Prevailing Wage Bill Would Deliver Devastating Blow to LI Economy

prevaling wage blog imageA bill has passed the New York State Assembly and is now sitting in the State Senate (A1261/S1947) that would require all Industrial Development Agency (IDA) funded projects to pay “prevailing wage.”  The bill is co-sponsored by State Senators James Gaughran and Monica Martinez.

While we appreciate the good intentions of the bill’s supporters, it must not pass. The bill’s adoption would deliver a devastating blow to future economic growth in Suffolk County. In addition to inhibiting the creation of new manufacturing enterprises, this radical change in IDA guidelines would also suppress the introduction of new housing into our region, including affordable housing.

Over the course of 41 years, HIA-LI has grown to represent tens of thousands of Long Island business professionals. We serve as a widely recognized advocate for regional development. It is our core mission.

A centerpoint of our constituency is the Hauppauge Industrial Park, which ranks second in size only to Silicon Valley among America’s industrial parks. This 1,400-acre Park houses more than 1,350 businesses employing some 55,000 people. These workers collectively represent a post-tax payroll accounting for more than $2 billion in local spending. Many of our projects have benefited from IDA support.

More broadly, the Suffolk IDA plays an essential role in Long Island’s economy. It has been a vital economic development resource with an excellent record of success helping local companies expand or renovate, build or add new facilities, or relocate to Suffolk County.

In the Town of Smithtown alone, the Suffolk IDA has been instrumental in the delivery of 34 projects – 13 ground-up developments among them. Most of these IDA projects have been situated in the Hauppauge Industrial Park. Townwide, they are helping to create 4,624 jobs and leverage more than $322 million in private capital.

A new prevailing wage provision is expected to shoot average IDA projects skyward by as much as 40 percent. Such a surge will instantly transform this new requirement into nothing short of a deal-killer for vast numbers of new developments. Contrary to the feelings of some lawmakers this bill will not increase the salary of construction jobs but will decrease the availability of jobs. This would not only stymie the creation of tens of thousands of permanent jobs and construction jobs but would also suppress creation of the kind of workforce housing that allows Long Island to allure and retain skilled personnel including millennials.

Over recent years, New York State witnessed the way that a new prevailing wage requirement had choked off the pipeline of IDA projects in Ulster County and the City of Yonkers. That same harmful scenario would surely play out here, too.

Our analysis is clear: imposing these onerous new costs on future IDA projects would severely diminish Long Island’s competitive status – and badly dampen our hopes for the future.

We urge our State lawmakers to reject this unsustainable new burden on our region’s economy.

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