trade or
occupation in the locality within the state where such public work is to be situated, erect-
ed or used.
That provision is implemented through Section 220 of the state Labor Law, which
generally applies to construction, reconstruction or maintenance work funded and
performed on behalf of public agencies, including the state, municipalities, school
districts, special districts and public authorities.
8
The New York law (see Appendix
A) differs from Davis-Bacon in two significant respects:
• Instead of conducting employer surveys, New York State bases its definition
of “prevailing rate of wage” on compensation levels set in “collective bar-
gaining agreements between bona fide labor organizations and employers in
the private sector.”
9
• While the Davis-Bacon law is designed to reflect the wages and benefits paid
to at least 50 percent or a weighted majority of the workers in any given lo-
cality, New York has the only state prevailing wage law still using the old 30
percent rule; that is, the union wage applies when a union contract covers as
few as 30 percent of “workers, laborers or mechanics in the same trade or oc-
cupation in the locality where the work is being performed.”
10
The New York State Department of Labor (NYSDOL) is responsible for calculating
the prevailing wage for state and local government projects throughout the state—
except in New York City, where the city comptroller promulgates prevailing wages
for public works projects in the city.
In practice, both NYSDOL and the city comptroller derive their prevailing wage
schedules from labor union contracts covering specific building trades, and the two
wage schedules are usually the same.
New York’s Costly Public Works Pay Mandate
5
As shown in Figure 1, above, the number of total private construction jobs covered
by union contracts in New York is down sharply from the 50 percent level of 1983,
when the state prevailing wage law was revised to reflect a 30 percent rule.
The rebound in construction union coverage over the past four years has coincided
with a post-recession building boom centered in New York City, where union con-
tractors still dominate the high-rise commercial building sector. Statewide, some of
the biggest projects undertaken during this period—including the new Tappan Zee
Bridge, upstate urban school modernization projects, and the “Buffalo Billion” solar
panel factory—have been reserved for union contractors. Yet even with this gov-
ernment push, only 32 percent of construction workers statewide had wages covered
by union contracts last year.
11
As of 2016, the estimated statewide union coverage in New York State’s construction
industry was more than double the national average of about 15 percent. New York’s
union coverage level was exceeded in only three states: Hawaii (41 percent), and
Minnesota and Illinois (tied at 37 percent).
12
Even in New York, however, the long-
term private-sector unionization trend points inexorably downward.
A permanent fall below the 30 percent union coverage threshold is inevitable for
most of New York’s building trades; indeed, the available data indicate it already
has happened in historically less union-intensive upstate areas. In that case, the law
would set the prevailing wage at the “average … in the locality.”
13
This would yield
a much lower figure in all regions, based on federal occupational statistics further
explained in Section 3 of this report (p. 11).
Information relating to the two most crucial variables used to calculate the wage—
actual copies of construction union contracts and pay scales for each region, and the
headcount of workers employed under those agreements—is not accessible to the
10
15
20
25
30
35
40
45
50
55
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016
percentage of all private construction workers
Figure 1. Union Membership and Workforce Coverage
in New York's Private Construction Industry
1983-2016
Union Members Covered by Union Contracts
Source: Union Membership and Coverage Database, www.unionstats.com
PREVAILING WASTE
6
public. In addition, neither NYSDOL nor the New York City comptroller is required
to survey employers to independently verify that the threshold actually is being met.
While public works contractors in New York have
legal standing to challenge the wage mandate on
the grounds that covered employment falls short
of 30 percent, potential plaintiffs face a legal
Catch-22: the burden of proof is on any party seek-
ing to challenge a wage determination, and courts
have ruled government agencies cannot be com-
pelled to share the kind of “extremely broad and
undefined” information needed to demonstrate
that the coverage threshold has been met.
14
“Wages”—and then some
As further stipulated in the law, Section 220 mandates payment of “supplements,”
defined as “all remuneration for employment paid in any medium other than cash,
or reimbursement for expenses, or any payments which are not ‘wages’ within the
meaning of the law, including, but not limited to, health, welfare, non-occupational
disability, retirement, vacation benefits, holiday pay, life insurance, and apprentice-
ship training.” Lower-paid apprentices are allowable only if they belong to state-
certified apprenticeship training programs, which are sponsored mainly by unions
and unionized employers.
Payment of the prevailing wage—including benefit supplements—is just the begin-
ning. The broad language of Section 220 effectively mandates labor union compensa-
tion and the worksite practices collectively bargained by local building trades unions.
This encompasses idiosyncratic clauses in every contract, including listed paid holi-
days, specific requirements for vacation pay, the method of calculating payments for
benefits and many other compensation-related provisions that can differ among dif-
ferent trades. (For example, carpenters, plumbers and electricians working on the
same job could have a different set of required holidays, all of which must be en-
forced under the prevailing wage law, notwithstanding the worksite inefficiencies
that ensue.)
Given the number of different construction trades and the varying geographic foot-
prints of the 135 union locals
15
around the state (as described further on page 9), the
determination of prevailing wage is a complex process. Private contractors are pro-
vided with a rate sheet in advance of bidding on public sector work. Although
NYSDOL makes the final determination of applicable rates for any given project, an
advisory schedule is published. Posted online as a 6.6 megabyte file, it runs to 2,539
pages.
16
As an example of the specificity and complexity, the prevailing wage deter-
mination for “Operating Engineer–Building” for nine Finger Lakes and Southern Ti-
er counties is shown in Appendix B.
The union contracts used
as a basis for setting
New York’s prevailing
wage levels are not
made public by the state
Labor Department.
New York’s Costly Public Works Pay Mandate
7
2. HOW THE WAGE MANDATE AFFECTS COSTS
The prevailing wage mandate affects the cost of public works projects in two princi-
pal ways.
First, it imposes a wage and benefit structure routinely exceeding market compensa-
tion rates in any given region. The difference between union and overall average
construction industry compensation is the principal focus of this study.
Second, while not formally requiring contractors to employ only union members, the
law has the same effect, especially on larger projects where union bidders are com-
peting with non-union contractors. Not all public construction projects employ un-
ion labor exclusively, but the pressure to do so is considerable. The use of union la-
bor brings with it contractually dictated union
practices and work rules, plus jurisdictional
agreements among union locals, that can hinder
productivity.
New York’s prevailing wage law allows con-
tractors to pay a lower wage to apprentices, pro-
vided that these workers are enrolled in a
NYSDOL-certified apprenticeship program. It
also stipulates that the ratio of apprentices to
“journeyworker” (skilled workers who have
completed their apprenticeships), as well as the
ratio of apprentice-journeyworker compensation, be “prevailing in the locality”
where the work is performed.
17
The list of NYSDOL-certified apprenticeship pro-
gram sponsors is dominated by construction unions and unionized employers.
Union practices and productivity
As noted above, when the prevailing wage requirement triggers the use of union la-
bor, this brings along union worksite practices. The use of union labor can invoke the
costly jurisdictional practices of the various trade locals—essentially the union-
determined distribution of work among different trades.
The division of labor into specialized tasks can powerfully boost productivity and
economic growth, as Adam Smith was among the first to recognize more than 200
years ago. But the inflexible and arbitrary divisions created by union contracts also
require more intensive, time-consuming managerial coordination on construction
worksites, reducing productivity and hindering adoption of more efficient practices.
Consider these examples, supplied by industry sources, of common construction un-
ion work rules and job classifications as applied to New York City projects subject to
the state prevailing wage law:
• A member of the operating engineers union—among the mostly highly paid
of all the trades—must run even fully installed, automated elevators in a
building under construction. Therefore, carpenters, plumbers, electricians
and other tradespeople working on upper floors must rely on an engineer to
push the elevator buttons for them.
By effectively steering
more projects to union
shop contractors, the
prevailing wage law also
mandates the imposition
of union job titles and
work rules that can sap
productivity.
PREVAILING WASTE
8
• Operating engineers also are required to stand by and “monitor” pumps and
welding units, a practice justified on safety grounds before the advent of self-
contained equipment that does not require constant watching.
• Building concrete floors and foundations requires workers from five different
construction trades: carpenters to fabricate temporary wooden forms, lathers
to place rebar, and different crews to place the concrete, finish the concrete,
and strip away the forms. Each crew has to complete its work before the next
can start, requiring 30 to 40 percent more labor and adding substantial time
to the process.
• The process of putting up, taping and painting drywall—which can be per-
formed by a single team of workers on a non-union site—is divided among
three different construction trades. Even when a single team does the work,
the prevailing wage law requires contractors to keep track of time and wage
rates for each of the three steps in the drywall installation process.
• Plumbers and electricians claim jurisdiction over the installation of standard
kitchen refrigerators—work that could be done at no extra charge by appli-
ance delivery crews. As a result, the additional cost of installing a new refrig-
erator can exceed the cost of the appliance itself.
• The number of workers involved in moving a piece of plate glass is deter-
mined by the size of the glass—as if it were being moved manually, as was
the case decades ago, when the work rules were written—rather than by the
requirements of mechanized equipment now used in the process.
• Construction unions also resist the use of technologies that can boost efficien-
cy, such as the automatic drywall taping tools now common on large projects
employing non-union workers.
• Union rules don’t allow for pre-cutting of pipes, which means hundreds or
even thousands of pieces must be cut on site by steamfitters.
Faced with stiffer competition from non-union workers, construction unions have
agreed to enter project labor agreements, also known as PLAs, in which some job
classifications are broadened and work rules are waived or modified. Buttressed by
union pledges to avoid disruptive work stoppages, PLAs have promised savings in
the range of 20 percent, according to published industry and labor union estimates.
In practice, however, union promises in PLAs have not always been kept, leading to
a significant reduction in projected savings. In July 2015, for example, members of
the District Council of Carpenters walked off 20 job sites in New York City, includ-
ing at least a dozen projects covered by PLAs with no-strike provisions, before being
ordered back to work by a federal judge.
18
Trade unions have been known to engage in protracted disputes to preserve their
respective occupational domains. One such instance occurred in 2005, when the In-
ternational Brotherhood of Electrical Workers (IBEW) Local 3 challenged the Labor-
ers Local 78 over the drilling of holes for electrical work at Frances Lewis High
School in Queens. Local 78 was considered to have jurisdiction over the drilling of
holes that contain asbestos, with Local 3 controlling the drilling of holes where as-
bestos was not present. As the presence of asbestos was initially “suspected,” Local
78 had begun the work.
New York’s Costly Public Works Pay Mandate
9
Local 3 challenged Local 78’s jurisdiction and was awarded the work in arbitration
in October 2005, as asbestos was found not to be present. For technical reasons, the
decision was appealed by IBEW to the National Plan for the Resolution of Jurisdic-
tional Disputes in Washington, however. At this point, the Mason Tenders District
Council (the union representing asbestos and hazardous materials workers—and
also, incongruously, Catholic high school teachers) got involved in the case. The case
wasn’t finally resolved until November 2006.
Careful coordination by the general contractor among the various trades can mini-
mize efficiency impacts; for example, by ensuring that carpenters and laborers have
completed necessary preparatory work in advance of electricians and plumbers ar-
riving on the job site. This level of coordination is not costless even when everything
goes smoothly; the cost imposed by this inflexibility increases when unexpected
problems arise. But other jurisdictional rules, such as the operating engineers’ con-
trol of elevators, lend themselves to classic featherbedding.
Contractors argue that, combined with high wage and benefit costs, union jurisdic-
tional claims and other work rules raise costs at the job site. Unions make an oppos-
ing argument that their workers often are better trained in safety procedures, and
more experienced, skilled and productive, ultimately saving money.
19
The produc-
tivity difference between union and non-union labor—assuming it could even be
reliably quantified, absent detailed comparable project budget data—is beyond the
scope of this study, which focuses on the wage and benefit differential.
Fungible “localities”
New York State has 10 officially designated labor markets—groups of counties that
also comprise the state’s economic development regions. But “prevailing” pay for
public works is not based on these regions or any other officially recognized or
commonly cited set of metropolitan boundaries. Instead, different rates of pay are set
for multiple unique permutations of counties and portions of counties. These “locali-
ty” rates often cross into multiple economic regions, in some cases stretching clear
across upstate New York.
For example, the Western New York labor market and economic development re-
gion consists of Allegany, Cattaraugus, Chautauqua, Erie and Niagara counties. But
building carpenters on public works projects in Erie County and part of Cattaraugus
County must be paid different rates than those in Niagara County, which is grouped
with all or part of three counties in the Finger Lakes region to the east.
Plumbers on public works projects in Buffalo have yet another schedule, applying to
all of Erie, Niagara and Wyoming counties and to some (but not all) towns in five
other Western New York and Finger Lakes counties. Still another set of boundaries
applies to pay for electricians, plumbers and so on—all ultimately reflecting the ju-
risdictions of unions, rather than the established commuting and trade patterns that
normally define a geographic labor market.
PREVAILING WASTE
10
3. MEASURING THE COST IMPACT
Given financial constraints on government capital budgets, including New York’s
state budget debt cap and cap on local property tax levies, capital dollars should be
stretched as far as possible. Furthermore, with Governor Cuomo’s pledge of state
support to more than $100 billion in planned major infrastructure and other building
projects, most of which would be subject to the prevailing wage law, even small dif-
ferences in cost will mean less public housing, fewer miles of new highway and
more bridges left unrepaired.
The proposed renewal of New York City’s so-called 421a tax exemption for housing
construction, first passed in 1971, has turned a fresh spotlight on the issue.
20
For
newly constructed market-rate condos, co-ops and rental apartments in an “exclu-
sion zone” of Manhattan, the law made tax abatements available only to developers
who also agreed to construct or finance affordable housing, either on-site or else-
where in the city.
When the program was due to expire in 2015,
Governor Cuomo said he would not support a
421a renewal unless the affordable housing com-
ponent was made subject to prevailing wage. De-
velopers opposed the extension of the prevailing
wage law to a previously exempt category of pri-
vately owned and sponsored affordable housing.
An attempt at compromise failed and 421a expired
in January 2016.
In the fall of 2016, the governor announced a 421a renewal “deal” between develop-
ers and the unions that would offer tax abatements of up to 35 years to developers of
residential buildings with 300 or more units in parts of Manhattan, Queens or Brook-
lyn, provided they set aside a certain percentage of affordable apartments for 40
years and agree to pay construction workers average hourly wages and benefits of
$60 in Manhattan and $45 in certain waterfront areas of Brooklyn and Queens. The
impact of the pay provision would be less onerous than the prevailing wage because
it would not also impose union rules on contractors.
Governor Cuomo subsequently incorporated language implementing the 421a deal
in his fiscal 2018 state budget proposal.
Less affordable housing
To assess the potential impact of a blanket prevailing wage mandate on affordable
housing projects, New York City Independent Budget Office (IBO) developed a mul-
tiple regression analysis of construction costs for 211 city housing projects built over
a six-year period. These included 22,157 affordable units, 5,856 of which were subject
to the prevailing wage law. With the final construction budget submitted to the city
Department of Housing Preservation and Development as the dependent variable,
independent variables included borough, unit size, whether the project included
parking, the share of units that were affordable and a few other factors.
Governor Cuomo sought
to expand the prevailing
wage law to a previously
exempt category of
privately owned and
sponsored affordable
housing in New York City.
New York’s Costly Public Works Pay Mandate
11
IBO concluded that total construction cost increased by 23 percent when a developer
was required to comply with the prevailing wage mandate. Requiring prevailing
wage across the board would add $4.2 billion in costs to Mayor de Blasio’s plan for
building 80,000 affordable units, the analysis said. The IBO study also reported the
prevailing wage impact more narrowly on the “hard cost” of construction. On that
smaller total, the prevailing wage requirement increased total cost by 28 percent.
21
The strength of the IBO methodology is the degree to which it reflects variation in
labor productivity as well as the difference in labor cost.
Because the projects in question were government-subsidized, IBO’s well-executed
study also had the advantage of access to construction budgets on file with a city
agency. Such records are not easily available for any large subset of projects current-
ly or potentially subject to New York’s prevailing wage law, however, making other
methodological approaches necessary.
Other recent studies
The IBO finding was consistent with an earlier literature review and analysis by the
Citizens Housing and Planning Council, indicating that the imposition of prevailing
wages would raise affordable housing costs by 25 percent.
22
A white paper issued in 2012 by Columbia Uni-
versity’s Center for Urban Real Estate featured a
deeper exploration of the “complex worlds” of
prevailing wages, focusing on the questionable
methodology used to develop New York State’s
prevailing wage schedule. While not measuring
the project cost differential directly, the study as-
sumed that the New York prevailing wage law
adds 25 to 30 percent to the cost of develop-
ment,
23
which is also consistent with a commonly
cited industry estimate.
Even within the unionized sector of the construction industry, there is little dispute
that union labor drives a significant cost differential. For example, the head of the
city’s Building Trades Employers Association has said that non-union construction is
20 to 25 percent cheaper than union labor, giving rise to an increasing role for “open
shop” contractors using a mix of union and non-union workers.
24
Our methodology
The construction cost impact of the prevailing wage mandate will vary, depending
on the project. Some sites or building designs will require more specialized and ex-
pensive labor than others. “Soft costs”—such as design, permitting and financing—
will differ dramatically from project to project. The difference between legally “pre-
vailing” union compensation levels and non-union pay rates varies from trade to
trade, and from locality to locality. Practically speaking, there can be no general find-
ing that applies to all projects in all settings.
However, using a 2008 study
25
of this topic by the Center for Governmental Research
(CGR) as a starting point, we developed (a) a prototype set of construction occupa-
There’s little dispute that
union labor can drive a
significant differential in
building costs. The
question is how much—
however, most estimates
are clustered in the same
range.
PREVAILING WASTE
12
tions that are representative of actual projects, (b) a table of prevailing wage and
non-union labor rates by these same occupations, and (c) an assumption concerning
labor’s contribution to overall project cost.
The distribution of construction trades required in a project—carpentry vs. electrical,
for example—and the labor share of a project costs are important to the outcome.
Our model is designed to allow these to vary, thus allowing us to apply sensitivity
analysis to our conclusions. We report here a single distribution of trades based on
the national average reported by the U.S. Bureau of Labor Statistics Occupational
Employment Statistics (OES)
26
series. OES data provide both occupational shares by
industry and average wage by detailed occupation for metropolitan statistical areas
and metropolitan divisions.
27
In New York State, OES data are reported for 11 upstate metropolitan statistical ar-
eas, and for two additional pairs of downstate suburban counties (Dutchess-Putnam
and Nassau-Suffolk). New York City data are not separately reported but are incor-
porated in numbers for the New York-New Jersey-White Plains Metropolitan Divi-
sion, which also includes three New York State counties (Orange, Rockland and
Westchester) and six New Jersey counties (Bergen, Hudson, Middlesex, Monmouth,
Ocean and Passaic).
At the national level only, OES reports the labor composition of specific industries,
i.e. the total labor employed by the industry, broken out by trade. For purposes of
this study, we relied on OES data for the nonresidential construction industry. OES
does not report multi-story, multi-family residential buildings as a separate sector.
Nationally, residential construction is dominated by stick-built single-family and
low rise multifamily structures. The construction of apartments and condos in New
York City is more comparable to similarly sized office buildings.
The national nonresidential construction industry employs the major construction
trades in the proportions reported in Table 1, below. A few of the smaller trades
have been incorporated into larger trades with similar skills and pay.
Table 1. Occupational Employment Shares, Nonresidential Construction
Trade / Occupation
SOC* Code
Percent
Laborers
47-2061
32.4
Carpenters
47-2031
26.3
First-Line Supervisors of Construction Trades & Extraction Workers
47-1011
18.9
Construction Equipment Operators
47-2073
3.7
Cement Masons and Concrete Finishers
47-2051
3.5
Pipelayers, Plumbers, Pipefitters, and Steamfitters
47-2152
3.5
Structural Iron and Steel Workers
47-2221
3.1
Electricians
47-2111
2.3
Painters and Paperhangers
47-2141
1.6
Drywall Installers, Ceiling Tile Installers, and Tapers
47-2081
1.3
Motor Vehicle Operators (Teamsters)
53-3032
1.3
Brickmasons, Blockmasons, and Stonemasons
47-2021
1
Sheet Metal Workers
47-2211
0.7
Roofers
47-2181
0.5
* Standard Occupational Classification System
Source: Bureau of Labor Statistics, Occupational Employment Statistics
New York’s Costly Public Works Pay Mandate
13
Again, these proportions will vary from project to project and are used here as one
source of information about a “typical” nonresidential construction project. Workers
in additional occupations also can be found in the nonresidential construction indus-
try, of course. Out of 724,000 employed in the industry, 58 percent are employed in
occupations classified as construction trades. We included motor vehicle operators in
the analysis, bringing the total to 60 percent of nonresidential construction industry
employment.
Methodology Note: a thumb under the scale
The findings of this study ultimately are based on estimates of wages and benefits for different
trades in New York’s private construction industry. Data limitations, however, create a chal-
lenge when it comes to parsing differences between “prevailing” union compensation and the
total pay of non-union construction workers.
The Occupational Employment Statistics (OES) survey produces an estimate of average wages
(but not benefits), broken down by metropolitan statistical area, for all persons employed in
hundreds of different occupations. However, the survey does not distinguish between union
and non-union workers. There are no authoritative government statistics estimating union vs.
nonunion pay on a state or regional level.
For occupations with low levels of unionization—as is now the case in most industries—the OES
averages can be considered a fairly accurate reflection of the predominant nonunion wages.
New York’s building trades, however, continue to include a substantial minority of employees
covered by collective bargaining agreements, which mandate pay and benefit levels higher
than the norm for non-union workers.
As of 2016, 31 percent of New York City’s construction workers were unionized, according to
an estimate by the Murphy Institute at the City University of New York. Using the same Current
Population Survey (CPS) data as the Murphy Institute, economists Barry T. Hirsch and David A.
Macpherson
a
estimated that 31.6 percent of the private construction jobs in New York State
were covered by union contracts last year.
b
At the regional level, their only statistically valid es-
timates were 28.1 percent union coverage for private construction in the New York City metro-
politan area (including parts of New Jersey, Connecticut and Pennsylvania); and 14 percent for
Albany-Schenectady.
Unfortunately, not only do we lack construction occupation unionization figures for most New
York metro areas, but the available estimates reflect union coverage in all private construction
sectors, not differentiating among residential, non-residential buildings, and heavy highway
and bridge construction. Therefore, any attempt to isolate a nonunion wage component based
on the existing data would produce crude and ultimately unreliable results.
That said, because the OES survey data includes wages for union workers, and because union-
ized building trades workers generally have higher compensation levels, the resulting occupa-
tional averages in the construction sector must exceed the norms for non-union workers. In
some localities, such as New York City, that difference is likely to be large.
Our results, therefore, inevitably understate the true cost of the prevailing wage on public
works construction—without considering the impact on productivity of union work rules.
a
Current Population Survey (CPS) Outgoing Rotation Group (ORG) Earnings Files, 2015. Sample in-
cludes employed wage and salary workers, ages 16 and over. © 2016 by Barry T. Hirsch and David
A. Macpherson. www.unionstats.com
b
Ruth Milkman and Stephanie Luce, The State of the Unions 2016: A Profile of Organized Labor in
New York City, New York State, and the United States, the Joseph S. Murphy Institute for Worker Ed-
ucation and Labor Studies, September 2016. https://goo.gl/fnJeEF
PREVAILING WASTE
14
Interpreting prevailing wage determinations
As noted above, the NYSDOL list of prevailing wage determinations by trade and
locality, incorporating wage determinations by the New York City comptroller, is
over 2,500 pages long. Reflecting the various collective bargaining agreements, many
trades have detailed wages for a range of varied skills. The Operating Engineer wage
list is typically complex, as illustrated in the sample included in Appendix B.
There is no simple cross-walk of the very detailed trades specified in union collective
bargaining agreements (the basis for the prevailing wage) to the more aggregated
occupations for which wages are reported by the OES data. We developed our com-
parison by matching the major union building trades to OES occupational categories
based on the closest Standard Occupational Classification code.
The prevailing wage file posted by NYSDOL includes the union journeyworker
wage and benefit, apprentice wage and benefit, and the allowed ratio of journey-
worker to apprentice compensation.
For example, as detailed in Table 3 on page 21, union carpenters in New York City
receive hourly pay of $50.50 plus benefits valued at $46.26 as journeyworkers, a total
of $96.76. Meanwhile, wages and benefits for apprentice carpenters total $60.35. One
apprentice may be hired for every four journeyworkers; thus, the average cost per
worker for a crew of 100 carpenters is about $89 per hour on a prevailing wage pro-
ject in New York City.
Impact on Total Project Cost
For the purpose of estimating the impact of the labor cost differential on the total
cost of construction in New York City, CGR employed the IMPLAN input-output
model
28
for New York’s metropolitan areas to develop an estimate of the labor com-
ponent of total project cost. CGR’s IMPLAN model estimates that labor is 44 percent
of total cost of nonresidential construction in New York City. The more labor-
intensive the project, the greater the cost impact of the prevailing wage mandate.
For the New York City region, the model estimates that the hourly cost of union la-
bor in nonresidential construction, weighted by the occupational distribution dis-
cussed above, is $75 of wages and benefits. For comparison purposes, we applied the
same weights to the median occupational wages reported by the OES, and assumed
average fringe benefit costs equivalent to roughly 29 percent of wages.
29
The resulting weighted average of wages and benefits—for a group that includes
union and non-union labor—was $40 an hour, just over half the union compensa-
tion. The OES reports that construction labor is 60 percent of total labor cost in this
sector. IMPLAN, as noted above, estimates that labor comprises 44 percent of total
building cost.
The added labor costs attributable to the prevailing wage are estimated on a
weighted basis, in line with the occupational proportions shown in Table 1. We esti-
mated the difference between prevailing wage union compensation and the
weighted average of median OES compensation for six regions of New York State.
For New York City, we compared compensation based on the city’s mandated pre-
New York’s Costly Public Works Pay Mandate
15
vailing wage schedule to the weighted average of median OES compensation for the
multi-state region that includes New York City.
The results are shown in Table 2, below. Union compensation levels ranged from 60
percent above average pay for all construction workers in the Albany area to double
the average in the metro area with New York City at its heart. The impact on total
project costs ranged from an added 13 percent in the Albany area to an added 25
percent in the New York City area.
Table 2. Regional Impact of Labor Cost Differences on Total Project Cost
(Pay includes wages + benefits; PW = Union Prevailing Wage)
Albany
a
Buffalo
b
Rochester
c
Syracuse
d
Mid-
Hudson
e
Long
Island
NYC
f
Weighted avg, all OES* pay/hr
$30
$28
$28
$26
$33
$38
$39
Weighted avg, PW/hr
$48
$51
$44
$43
$56
$69
$75
Labor cost increase due to PW
57%
84%
60%
62%
68%
80%
95%
Total project cost impact
13%
20%
14%
14%
15%
20%
25%
a
Albany, Saratoga, Schoharie, Schenectady and Rensselaer counties
b
Cattaraugus, Erie and Niagara counties
c
Monroe, Ontario, Wayne, Livingston, Orleans and Yates counties
d
Onondaga, Oswego and Madison counties
e
Dutchess and Putnam counties
f
All of NYC; Orange, Rockland, Westchester in NY; Bergen, Hudson, Middlesex, Monmouth, Ocean and Passaic in NJ
*
Regional medians from 2016 Occupational Employment Statistics for nonresidential construction sector, assuming benefits averaging
29% of hourly base pay
Source: NYS Department of Labor, Prevailing Wage orders; Bureau of Labor Statistics, Occupational Employment Statistics
These cost impacts translate into truly significant numbers, whether related to multi-
year capital plans or specific projects. For example:
• Based on the conservative assumption that just one-fifth of New York’s state
capital projects budget is slated for building construction projects subject to
the Section 220 mandate, the prevailing wage mandate will cost state taxpay-
ers nearly $2 billion over the next five years, averaging $400 million a year.
30
• New York City’s capital commitments for the next three years include $8 bil-
lion in elementary and secondary school construction projects. Added costs
due to the prevailing wage will come to least $1.4 billion, net of $195 million
in savings attributed to a PLA deal between unions and the city’s School
Construction Authority.
31
• Focusing on just two high-profile Manhattan projects funded by the state, the
mandate to pay union wages and benefits will account for $340 million out of
$1.7 billion in total costs for the Moynihan Station redevelopment and Javits
Convention Center renovation.
Implications
The application of prevailing wage brings two public policy goals into conflict. Eco-
nomic development policy seeks to improve both the quantity and the quality of jobs,
thus the pay going to workers. After all, higher-paid workers purchase more goods
and services from workers in other sectors and pay higher taxes. The prevailing
wage law was intended to reserve publicly funded work for locally based labor in
the face of competition from itinerant workers, including immigrants.
PREVAILING WASTE
16
Public funds are limited, however. Mandating higher wages and benefits for work-
ers on publicly supported projects will reduce the quantity of public goods and ser-
vices that can be purchased. In the case of affordable housing, for example, given a
fixed pool of tax credits and other funds, higher cost translates directly into fewer
units of housing.
The prevailing wage requirement is, in effect, a transfer payment from taxpayers to a
small (and, the data indicate, shrinking) subset of private construction workers—
those represented by labor unions.
This is more than an issue of compensation, however. The prevailing wage require-
ment reserves public sector construction jobs for the union locals that control con-
struction jobs in that location. This public policy effectively endorses the complex
jurisdictional agreements among the various union locals, such as which holes are to
be drilled by laborers vs. electricians, and whether plumbers self-operate automated
elevators without the assistance of operating engineers. It also gives favored treat-
ment to a unionized workforce that, in the eyes of some critics, still does not reflect
the ethnic or racial diversity of the city’s population.
32
Contractors must also juggle myriad other idiosyncratic elements of the various
trades’ contracts; for example, whether overtime pay is required if the worksite is
organized around four 10-hour days instead of five eight-hour days, and the number
of paid holidays. While very difficult to measure, these various contractual issues
surely reduce productivity and increase taxpayer cost.
Big Apple union premium
While some academic studies have sought to disprove the notion that prevailing
wage laws raise construction costs,
33
the higher pay levels of unionized construction
labor are undisputed. What’s less often noted, however, is the extent to which New
York City’s construction workers, in particular, are better paid than their counter-
parts even in other large, union-friendly big cities subject to prevailing wage laws
that favor unionized firms.
Figure 2 on the following page compares wage and benefit levels for six common
building trades in New York City, Chicago, Los Angeles and Boston. For every oc-
cupational group except construction laborers, who earn roughly the same in Chica-
go as in New York, the New York City union pay level (also reflected in the prevail-
ing wage law) is significantly higher than those in the other cities.
Other published comparisons taking in a larger number of locations also have found
that New York City’s union wages for most building trades are significantly higher
than those in other big cities.
34
New York’s Costly Public Works Pay Mandate
17
Figure 2. Union Pay Scales for Common Building Trades
New York, Chicago, Los Angeles and Boston
2015-16
Sources: Published union pay schedules, prevailing wage guidelines and construction industry sources
PREVAILING WASTE
18
4. THE FRINGE FACTOR
“I want to pay union labor because I want [workers to have] benefits and health care and the
government doesn’t have to subsidize it.”
Governor Cuomo, September 2016
Pension contributions and health care coverage are the largest items in the fringe
benefit packages of most unionized construction workers in New York State. Under
the prevailing wage mandate, the high cost of these benefits is effectively subsidized
by taxpayers.
Most private employers hire and train their own workers, and take responsibility for
funding or purchasing employee benefits, including health insurance and retirement
savings plans. But it’s different in the “closed shop” construction world, where gen-
eral contractors and specialized subcontractors outsource their recruitment, hiring,
training and employee benefits to unions.
In the unionized construction sector, compensa-
tion levels and work rules are controlled by nu-
merous collective bargaining agreements, nego-
tiated with employer associations by unions rep-
resenting specialized building trades such as
carpenters, laborers, electricians, plumbers and
equipment operators. Each trade has its own un-
ion, and each union has a separate contract. The
unions exclusively supply contractors with
skilled workers on an as-needed, project-by-
project basis.
Hourly benefit rates mandated by New York construction union contracts, including
the fringe benefit “supplements” required by the prevailing wage law, typically
range from 80 percent to more than 100 percent of hourly base pay. On average,
that’s roughly three to four times the average employer cost for all private workers,
as computed by the U.S. Bureau of Labor Statistics.
*
Why are union benefits so pricey?
High fringe benefit costs for unionized construction workers are largely a function of
plan design. Pensions and health care coverage are provided to union members by
trade-specific “multiemployer” plans, governed by boards of trustees consisting of
employers and union representatives. New York State has 120 such plans, organized
along regional and occupational lines.
The construction industry’s multiemployer pension plans (MEPPs) are similar to the
pension plans sponsored by New York’s state and local governments. Like public
plans, the MEPPs offer traditional “defined benefit” pensions, promising a fixed
stream of regular post-retirement income based on career earnings, longevity and
age at retirement.
*
These comparisons in all cases exclude government-required employer payments for Social Security
and Medicare taxes, workers’ compensation insurance, and unemployment insurance.
Pension and health
benefits for New York’s
union construction
workers are covered by
scores of “multi-
employer” pension and
welfare plans serving
individual skilled trades.
New York’s Costly Public Works Pay Mandate
19
The building trades’ MEPPs are funded by a combination of employer contributions
and returns from trust fund investments in stocks, bonds and other financial assets.
(Unlike most New York government employees, construction workers don’t con-
tribute to their own defined-benefit pension funds; nor do most have to pay a share
of their health insurance premiums, although they negotiate varying levels of em-
ployee co-pays and deductibles.)
In another similarity to public pension plans, the union MEPPs follow accounting
rules that allow them to calculate their funding requirements based on optimistic
investment return assumptions, reflected in liability discount rates of 7.5 percent for
most funds. The higher the assumed rate of return, the lower amount of the required
contribution—and the bigger the resulting unfunded liability if returns don’t match
assumptions. By contrast, corporate pension plans are subject to more stringent ac-
counting requirements, basing their funding levels on much lower “market” interest
rates for safe fixed-income investments, such as highly rated government or corpo-
rate bonds.
Digging a hole
To have any hope of achieving 7.5 percent annual gains, pension funds need to in-
vest heavily in the stock market—a high-risk, high-reward strategy whose downside
has become dramatically apparent twice in the last 15 years, when major stock indi-
ces twice plunged by 50 percent or more (in the bear market of 2000-02, and again in
2007-09). Eight years after the end of the Great Recession, public and private pension
funds alike are still digging themselves out of the holes created by these losses.
Dozens of New York-based construction union pension, welfare and annuity plans
were so desperate for high returns that they invested money with convicted Ponzi-
schemer Bernie Madoff. Victims included one of the state’s largest construction-
union pension plans, the Long Island-based Empire State Carpenters Pension Fund,
which reported Madoff-related losses of nearly $100 million, or 10 percent of the
fund’s total assets.
†
New York’s construction union MEPPs also face a daunting demographic challenge.
Most are “mature” plans, as measured by the ratio of active (working) members to
retired or otherwise inactive participants. As one industry actuarial report put it:
“In general, the higher the ratio of active participants to inactive participants, the eas-
ier it is for a plan to correct any funding shortfall by increasing contribution rates or
decreasing future benefit accruals. On the other hand, a lower ratio usually means
that it is more difficult for a plan to improve funding through these means.”
35
In 2013, the latest year for which data are available, the median participation ratio for
construction industry pension plans across the country was 0.68, equating to 68 ac-
tive (working) plan participants for every 100 total participants.
36
In their most recent
†
The 16,000-participant Empire State Carpenters Pension Fund has since merged with finan-
cially troubled pension plans covering union carpenters in New Jersey and the Albany-
Adirondacks region to form the Northeast Carpenters Fund. Less than half the Madoff-
related losses will be made up through insurance and litigation settlements.
PREVAILING WASTE
20
federal filings, all of New York State’s largest construction union MEPPs had partici-
pation ratios below that level.
The New York District Council of Carpenters Pension Plan—the second largest con-
struction industry MEPP based in the state, with nearly $3 billion in assets and more
than 31,000 members working mainly in New York City—had a participation ratio of
0.41, which would rank in the lowest quartile of all national plans in the latest annu-
al ranking. The Northeast Carpenters Fund, covering thousands of workers on Long
Island and upstate, had a participation ratio of just 0.31, meaning inactive partici-
pants outnumbered active workers by a 2-1 margin. The New York-based MEPP
with the highest participation ratio was the Steamfitters Industry Pension Fund at
0.62, which was still below the national median.
Construction union members are among the tiny minority of private-sector workers
still receiving retiree health care coverage. Like their pension funds, the unions’ mul-
ti-employer welfare funds also have amassed sizable liabilities for current and future
retiree health insurance coverage. Covering the same group of workers, the welfare
funds have participation ratios (and aging profiles) similar to the pension funds.
Per-hour impact
When an employer deposits a percentage of a worker’s wages in a 401(k)-style de-
fined-contribution account, 100 percent of the contribution becomes the property of
that worker alone, adding to his or her personal retirement savings.
But in the case of union defined-benefit pension
plans, the hourly employer contribution to un-
ion pension and welfare funds is based on vari-
ous factors including the age and projected re-
maining lifespans of all the workers and retirees
vested in the plan; the hours worked and pay
earned by current active participants; and the
performance of the funds’ investments. For most
of the construction plans, the “normal” cost of
future benefits earned by each worker in a given
year makes up less than half the employer con-
tribution.
Most of the employer contribution covers unfunded liabilities for benefits already
earned or promised to current and retired workers. This arrangement basically
serves the collective interests of workers, retirees and, last but not least, the unions
and contractors that jointly sponsor the pension plans. The impact of these added
funding requirements varies by union, depending on the financial status and demo-
graphic profiles of their pension and welfare plans.
Consider, for example, how these factors play out in the New York City District
Council of Carpenters Pension Plan.
As shown in Table 3 on the following page, prevailing wage rates for a union jour-
neyworker carpenter in New York City come to $96.76 an hour, consisting of $50.50
in wages and total fringe benefit payments of $46.26, including a pension fund con-
Less than half of
employer pension
contributions reflect
workers’ newly earned
benefit. The rest is
needed to make up for
underfunded promises
to current and future
retirees.
New York’s Costly Public Works Pay Mandate
21
tribution of $12.85 an hour and a welfare contribution of $14.64 an hour. At 25 per-
cent and 29 percent of wages, respectively, these are extraordinarily high amounts
by private-sector standards.
The financial factors shaping the carpenters’ pension and welfare fund contributions
emerge from the funds’ required annual reports to the federal government, as high-
lighted in Table 4 on page 22.
During the fiscal year ending in June 2015,
the carpenters’ plan collected $235 million
in employer contributions, or $18,038 per
active worker. The “normal” cost of bene-
fits earned by active workers that year was
pegged at $101 million, or $7,718 per work-
er. But the fund also had to cover $13 mil-
lion of administrative expenses and $121
million in unfunded liabilities. The result:
employer contributions averaging $10,320
per worker, more than half the per-worker
total, were devoted to backfilling the plan’s
long-term funding shortfall.
Applying those proportions to the 2015 average employer contribution of $12.85 an
hour, about $5.53 represented the value of benefits earned that year by each worker.
The remaining $7.32 per hour covered the pension plan’s unfunded liabilities.
A similar pattern occurs in the New York City District Council of Carpenters Welfare
Plan. In 2014, employer contributions to the plan for health coverage were billed at
an average rate of $13.47 per hour. This resulted in total payment of $257 million, or
$20,000 per active worker. Actual health benefit payments for active workers came to
$128 million, or $10,000 per worker. The rest of the money raised from employer
contributions—nearly half of the total—covered the welfare fund’s current and fu-
ture health care obligations to retired union members, including $69 million for fu-
ture retirement benefits earned by active workers during the year.
Based on these totals, the welfare plan needed to collect only $6.50 an hour to pro-
vide health care to carpenters employed in 2015, but billed another $4 to cover the
normal cost of future retiree health benefits earned during the year by those workers.
Taken together, the pension and welfare plan figures indicate that nearly $11.32 an
hour in fringe benefits, or 11.6 percent of the total hourly compensation for a carpen-
ter, consisted of subsidies to the welfare and pension plans, rather than benefits re-
ceived or earned during the year by the individual workers.
The same general pattern is replicated throughout New York’s unionized construc-
tion industry, subsidized by the prevailing wage: in most cases, employer contribu-
tions made on behalf of individual union workers serve largely to subsidize union
benefit plans and their sponsors.
Table 3. A Prevailing Pay Breakdown
NYC District Council of Carpenters
Journeyworker, 2015
Wage per hour $50.50
Fringe Benefits per hour $46.26
Pension $12.82
Vacation $7.68
Health & Welfare $14.68
Annuity $8.96
Education & Training $0.70
Other Supplements $1.43
TOTAL per hour $96.76
PREVAILING WASTE
22
New York’s Costly Public Works Pay Mandate
23
Shoring up a flawed model
Using their preferred actuarial measures, most of New York State’s construction un-
ion MEPPs reported in 2015 that their asset values were above 70 percent of the level
needed to cover liabilities, which puts them outside the official “critical” or “endan-
gered” zone. Some even reported they were more than 100 percent funded, when
measured on this basis.
But the picture is quite different when the plans are evaluated using the same ac-
counting standards that apply to corporate plans. Table 4 on page 22 breaks down
key financial indicators based on reports filed with the federal government by 25 of
the largest New York-based pension plans sponsored by building trades unions. As
shown, these plans covered a total of 188,597 people, of whom 84,931 were active.
The union pension plans had $13 billion in cur-
rent assets against liabilities totaling $25 billion,
when discounted using the market rate of interest
prescribed by the federal Retirement Protection
Act of 1994. Using this measure, also known as
“RPA ‘94”, the plans had funded ratios under 50
percent; that is, they had less than half of what
they ultimately will need to provide promised
benefits to their plan participants. The plans’ total
unfunded liabilities came to nearly $12 billion.
The union pension plans’ estimated unfunded
liabilities were smaller when calculated on the basis of their preferred actuarial
measures, most of which used a 7.5 percent discount rate. Nonetheless, the annual
increment towards the multi-year “amortized” cost of paying down those liabilities
consumed $685 million out of $991 million in employer contributions to the 25 plans.
Hourly employer contributions would have to be even higher to raise these pension
plans to the more securely funded level as measured by the RPA ’94 standard.
A nationwide problem
The challenges faced by New York’s construction union pension funds are shared by
union-sponsored MEPPs across the country, especially since the Great Recession and
financial downturn. In recent years, a handful of the largest New York-based con-
struction industry pension funds, including the Upstate Engineers Pension Fund,
have been placed on the federal government’s official list of “critical or endangered”
MEPPs, meaning they must develop “rehabilitation plans” to ensure they do not go
insolvent.
The only financial backstop for these private plans is the federal Pension Benefit
Guarantee Corp. (PBGC), which itself has only $2 billion in assets to cover $54 billion
in estimated liabilities, Moody’s Investors Service reported last year.
37
The corpora-
tion is in no position to guarantee more than a small fraction of the benefits prom-
ised to fund participants.
With unfunded liabilities
totaling nearly $12 bil-
lion, New York’s largest
construction union pen-
sion plans had less than
half the money they
needed to pay for all the
benefits promised to
their participants.
PREVAILING WASTE
24
The Cleveland-based Iron Workers Local 17 pension fund recently became the first
MEPP to receive Treasury Department permission to cut retiree benefits under the
Multiemployer Pension Reform Act passed by Congress in 2014. In February 2017,
New York-based Teamster Local 707’s pension fund ran out of money, turning for
relief to the underfunded PBGC.
38
Other, larger New York Teamster pension funds,
whose participants include drivers employed in prevailing wage-covered construc-
tion projects, reportedly are also teetering on the edge of financial collapse.
39
Bad benefit fit
The kind of defined-benefit pension plan offered by union shop contractors is argua-
bly best suited to workers who spend all or most of their careers on the payroll of a
single employer. Unionized construction workers, by contrast, are assigned by their
locals to a series of temporary jobs, often on a seasonal basis, in an economically cy-
clical industry that tends to slow down (reducing pension fund contributions) at
times that coincide with general financial downturns (reducing asset values). A de-
fined-benefit plan is a singularly expensive approach to providing retirement and
health benefits for such workers.
The construction industry as a whole is better suited to defined-contribution retire-
ment savings plans, which would give each worker an individual account backed by
employer and employee contributions. The unions themselves obviously realize the
benefits of such an approach, because many have successfully bargained for em-
ployer contributions to their own defined-contribution annuity plans, which sup-
plement their pensions. The New York District Council of Carpenters, for example,
has an annuity fund to which employers contribute $8.96 an hour, on top of the
$12.58 going to the pension plan. In contrast to the pension contribution, nearly all of
that $8.96 per hour fully and solely benefits the employees who earn it. Construction
union members appear to be unique, even among workers in physically demanding
industries, in having both defined-benefit pensions and generous defined-
contribution annuities.
The defined-benefit model assigns all investment risk to the pension plans—which,
as noted, are sponsored by the unions themselves, in partnership with employers. A
defined-contribution plan shifts the risk of investment losses to individual retirees,
so it’s especially important for construction workers to have a well-designed plan
supported by a relatively high level of ongoing contributions. This could be accom-
plished, at a lower net cost to employers, by phasing out the defined-benefit pension
funds and shifting entirely to defined-contribution funds, building on the kind of
annuity plans that most unions already have.
Health benefits, likewise, could be funded more cost-effectively by separating retiree
benefits from those of active workers, and by funding retiree benefits on a defined-
contribution basis.
In the meantime, to the extent that New York prevailing wage props up defined-
benefit plans, it delays the inevitable day of reckoning for a costly, unsustainable and
unreliable benefits model.
New York’s Costly Public Works Pay Mandate
25
CONCLUSION
The prevailing wage mandate inflates total public construction costs by at least 13
to 25 percent, depending on the region, without including the productivity-
eroding impact of work rules. This translates into billions more in borrowing and
higher debt service expenses and, ultimately higher taxes. A portion of the added
spending isn’t flowing into the pockets of construction workers; rather, it’s effec-
tively bailing out their pension and welfare plans, which have significant un-
funded liabilities.
The losers in this process are the taxpayers—who must come up with larger amounts
of money than a normal, competitive labor market would require—and the potential
beneficiaries of the public work, such as New Yorkers seeking affordable housing.
Higher costs inevitably lead to fewer capital projects.
The winners are some of the nation’s best-paid construction workers and the shrink-
ing but politically powerful unions to which they belong. The more market share the
unions lose, the more they depend on government mandates to keep their members
working—and crucially, to keep employer contributions flowing into pension and
welfare funds.
New York State’s constitutional prevailing wage requirement need not be repealed
to create a better, more productive and more transparent system. Crucial reforms to
Section 220 could break the costly union monopoly on construction labor and free
more dollars for essential public infrastructure projects.
Short of repealing the constitutional provision, here are five steps to a better, fairer,
more cost-effective prevailing wage:
1. Conduct a statistically valid survey of the private construction sector in each
metropolitan area of the state to determine the share of a trade’s workers
covered by a collective bargaining agreement, as required by law.
2. In localities where the threshold had not been reached, base the “prevailing”
wage on federal OES surveys and tabulations.
3. Eliminate the statutory 30 percent rule, instead matching the Davis-Bacon
threshold of either a wage covering at least 50 percent of a given trade or a
weighted average wage for each trade in a given locality.
4. Limit the scope of the mandate to the common, dictionary definition of
“wage”—the amount directly paid to workers on an hourly basis, before tax-
es and excluding benefits, also eliminating the application of union work
rules.
5. Ensure the entire process is transparent, keeping confidential only data that is
directly related to employer-employee confidentiality.
PREVAILING WASTE
26
ENDNOTES
1
S2975. The lead sponsor is Sen. Terrence Murphy, R-Yorktown Heights.
https://www.nysenate.gov/legislation/bills/2017/S2975
2
See David E. Bernstein, “Only One Place of Redress: African Americans, Labor Regulations &
The Courts from Reconstruction to the New Deal,” Duke University Press, 2001, pp. 66-84. By all
accounts, Bacon and other northern supporters of the prevailing wage law did not explicitly make
race an issue, concentrating instead on the exploitation of what Bacon termed “cheap, bootleg la-
bor” and the denial of job opportunities to local workers. However, Bernstein’s account docu-
ments pronounced racialist and nativist subtext to Davis-Bacon labor laws enacted in the 1920s
through the New Deal era.
3
29 Code of Federal Regulations 1.2(a)(1)
4
Building & Construction Trades Department, AFL-CIO, et al.,v. Raymond J. Donovan, Secretary of La-
bor, et al. Nos. 83-1118, 83-1157, U.S. Court of Appeals, District of Columbia Circuit.
5
The Beacon Hill Institute offered a critical review of the wage determination process in a 2008
report: The Federal Davis-Bacon Act: The Prevailing Mismeasure of Wages,
http://www.beaconhill.org. Also see U.S. Department of Labor Davis-Bacon Surveys at
https://www.dol.gov/whd/recovery/pwrb/Tab5.pdf.
6
A complete list of states with prevailing wage laws as of 2016 can be found at
https://www.dol.gov/whd/state/dollar.htm.
7
“Kentucky Repeals Its Prevailing Wage Requirements,” Bloomberg BNA, Jan. 11, 2017,
https://www.bna.com/kentucky-repeals-prevailing-n73014449673/
8
The requirement does not apply to private construction projects financed by Industrial Devel-
opment Authorities through the issuance of tax-exempt industrial revenue bonds. Frequently
asked questions about the law’s applicability are addressed at
https://www.labor.ny.gov/workerprotection/publicwork/PW_faq1.shtm
9
Prior to a 1983 amendment, the state Labor Department set prevailing wages based on surveys of
wages paid to at least 40 percent of construction workers in each locality. The union-supported
reduction in New York’s threshold was enacted the same year that the Reagan administration
raised the Davis-Bacon coverage threshold to 50 percent of workers.
10
NYS Labor Law § 220 http://public.leginfo.state.ny.us/lawssrch.cgi?NVLWO: Full text in Ap-
pendix A.
11
Construction union coverage as of 2016 was estimated by the Union Membership and Coverage
Database (unionstats.com) at just 28 percent for the New York-Newark, NY-NJ-CT-PA Combined
Statistical Area, which includes all of New York City and Long Island, six counties in the lower
Hudson Valley as well as all of northern and central New Jersey and six counties in northeastern
Pennsylvania.
12
Union Membership and Coverage Database, compiled from federal data by economists Barry T.
Hirsch and David A. Macpherson, www.unionstats.com.
13
NYS Labor Law § 220.5
14
Matter of Suit-Kote Corp. v Rivera, 2016 NY Slip Op 01539, decided on March 3, 2016, Appellate
Division, Third Department. The plaintiff in the case was a Cortland-based highway paving com-
pany whose president, Frank Suits, is chairman of the board of the Empire Center. He was neither
consulted nor played any role in the presentation of this report.
15
See http://www.nybuildingtrades.com/
16
See https://applications.labor.ny.gov/wpp/publicViewPWChanges.do
17
NYS Labor Law § 220 http://public.leginfo.state.ny.us/lawssrch.cgi?NVLWO
18
“Judge orders city carpenters union back to work,” New York Post, July 6, 2015.
http://nypost.com/2015/07/06/judge-orders-city-carpenters-union-back-to-work/
19
See, for example, the research reports linked at the website of Smart Cities Prevail, a labor un-
ion-affiliated advocacy group in California. http://www.smartcitiesprevail.org/research-links/
20
Independent Budget Office, “Worth the Cost? Evaluating the 421-a Property Tax Exemption”,
Fiscal Brief, Jan. 2003. http://www.ibo.nyc.ny.us/iboreports/421aTaxFiscalBrief.pdf
21
City of New York, Independent Budget Office, “Assessing the Costs: The Impact of Prevailing
Wage Requirements on Affordable Housing Construction in New York City,” January 2016,
http://www.ml46.org/wp-content/uploads/2016/02/Impact-of-Prevailing-Wage-on-
Affordable-Housing-Construction-in-NYC.pdf. “Correction to our January 2016 Prevailing Wage
Report,” February 2016, http://www.ibo.nyc.ny.us/iboreports/2016corection-to-january-2016-
prevailing-wage-report.pdf
New York’s Costly Public Works Pay Mandate
27
22
Elizabeth A. Roistacher, Jerilyn Perine, Harold Shultz, “Prevailing Wisdom: The Potential Im-
pact of Prevailing Wages on Affordable Housing,” Citizens Housing & Planning Council, Decem-
ber 2008.
23
Julia Vitullo-Martin, “The Complex Worlds of New York Prevailing Wage,” Center for Urban
Real Estate, Columbia University, June 2012. http://nysafah.org/cmsBuilder/uploads/The-
Complex-World-of-Prevailing-Wage.pdf.
24
“Are unions losing their grip in NYC?”, The Real Deal, March 2016, at
https://therealdeal.com/issues_articles/are-unions-losing-their-grip-in-nyc/
25
Kent Gardner and Rochelle Ruffer, “Prevailing Wage in New York State: The Impact on Cost
and Competitiveness,” Center for Governmental Research, Jan. 2008.
http://reports.cgr.org/details/1532
26
See http://www.bls.gov/oes/.
27
The OES survey is a semi-annual mail survey of non-farm establishments conducted by the NYS
Department of Labor under U.S. Bureau of Labor Statistics guidelines. The sampling frame is de-
rived from the list of NYS establishments maintained by NYSDOL for unemployment insurance
purposes. NYSDOL mails the survey materials to the selected establishments and makes follow-
up calls to request data from nonrespondents or to clarify data. The OES tables report the hourly
and annual 10th, 25th, 75th, and 90th percentile wages. See
http://www.bls.gov/oes/oes_ques.htm#overview.
28
IMPLAN is built on the input-output table for the U.S. economy that is developed by the Bureau
of Economic Analysis, U.S. Department of Commerce. An input-output table is a matrix contain-
ing all the goods and services in the economy. For a final good sector, e.g. nonresidential building
construction, it shows inputs from all other sectors including the household sector’s contribution
of labor. IMPLAN regionalizes these data using available information at the county and MSA lev-
el. This enables the user to estimate total labor demand for an increase in demand from the sector
in question. For nonresidential construction in NYC, IMPLAN estimates that labor will receive 44
percent of the final cost of nonresidential building construction. See https://implan.com/ for
more technical detail.
29
See “Employer Costs for Employee Compensation,” U.S. Department of Labor, Bureau of Labor
Statistics, March 17, 2017. Based on average fringe benefit costs as a percentage of all private con-
struction wages, excluding legally required payroll taxes and insurance.
30
Slightly more than one-third of the state’s capital budget is slated for highway, bridge and mass
transit projects, while this report’s estimates focus on building construction and renovation pro-
jects. Another sizable but ultimately unspecified chunk of the state capital plan will finance
equipment purchases, economic development grants, and building maintenance and operation
costs. The prevailing wage estimate is a blend of the cost impacts weighted for regional shares of
state population.
31
“De Blasio Administration Announces Labor Agreements on Public Projects to Reduce Costs,
Increase Opportunity for City's Minority and Women-Owned Business Enterprises,” June 4, 2015
press release, Office of the Mayor.
32
See, for example, “Union work crews should be as diverse as New York City,” by Eric Adams,
Brooklyn borough president, in Crain’s NY Business, May 29, 2016
33
Frank Manzo IV, Alex Lantsberg and Kevin Duncan, “The Economic, Fiscal, and Social Impacts
of State Prevailing Wage Laws: Choosing Between the High Road and the Low Road in the Con-
struction Industry,” Illinois Economic Policy Institute and Smart Cities Prevail, Feb. 9, 2016.
34
“Union Wages See Modest Gain,” Engineering News Record, 3Q Cost Report-Labor, table on
Hourly Union Pay Scales by City, pp 6-7.
35
Mechanical Contractors of America and Horizon Actuarial Services, Inventory of Construction
Industry Pension Plans, Fourth Edition, February 2016. p12.
36
Ibid.
37
“U.S. Pension Funding Levels to Deteriorate, Moody’s Says,” Wall Street Journal, July 13, 2016.
http://on.wsj.com/29K32VP
38
“Local 707’s once-booming pension fund runs out of money,” New York Daily News, Feb. 26,
2017. http://www.nydailynews.com/new-york/teamsters-local-707-booming-pension-fund-
runs-cash-article-1.2982433
39
Ibid.
New York’s Costly Public Works Pay Mandate
i
APPENDIX A
Text of NYS Labor Law Article 8 § 220
Hours, wages and supplements.
5. Definitions.
a. The "prevailing rate of wage," for the intents and purposes of this article, shall be
the rate of wage paid in the locality, as hereinafter defined, by virtue of collective
bargaining agreements between bona fide labor organizations and employers of the
private sector, performing public or private work provided that said employers em-
ploy at least thirty per centum of workers, laborers or mechanics in the same trade or
occupation in the locality where the work is being performed. The prevailing rate of
wage shall be annually determined in accordance herewith by the fiscal officer no
later than thirty days prior to July first of each year, and the prevailing rate of wage
for the period commencing July first of such year through June thirtieth, inclusive, of
the following year shall be the rate of wage set forth in such collective bargaining
agreements for the period commencing July first through June thirtieth, including
those increases for such period which are directly ascertainable from such collective
bargaining agreements by the fiscal officer in his annual determination.
In the event that it is determined after a contest, as provided in subdivision six of
this section, that less than thirty percent of the workers, laborers or mechanics in a
particular trade or occupation in the locality where the work is being performed re-
ceive a collectively bargained rate of wage, then the average wage paid to such
workers, laborers or mechanics in the same trade or occupation in the locality for the
twelve-month period preceding the fiscal officer's annual determination shall be the
prevailing rate of wage. Laborers, workers or mechanics for whom a prevailing rate
of wage is to be determined shall not be considered in determining such prevailing
wage.
b. "Supplements," for the intents and purposes of this article, means all remunera-
tion for employment paid in any medium other than cash, or reimbursement for ex-
penses, or any payments which are not "wages" within the meaning of the law, in-
cluding, but not limited to, health, welfare, non-occupational disability, retirement,
vacation benefits, holiday pay life insurance, and apprenticeship training.
c. "Prevailing practices in the locality," for the intents and purposes of this article,
shall be the practice of providing supplements, as hereinbefore defined, as provided
by virtue of collective bargaining agreements between bona fide labor organizations
and employers of the private sector, performing public or private work provided
that said employers employ at least thirty per centum of workers, laborers or me-
chanics in the same trade or occupation in the locality, as determined by the fiscal
officer in accordance with the provisions herein.
With respect to each supplement determined to be one of the prevailing practices in
the locality, the amount of such supplement shall be determined in the same manner
and at the same times as the prevailing rate of wage is determined pursuant to this
section.
d. "Locality" means such areas of the state described and defined for a trade or occu-
pation in the current collective bargaining agreements between bona fide labor or-
ganizations and employers of the private sector, performing public and private
work.
PREVAILING WASTE
ii
6. The fiscal officer, may, and on the written request of any interested person shall,
require any person or corporation performing such public work to file with such fis-
cal officer schedules of the supplements to be provided and wages to be paid to such
laborers, workmen or mechanics. Any such person or corporation shall, within ten
days after the receipt of written notice of such requirement, file with the fiscal officer
such schedules of wages and supplements. An employer may contest a determina-
tion by the fiscal officer under paragraphs a and c of subdivision five of this section.
The employer must allege and prove by competent evidence, that the actual percent-
age of workers, laborers or mechanics is below the required thirty per centum and
during the pendency of any such contest and until final determination thereof, the
work in question shall proceed under the rate established by the fiscal officer.
New York’s Costly Public Works Pay Mandate
iii
APPENDIX B
Sample Prevailing Wage Determination
Prevailing Wage (NYS): Operating Engineer - Building 06/01/2016
JOB DESCRIPTION Operating Engineer - Building DISTRICT 7
ENTIRE COUNTIES: Allegany, Chemung, Livingston, Monroe, Ontario, Schuyler, Steuben,
Wayne, Yates
PARTIAL COUNTIES: Genesee: Only that portion of the county that lies east of a line drawn
down the center of Route 98, and the entirety of the City of Batavia.
WAGES
Cranes 1 - Up to & including 250 ton capacity hydraulic & lattice boom cranes, all boom
trucks
Cranes 2 - 251 ton capacity and over hydraulic and lattice boom cranes.
Cranes 3 - All tower cranes (when need to climb up) including mobile self-erecting (Potain
and similar type).
CLASS 1: Air Tugger; All terrain telescoping material handler; Barber Green and similar type
machines; Clamshell, Dragline, Shovel and similar machines over three-eighths cu.yd. capaci-
ty (Fact.rating); Carrier mounted backhoes that swing 360 degrees; Big Generator Plant Hoist
(on steel erection); Bridge Crane (all types); Cableway; Caisson auger and similar type ma-
chine; Crane; Derrick; Dredge; Excavator all purpose hydraulically operated; Forklift (with
Factory rating of Fifteen ft. or more of lift); Hoist (on steel erection); Hydraulic/Krupp Drill
Type; Mucking Machines; Remote Controlled excavator with attachments (Brokk type or sim-
ilar); Ross Carrier (and similar type); Three-Drum Hoist (when all three drums are in use).
CLASS 2: A-Frame Truck; Backfilling Machine; Backhoe - tractor mounted; Belt Crete and
similar type machines; Bituminous spreading machine 3/8 yd. capacity or less (Factory Rat-
ing); Bulldozer; Carry-all type scraper; Compressors: Four (4) not to exceed 2000 CFM com-
bined capacity; or three (3) or less with more than 1200 CFM but not to exceed 2000 CFM;
Concrete Mixer; Concrete Placer; Concrete Pump; Dinky Locomotives (all types); Elevating
Grader; Elevator; Fine Grade and Finish Rollers; Fine Grade Machines (all kinds); Forklift
with Factory rating of less than fifteen (15) feet of lift; Front End Loader; Gunite Pumping
Machine; High Pressure Boiler; Hoist (1 or 2 drums); Maintenance Engineer (Mechanic); Me-
chanical Slurry Machine (all kinds); Mega Mixers and similar type machines; Motor Grader;
Post Hole Digger; Pumps (regardless of motive power) no more than four (4) in number not
to exceed twenty (20) inches in total capacity; Shot Crete Pumping Machine; Side Boom Trac-
tor; Skid Steer Loader with attachments; Stoner Crusher; Tournadozer and similar types;
Tournapull and similar types; Trenching Machines; Welder; Well Drill; Well Point System;
EXCEPTION: Single electric pumps up to and including four(4) inches need not be manned.
CLASS 3: Any combination (Not to exceed three (3) pieces of equipment); Compressors -
three (3) or less, or not to exceed 1200 CFM combined capacity; Fireman; Longitudinal Float;
Mechanical Heater; Pumps (regardless of motive power) No more than three (3) in number,
not to exceed twelve (12) inches total capacity; Roller (Fill and Grade); Rubber Tired Tractor;
Welding Machine or Mechanical Conveyor (over 12 ft. in length); EXCEPTION: Single gaso-
line driven welding machine to 300 amps need not be manned.
CLASS 4: Junior Engineers / Oilers
Crane 1 $33.61
Crane 2 $35.42
Crane 3 $36.21
Master Mechanic $32.80
PREVAILING WASTE
iv
CLASS # 1 $30.80**
CLASS # 2 $30.06**
CLASS # 3 $27.60**
CLASS # 4 $23.42
** Hazardous Waste Site Premium: When an employee is required by Federal, State, Owner
or Employer rules or regulations to wear any type of respiratory protection (excluding paper
dust masks) in the Class #1, #2, or #3 classification add $2.50 per hour over the appropriate
classification.
SUPPLEMENTAL BENEFITS Per hour worked:
07/01/2015
Journeyworker $ 25.39
OVERTIME PAY See (B,E,E2,Q) on OVERTIME PAGE.
HOLIDAY Paid: See (5, 6) on HOLIDAY PAGE
Overtime: See (5, 6) on HOLIDAY PAGE
REGISTERED APPRENTICES (1) year terms at the following percentage of journeyworker's
wage.
1st term 60% of class 3 rate
2nd term 65% of class 3 rate
3rd term 75% of class 2 rate
4th term 80% of class 1 rate
Supplemental Benefits per hour worked: 07/01/2015 $ 25.39
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reflecting the views of the Empire Center, or as an attempt to
influence the passage, defeat, approval or disapproval of any
legislation or any other matter before the State Legislature,
the Governor, or any other state or local agency.
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Contributions are tax-deductible to the fullest extent of the
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