The Empire Page

One and a half million New Yorkers have left our state since 2000: more than any other state. They left mainly because of the lack of job opportunities caused by high state and local taxes, and high electric, Workers Comp, and Medicaid costs.

According to the independent Tax Foundation, New York has the second worse business tax climate in the country; surpassed only by New Jersey. New York also has the fourth highest electric costs in the nation; the highest Workers Comp costs; and our Medicaid costs exceed Illinois, Florida, and Texas COMBINED. 

In order to overcome these cost disadvantages and compete for economic development projects, municipalities in New York use their Industrial Development Agencies to lower this tax burden in an effort to level the playing field and encourage businesses to invest and create jobs. Since 1990, IDAs have supported more than 3,800 projects that have invested $41 billion in communities throughout New York.  The State Comptroller reports that these projects have accounted for the creation of 224,000 and the retention of 424,000 jobs.

Too often though, New York is eliminated from consideration as an investment location because of the very high cost of doing business here.  The door is slammed shut before we have a chance to talk about our great research universities, productive workforce, quality of life, comprehensive transportation networks, and superior economic development programs. 

Now, legislation sponsored by Assemblyman Sam Hoyt and Senator Antoine Thompson from Buffalo, and another measure proposed by Governor Paterson, would make things even worse. These proposals would impose job-killing wage mandates on the construction of most IDA-financed projects, as well as the permanent jobs they create. These prevailing and living wage requirements would add 30 – 45 percent to the cost of an IDA project; far more than an IDA can provide as an incentive. What business would pay a 35 percent wage penalty in order to receive a 15 percent benefit from an IDA?

And, if that is not bad enough, Assemblyman Hoyt and Senator Thompson have already stopped more than $2.3 billion in non-profit projects from getting low-cost IDA financing in order to leverage their union wage legislation.  Affected projects include nursing homes, hospitals, charter schools, YMCAs, housing for the mentally disabled, and Cerebral Palsy Centers.

The Hoyt-Thompson legislation is being championed by powerful NYC labor unions in an effort to gain a bigger foothold in Upstate.

We know what the outcome would be if these wage requirements were enacted. Last week for example, the NYC Council killed the Kingsbridge Armory project that would have created 2,000 jobs in the Bronx. At the urging of the same unions pushing the Hoyt-Thompson legislation, the NYC Council rejected the project because it did not include a “living wage” requirement for permanent jobs.

Three years ago, Ulster County established a prevailing wage requirement for all IDA-financed projects. During the two years the wage mandate was in place, not a single application was submitted to the IDA. Within two months after the county repealed the requirement, three projects were approved.

Expanding costly prevailing and living wage requirements to private employers would be viewed by business leaders and site location consultants around the world as anti-competitive. Given New York’s already high cost of doing business, these mandates would impose even greater barriers to economic growth than we already face, and would give business decision makers one more reason to locate projects in other states.  

During this deep global economic recession, Governor Paterson and legislators, including Assemblyman Sam Hoyt and Senator Antoine Thompson, should seek ways to reduce obstacles to growth, not create new ones. The political strength of powerful NYC special interests should not trump the interests of the vast majority of New Yorkers.

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Brian McMahon is Executive Director of the New York State Economic Development Council