Testimony to the NYS Joint Legislative Budget Hearing on Housing
Thank you for the opportunity to testify on the critical issue of housing in New York State. I represent the Associated Builders & Contractors, Empire State Chapter (ABC), a construction trade association representing hundreds of merit shop contractors who employ tens of thousands of workers across the 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.
When Governor Hochul outlined her budget proposal for fiscal year 2026, we agreed with her call to build more affordable housing in New York. Just last year, the New York City Department of Housing Preservation and Development (HPD) reported that the city’s vacancy rate hit a historic low of 1.4%. Experts agree that the statewide vacancy rate is hovering around 4%. These figures make it clear: the only way out of this crisis is to build more housing.
The biggest hurdle to building new and affordable units is New York’s extremely high construction costs. Since 2022, construction material prices have risen by 20%. A recent Turner & Townsend International Construction Market Survey found that New York City’s construction costs are among the highest in the world. The problem is about to get worse. The reinstated Trump Administration tariffs on construction materials will further drive-up costs, as most of the materials used in New York are imported from Canada. Without action, these increasing costs will make it impossible for the state to meet its housing goals.
There are immediate steps that can be taken to reduce construction costs. The most effective solution is to ensure that Project Labor Agreements (PLAs) and prevailing wage mandates are not attached to these projects. These mandates drastically increase costs and will make it impossible to meet the housing goals set by the Governor and Legislature.
PLAs increase costs because they limit participation to union labor. A typical PLA forces contractors to hire most of their workers from union halls. The problem is that around 80% of New York’s contractors and construction workers are not part of a union. This means that non-union contractors must either replace their trained workforce with unfamiliar workers from union halls or choose not to bid at all. Many opt for the latter, reducing competition and driving up costs.
Dr. Paul G. Carr, P.E., from Cornell University, studied public works projects in New York and found that fewer bidders lead to higher construction costs. His research showed that reducing competition by just two bidders increased project costs by more than 4%. If PLAs are mandated on affordable housing projects, it will likely add $1 billion in costs to the $25 billion allocated for housing construction—without building a single additional unit. Dr. Carr’s research found that the best bid prices come when there are five or more bidders, a condition that PLAs make impossible to achieve.
Before implementing a PLA, New York law requires a study to show that the agreement would generate savings. However, these studies rely on a flawed premise: they assume cost savings can be achieved by modifying work rules in existing union Collective Bargaining Agreements (CBAs). There are two major problems with this. First, any supposed savings come from cutting workers’ wages and benefits—reducing pay for the very construction workers these agreements claim to help. Second, an independent analysis by the Beacon Hill Institute found that the projected savings in these PLA studies were miscalculated or could be achieved without a PLA.
The RAND Corporation analyzed the impact of PLAs on affordable housing in California, a state facing similar housing challenges. In 2021, California invested $1.2 billion in affordable housing through its HHH program, aiming to build 10,000 units. However, RAND found that PLA-mandated projects had construction costs that were, on average, $81,000 (31%) higher per unit than comparable non-PLA projects. The increased costs meant nearly 1,000 affordable housing units were never built.
RAND also examined prevailing wage laws and their impact on affordable housing production. The report concluded that these mandates increased construction costs by 11–16%. A separate study by the Empire Center found that prevailing wages raise costs in New York by 13–25%, depending on the region and trade. If California lost 1,000 units on a $1.2 billion investment, then New York will likely lose 20,800 units on the $25 billion the state has allocated for affordable housing. More than 20,000 affordable housing units going unbuilt due to politics in Albany is unacceptable. These mandates will guarantee that the Governor’s housing goals are not met.
Beyond these mandates, another major cost driver is workers’ compensation fraud. New York’s system is being crippled by the Scaffold Law (Labor Law 240), an outdated 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 country that still enforces this law—every other state has repealed it due to its enormous costs. Studies show the Scaffold Law costs taxpayers over $1 billion every year. Repealing it would save billions, reducing liability claims and insurance costs, and putting more money back into housing development.
The state has attempted to support construction through the 485X program, but it has failed. Few projects have taken advantage of it, primarily because the state set wage floors that are nearly identical to prevailing wage rates. As a result, the program's financial incentives are negated by the inflated labor costs. Instead of promoting housing development, the 485X program has only reinforced the same costly mandates that continue to prevent the state from meeting its housing goals.
New York desperately needs affordable housing. That is why we are fighting against these costly policies. Every winter, we are reminded of the consequences of a housing shortage. Our leaders in Albany have a choice: they can achieve their goal of 800,000 new affordable housing units, or they can continue prioritizing union mandates that drive up costs. They cannot do both. Let’s build a better New York for everyone.