Lawmakers in Albany are considering a legislative proposal that could significantly widen the scope of private construction projects required to pay prevailing wages. If passed, the measure would lower the threshold for projects receiving public funding from 30% to 20%, increasing the number of developments required to adhere to these wage standards.

Labor groups are advocating for the proposal’s inclusion in the state budget, which is due by April 1. The change would primarily affect market-rate commercial real estate projects exceeding $5 million, requiring them to pay workers the minimum hourly wage established by local labor departments.

Key Changes and Impact

Under current law, only projects with at least 30% public funding must meet prevailing wage requirements. The proposed change would lower that percentage to 20%, making more projects subject to the rule. The legislation would also eliminate the Public Subsidy Board, a panel tasked with determining which projects qualify—a board that has been criticized for inefficiency and deadlocks in decision-making.

Gary LaBarbera, president of the Building and Construction Trades Council and a board member, highlighted which projects would be most affected by the new law:

"It’s commercial real estate projects, pretty much everything but housing projects," said LaBarbera. "Retail projects, community space projects, things like that, it’s market-rate [projects] in all of those areas."

Public Subsidy Board Under Scrutiny

Currently, the Public Subsidy Board must approve qualifying projects before they are required to pay prevailing wages. However, LaBarbera argues the board is ineffective, citing its failure to approve most projects that come before it. In the past four years, the board has ruled only six out of 36 projects eligible for prevailing wage requirements.

According to LaBarbera, the board frequently gets stuck debating basic definitions, such as what qualifies as a "construction cost," which can allow developers to inflate their project costs and avoid triggering the current 30% public subsidy threshold.

"There are developers that are bad actors, just like in any other industry," said LaBarbera. "That’s what bothers me. It’s that they’re getting subsidy from the state, they’re getting market rate, but they want to pay very low wages."

Developers Push Back

Developer groups, however, argue that the Public Subsidy Board plays a crucial role in preventing unnecessary cost increases on private developments that receive public funding. Joe Hogan, vice president at the Associated General Contractors of New York State and a board member, defended the board’s role in keeping economic development on track.

"When we look at the numbers coming out nationally, New York state lags behind getting back to pre-pandemic job numbers in construction," said Hogan. "At a time where we’re seeing the impact of tariffs, and even the threat of tariffs on the producer price index, we don’t need something else to hurt economic development."

Brian Sampson, president of Associated Builders and Contractors of New York, has previously argued that prevailing wage mandates raise construction costs for taxpayers.

"[Prevailing wage] increases construction costs for taxpayers by 20% to 25%," Sampson stated. "Why does [the state] think private power producers are going to build projects in New York over other states that don’t force them to eat higher wages and benefits and slow walk the approval process?"

Labor Groups Push for Change

LaBarbera believes the current system is broken for construction workers and that the proposed changes would ensure fair wages on market-rate projects that generate significant profits.

"They want to make 30% profit, 20% profit," said LaBarbera. "What’s wrong with 15% and pay your worker a fair wage and benefit package?"

If the legislation passes, the Department of Labor would take over the responsibility of determining which projects must comply with prevailing wage laws, removing the role of the Public Subsidy Board.

With the state budget deadline approaching, labor groups are pushing to get the proposal finalized.

"April 1 is the deadline, but sometimes it goes a few days or weeks later than that. We’re in what we would call crunch time now," said LaBarbera. "We’re trying to amend this law to make it serve the purpose that it was intended to serve."

Originally reported by Sebastian Obando in Construction Dive.