The Independent Budget Office is now twice as wrong on prevailing wages

In January, the New York City Independent Budget Office released a report on the impact of a prevailing wage on affordable housing. Respected economists like James Parrott of the Fiscal Policy Institute called the report “flawed” and said it “should not be used to inform public policy decisions.”

Rather than correct their findings, the IBO recently doubled down with an amended report that reaches dramatically different, and even more questionable, conclusions than those in the original. Rather than clarifying the facts, the latest report raises serious questions about the quality and integrity of this research and the data that was used. As it now stands, these questions render the report useless as a document to inform public policy until they are answered.

Moreover, the city Department of Housing Preservation and Development, which provided the source materials and data used in this report, apparently provided this information to the IBO under the condition that it remain confidential. That is not only completely inconsistent with basic research principles, it certainly violates the principles of an open and transparent government.

The fact that the Department of Housing Preservation and Development believes the information forming the basis for this highly controversial “study” should be kept confidential is deeply troubling. HPD Commissioner Vicki Been must instruct her staff to release any and all information that contributed to this IBO report so that this questionable research can be seriously scrutinized. Mayor Bill de Blasio once said that his would be the most transparent administration in the city’s history, and releasing this data would help achieve that goal.

Prior to this unusual occurrence of issuing an amended report, the IBO study was already widely criticized for its omissions and methodology. In fact, the vast majority of research on the fiscal effects of prevailing wages has come to completely different conclusions. For example, the fact that the IBO report only considers construction budgets, rather than actual, final costs, is naïve at best. As anyone who knows New York construction will tell you, proposed budgets don’t necessarily reflect the end result, especially when dealing with non-union contractors who are less efficient in terms of a project’s speed to market (time equals money) and are fined more than union contractors for safety and other violations.

Of course, the special interest groups that touted both versions of the IBO report are the same ones that profited from these multibillion-dollar tax breaks while paying their workers low wages and not providing state-of-the-art safety training that union apprentice programs offer. Organizations like the New York State Association for Affordable Housing, which just over a year ago testified before the City Council that mandating prevailing wage on affordable housing sites would increase costs by 50 percent, applauded the original and amended IBO report, despite contradicting its own conclusions on this topic in their public statements.

We firmly believe that since real estate developers are receiving public funds, they have a responsibility to pay good wages with benefits and ensure safe worksites, unlike what the majority of affordable housing contractors do today. It is a moral obligation on their part, and public officials should demand that when tax dollars are being used as incentives for developers, there needs to be accountability, wage and safety standards for the thousands of men and women who help build our city. 

Gary LaBarbera is the president of the Building and Construction Trades Council of Greater New York.