Prevailing Wage: The Basics

Part of the Fiscal Year (FY) 2021 Enacted Budget that New York Gov. Andrew Cuomo signed into law on April 3rd, New York’s prevailing wage laws will be expanding to include private projects worth over $5 million and are receiving public subsidies of 30% or more of the total construction costs.

There are varying opinions as to whether the move will hurt or hinder development. Once broken down, there is valuable leverage that can be extracted from this bill for the Merit and Open Shop Contractors.

Prevailing wage, unlike minimum wage or the standard employee wage, is defined as the basic hourly rate paid on public works projects to workers engaged in a particular trade/classification or type of work within the locality and/or nearest labor market area (in our case counties).

Prevailing wage is based on working a 40 hour week and is a combination of 2 things:

  1. hourly basic wage

  2. hourly supplemental benefit: payments for health and/or pension benefits and can also cover vacation pay, insurance, and training

Each Prevailing Wage schedule is determined by the NYS DoL. Each county across New York State issues its own Prevailing Wage schedule of rates per trade, the 5 boroughs being towards the highest.

The Prevailing Wage rates are very similar to those rates of a local union trade in that area, that is because those companies fill out the surveys, while most open shop contractors do not.

The new law is expected to significantly increase labor costs for “private” projects; it’s expected for workers making an average wage of $20-$25/hr to see an increase to $60-100/hr. depending on whether their employer has a New York State Department of Labor (NYSDOL) Registered Apprenticeship program.

How to leverage the new legislation moving forward

For open shop contractors, the solution that pays dividends immediately and in the long run is to become a sponsor of a New York State Department of Labor (NYSDOL) Registered Apprenticeship program.

These programs are designed to train individuals, that have zero to little work experience a specific skill set through a combination of on-the-job training and classroom learning.

With the right help, applying, registering, and maintaining a sponsorship is not complicated. The process takes time and approval may take 3-4 months after the paperwork is submitted.

Next week we’ll get into the specifics about the wage scale and how an New York State Department of Labor (NYSDOL) Registered Apprenticeship program can lower the labor costs.

For more information Contact Michael Todisco, Apprenticeship Connections & Consulting, 516-457-8037

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