Prevailing Wages on Off-site Prefab Will Cost NY Thousands of Jobs
ABC opposes the New York State Legislature's proposed legislation to mandate prevailing wage mandates on construction work performed at an offsite custom fabrication facility. If passed, this law will drive the custom fabrication industry out of the state and eliminate union and nonunion jobs, resulting in a significant step backward for the already struggling economy.
New York is already one of the most expensive states to build in, largely due to the prevailing wage laws that impact almost all taxpayer-funded work in New York. Studies show that New York's prevailing wage laws increase the cost of construction by 13 to 25%, depending on the region. These high costs force companies to rely on work completed at offsite custom prefabrication shops to try and mitigate these costs. As a result, union and nonunion businesses have opened large custom fabrication shops employing thousands of New Yorkers across the state.
This bill will remove the incentive to use custom fabrication shops, thereby wasting the millions of dollars spent building and staffing these facilities and, most importantly, costing thousands of people their jobs.
While New York lawmakers can enforce fabrication shops in the state to pay their workers prevailing wages, they cannot do so for out-of-state shops. Therefore, project owners will get their projects out of state because it's cheaper. Therefore, this law passing would destroy an entire industry, an industry that is substantially different but no less important than on-site construction. Manufacturers invest significant capital in technology, specialized machinery, and craftworker development to fabricate a product different from regular construction. It would be impossible to create their products on the job site and, more importantly, far less safe than doing it in a controlled facility. Sometimes, structures are built offsite because they are more efficient, or the job site conditions demand them because of limited space, security issues, etc.
Post offices, police stations, schools, firehouses, libraries, housing facilities, and office buildings have heavily relied on offsite prefabrication. They go this route because it's cheaper and doesn't disrupt their daily functions like regular on-site construction. Fabrication is not a cut-and-dry process; it shouldn't be legislated like it is. Removing the incentive to use offsite prefabrication will make construction more expensive for entities already feeling a budget squeeze. ABC and its members wholly reject this proposed legislation and the disastrous consequences it would bring to the construction industry.
It's time for our elected leaders to vote on bills that reduce the cost of construction so more construction can be done in New York. Doing so will help build our way out of the affordable housing crisis while also creating jobs for the men and women in the construction industry, regardless of labor affiliation, to benefit from.