New York City mayor Bill de Blasio was well on his way to keeping his promise to create 200,000 new affordable housing units in the city over the course of a decade when the prevailing wage caused problems. The primary weapon in de Blasio’s arsenal was the 421-a tax credit that gave developers significant concessions in exchange for building affordable housing units. But when it came time to renegotiate the prevailing wage with unions, things went wrong.
Renegotiating The Prevailing Wage
The governor of New York told the city and union representatives that they had to negotiate a prevailing wage that would allow for the continuation of 421-a before January 1, 2015. Neither side could agree on a wage, so the 421-a was discontinued.
New York governor Andrew Cuomo is considering subsidies to try and offset the cost of the prevailing wage. However, the city of New York estimates that the prevailing wage as it is now would raise the cost of the affordable housing project by 23 percent and cost an extra $3 billion. It is a price tag the city will not pay.
The New York City construction unions say that the actual increase in costs for the affordable housing project would be 13 percent. That is a number the city and state can absorb. But the city’s budget department is not backing off its 23 percent estimate, nor is it considering recommending that the city absorbs any additional costs associated with wages.
Are Unions Losing Their Grip In New York?
The prevailing wage is generally considered the union wage required to do work on a project that is funded by public money. While all federal and most state contracts require union jobs, private contracts are allowing for non-union jobs, and that is costing the unions a lot of work.
In 2008, the labor unions in New York City did approximately 24 million hours of work during the fiscal year. By 2015, that number had dropped to 21 million hours. This was despite the fact that 2015 was one of the busiest years for construction in New York City this decade. Major New York City contractors such as Gilbane, which does over $1 billion of work in New York City annually, has opted not to sign on to some of the newest union agreements and will use non-union jobs to get the work done. The unions are picketing Gilbane, but the picket lines are not what they used to be when the unions were in control of New York City labor in the 1950s.
How Are Unions Affecting Affordable Housing?
Despite the loss of influence that labor unions are experiencing in New York City, affordable housing projects are still completed using public money. This means that the prevailing wage must be used, and that is causing a slow-down in affordable housing work.
The idea that unions are losing ground in privately funded projects could very well be fueling the union’s lack of movement on the prevailing wage for Mayor de Blasio’s affordable housing projects. The unions argue that their workers are better trained and more efficient that non-union labor. It takes years for a union laborer to work up through the ranks, and unions make hours of safety training mandatory for every worker.
Union Versus Non-Union Job Safety Arguments
Unions also argue that their excellent safety record, when compared to non-union jobs, makes them a better choice for any type of project. Union projects do not experience the amount of work stoppages and fines that non-union companies receive. As a result, that loss of productivity from non-union workers makes union crews a better value for the city.
Despite their best arguments, the fact is that the city is using the prevailing wage as a reason to not fund more affordable housing projects. It remains to be seen if the state steps in with solutions that will allow the prevailing wage for the New York City projects without significantly increasing costs, but any of those solutions are still in the discussion phases.
When the unions and the city had to agree on a prevailing wage that could keep the affordable housing program going, they could not. With more private projects taking on non-union labor, the city is hoping that the pressure to get union workers back on the job will force unions to reconsider their wage requirements.