Employee Relations

Prevailing Wage

The Mandate: The prevailing wage law is a prime example of a mandate that arbitrarily and without merit drives up the cost of managing a municipal government, particularly as it relates to undertaking public works projects or providing services for municipally owned buildings. Labor Law § 220 mandates that for all contracts for public works projects the contractor must pay workers "prevailing wages" and supplements -- that is, wages and benefits equivalent to those paid to laborers and workers performing the same types of work on private projects. Also, Labor Law § 230 imposes the prevailing wage mandate on contracts to provide services to municipally and privately owned buildings, provided the contract is more than $1,500.

The Cost: Although the payment of prevailing wages is an obligation of the contractor, this cost is passed through to the governmental entity since it must pay the contractor for performing the work. It must also be noted that the methodology by which "prevailing wage" is defined and determined in New York essentially guarantees that the prevailing rate will be the union rate, which is often significantly disproportionate to what non-union labor would cost.

The Solution: The dollar exemption found in Labor Law § 230 was enacted in 1971 and has not changed. During the last four decades, however, consumer prices have quadrupled. A first and relatively easy step to reforming this mandate would be to amend the statute to exempt building service contracts of less than $20,000 from prevailing wage laws. Similarly, Labor Law § 220 -- which currently contains no threshold -- should be amended to exempt public works contracts of less than $35,000 from prevailing wage obligations. Lastly, the method used by the State to calculate "prevailing wages" for public works projects should be changed to use the State's Unemployment Insurance Prevailing Wage tables.  The Unemployment Insurance Prevailing Wage tables are updated semi-annually via the Occupational Employment Statistics survey of employers and reflects local economies' actual prevailing wages, which will provide a better determination of regional prevailing wages for projets.