If the Prevailing Wage Law Levels All Bids, How Do Non-Unions Keep Winning?
One estimator says, “The most likely reason is that the non-union bidders are still lying.”
This is the third installment of an analysis of the recent report by Cornell University, “Building Responsible Projects in New York City” which concludes that union labor is more affordable than non-union labor.
In January 2022, fed up by non-union bid rigging that had tilted the industry toward bad actors, New York passed the prevailing wage law to even the playing field. Now, any contractor bidding on a project over $5 million that will receive at least 30% of that in public funding must provide estimates that are based on paying their workers the prevailing wage. That means hourly pay plus benefits.
The prevailing wage is largely based on what construction unions pay their workers. Now that non-union contractors must match union pay, all prevailing wage bids should net out equal on labor costs, and builders can then assess the contractor bids on a set of criteria other than cost — like speed, safety, and quality (union strengths).
But a year-plus after the enactment of the law, union contractors are saying they’re still not winning as many jobs as non-union contractors and the reason they’re being given is cost. One person close to the process said to Union-Built Matters, “we’re being told we’re still higher than non-union.”
We reached out to a construction estimator who has seen contracts “go the wrong way,” as he says, meaning non-union crews have won them. He summed it up quickly. “They’re still lying. They have to be.”
"There should be no large cost discrepancy between union labor and non-union labor at all"
— Construction Project Estimator
He explained a truth about standard jobs that will receive public funding and thus require the prevailing wage. “We all know the number of guys it takes to do those jobs. How many square feet? How many floors? What type of materials? And what are the legal and safety requirements of building? We’ve estimated these jobs so many times.” He created an example, “It’s 20,000 hours, 8 weeks, 64 people. These are the figures that — if you’re following the safety laws, which means allotting the right number of people for each task, and we’re all paying prevailing wage — these figures should all be the same on everyone’s bid. There should be no large cost discrepancy between union labor and non-union labor at all.”
“So how are they cheaper?” he asks. “You tell me.”
And then he points to the subtle comments in the recently published Cornell University report on this subject. “That report focuses on why unions are actually less costly than non-union. There are so many reasons. But in between the analysis it says stuff like, ‘of course unions are safer and their work is better, it lasts longer than non-unions. It’s said so casually, as if everyone knows these things. And I think they do.”
Indeed, the report states that “…empirical research on the construction industry consistently finds that union contractors outperform non-union contractors on numerous measures of work quality and productivity.”
Our estimator contact then asked, “So now tell me this. Union labor does better work, and now we know it’s more affordable. Why aren’t union contractors winning every bid? The most likely reason is that the non-union bidders are still lying.”
New York legislators have argued that even though the project at 475 Bay Avenue in Staten Island falls under the prevailing wage law, the builders have found loopholes to avoid paying their workers properly. It is one example of the continued unscrupulous behavior by non-union builders to skirt the rules, they argue.
The estimator then said of non-unions, “I think it’s that lying that is making their work suffer.” He explained, “Of course, this is my suspicion, I don’t see their bids — there’s no transparency at all. I don’t have actual proof of this. But nothing else makes any sense now. I believe that many of them, I bet they’re not allocating the proper number of people, nor are they assigning all the specialties that are needed. They’re misclassifying workers — planning on concrete guys doing jobs that aren’t concrete, and like that. It stresses the system, stresses those workers. And the building suffers.”
He concluded, “We need some kind of enforcement to check the veracity of all the prevailing wage bids. Without verification, that law is just ink on paper.”
Making and enacting rules, like the Prevailing Wage law, is the first part of establishing a fair working system. The second part is the enforcement of those laws. Increasingly, we have the rules we need to create a fair playing field. But we still seem to need more transparency.
Cornell University’s ILR Workers Institute, which authored the report, created a sample calculator that shows the various cost savings that unions provide over non-union contractors. You can sample it here.
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