Economic Development Testimony to NYS Joint Legislative Hearing
First, I want to thank Senator Ryan and Assemblymember Stirpe, the honorable chairs of the economic development committees in both houses, for the opportunity to testify today.
I represent the Associated Builders & Contractors, Empire State Chapter (ABC), a construction trade association representing over 450 open-shop contractors who employ tens of thousands of workers across New York State. Our organization promotes fair and open competition and provides advocacy, education, and world-class safety services for our members. We are also proud to operate one of the state’s largest multiple-employer apprenticeship programs, offering training in ten different trades.
We applaud Governor Hochul’s proposed investment in the Regional Economic Development Councils (REDCs), the New York Forward program, Downtown Revitalization, and the FAST shovel-ready grant program. These initiatives have the potential to create thousands of jobs and drive economic growth. However, their success depends entirely on whether state leaders take the necessary steps to address the rising cost of construction in New York. Without action, these investments will be undermined by inefficiency, delays, and inflated costs.
New York is one of the most expensive and difficult places to build in the country. Due to its burdensome regulations, the state ranks second to last in the nation for competitiveness and a healthy construction environment, with a job growth rate of -2.1%, according to the 2024 Construction Scorecard. Meanwhile, New York City’s construction costs have soared to some of the highest levels in the world, making development increasingly unaffordable. If policymakers fail to act, costs will continue to spiral, further hindering growth and driving away both businesses and residents.
The construction industry is already grappling with record-high material prices, which have risen by 20% since February 2022, increasing labor costs, and the continued uncertainty of the Trump Administration’s tariffs that will further drive up expenses on essential building materials. Rather than compounding these challenges, the state must do everything in its power to lower construction costs and maximize the impact of its investments.
Unfortunately, state policies continue to make construction more expensive by imposing Project Labor Agreements (PLAs) and prevailing wage mandates on state-funded economic development projects. PLAs are pre-hire agreements requiring contractors to hire most of their workforce from union halls, effectively locking out local, qualified open-shop contractors who already have trained and loyal employees. As a result, these contractors are forced to either replace their workforce or decline to bid on projects altogether. No business—regardless of industry—would agree to a policy that forces them to replace their employees with an unfamiliar labor pool.
This restriction reduces competition, drives up costs, and limits opportunities for local workers. According to data from the Bureau of Labor Statistics and the Current Population Survey, over 80% of New York’s construction workforce chooses not to join a union. If PLAs are mandated, most of New York’s construction workers will be shut out of state-funded projects, forcing the state to rely on out-of-state contractors to fill the gap. New York already has a highly skilled, local workforce—there is no justification for imposing restrictions that make construction more expensive, less efficient, and sideline 80% of New York-based construction workers.
Studies have repeatedly shown that limiting competition through PLAs increases costs. Research by Dr. Paul G. Carr, P.E., from Cornell University examined 125 public works projects in New York and found that construction costs increased when the number of bidders decreased. Specifically, when just two bidders were removed from the process, bid costs rose by more than 4%—a completely avoidable expense at a time when New Yorkers are already struggling with a severe affordability crisis.
Another primary cost driver is prevailing wage mandates. While prevailing wage laws were initially intended to ensure fair pay, New York’s system inflates costs well beyond market wages. Instead of reflecting actual wages in the local economy, the state calculates prevailing wages based on the highest union-negotiated rates, increasing construction costs by 13% to 25%, depending on the county. This system wastes billions of taxpayer dollars annually.
A study by the Empire Center found that prevailing wage laws increase construction costs in New York by 13% to 25%, depending on the region and trade. A separate study from the Beacon Hill Institute estimated that prevailing wage laws add an average of 25% to the labor portion of a project, translating to a 10% to 15% increase in total project costs. These inflated costs ultimately mean fewer projects get built, fewer jobs are created, and fewer New Yorkers benefit from public investments.
Now, the Legislature is considering expanding prevailing wage laws to include work completed in custom prefabrication shops. This move would be a major blow to economic development in New York. Prefabrication is one of the most effective ways to reduce construction costs, as it allows building components to be assembled in a controlled environment before on-site installation. Applying prevailing wage mandates to these facilities will cause the loss of thousands of New York-based jobs, increase costs, discourage innovation, and push projects out of state to locations where labor costs are more competitive. This policy would not only drive up the cost of public projects but could also deter private-sector investment by making construction in New York even more expensive.
An overlooked but critical issue is workers’ compensation fraud, which is a massive cost driver in the construction industry. New York’s workers’ compensation system is being crippled by the Scaffold Law (Labor Law 240), a centuries-old statute that holds employers, property owners, and contractors absolutely liable for “gravity-related” injuries, regardless of worker negligence. New York is the only state in the nation that still enforces this outdated law—every other state has repealed it because of its enormous cost burden. Studies show the Scaffold Law costs taxpayers over a billion dollars every year. Repealing it would save billions by reducing liability claims and insurance costs, putting more money back into development and job creation.
New York’s affordability crisis is already driving residents out of the state in record numbers. In 2023, New York lost about 180,000 residents as people moved to more affordable states where they can actually afford to live. It’s not the weather—they’re leaving because Albany’s policies have made New York unaffordable for regular people. If policymakers fail to address construction costs, this trend will continue, making it even harder to retain the workforce and talent needed for a thriving economy.
To ensure the success of New York’s economic development initiatives, the Governor and Legislature must act to reduce the cost of construction. Without intervention, rising costs will force well-intended economic development programs to either scrap projects entirely or significantly scale back their plans. Neither outcome is acceptable.
New York has an opportunity to make transformational investments in its economy, but that will only happen if state leaders prioritize fiscal responsibility, fair competition, and cost efficiency. The time to act is now.
Thank you for the opportunity to testify today.