The small Hudson Valley city of Poughkeepsie is now home to some of the best-paying summer jobs ever: $51.71 an hour.
That’s right: $51.71 an hour.
The project started off as perfectly sensible. The work involves restoring Fallkill Creek, damaged in last summer’s post-Hurricane Irene flooding. To get the job done and put up to 150 unemployed young people to work, the state Labor Department tapped a federal storm-cleanup grant.
So far, so good: There’s work that needs to be done, people who need work and a way to pay for it all.
But $51.71 an hour?
Clearing debris and lifting heavy objects isn’t easy, but why pay temporary manual laborers the same hourly rate as a skilled employee in a $100,000-a-year full-time job?
The story of how a simple and necessary public works project became a full-blown boondoggle is a classic tale of government excess and regulatory insanity.
The ultimate source of funding for the Fallkill cleanup is a federal National Emergency Grant, whose terms require paying wages at the highest of the federal, state or local minimum wage or at the comparable rates of pay for individuals employed in similar occupations by the same employer.
The state Labor Department decided that this meant the prevailing wage for public-works projects. But “prevailing wage” is a term of art that actually means a pay rate based on collective-bargaining agreements between labor unions and private employers.
For the Mid-Hudson region, the prevailing hourly rate for laborers comes to $51.71 — $30.71 in wages plus $21 in benefits. But the temporary workers on the Fallkill won’t be union members, so they’ll get the entire amount as a wage, the Labor Department ruled.
Another string on the grant: Total wages paid to a worker can’t exceed $12,000, excluding fringe benefits — so the Fallkill youths will max out after the equivalent of six weeks of full-time work.
It gets worse. This situation is extreme, but hardly unique: The prevailing wage has been an increasingly costly headache all over New York. But the unions push for it, and the pols are only too happy to oblige.
A recent detailed study, “The Complex Worlds of Prevailing Wage,” by visiting senior fellow Julia Vitullo-Martin at the Columbia University Center for Urban Real Estate, points out that “further extension of [the] prevailing wage will prove destructive economically by driving labor costs up to unsustainable levels, reducing the creation of new jobs, discouraging capital investment and lowering tax revenues.
“Moreover, with prevailing-wage rates generally far higher than local average rates (as much as twice as high) before counting fringe benefits that can add another 70 percent on top, the public dollar buys fewer actual projects.”
And, at Fallkill, fewer jobs.
If not for the prevailing wage, the Fallkill grant could’ve provided seasonal employment for 1,000 young people at the minimum-wage rate of $7.25 an hour — which might have gotten the job done sooner, to boot.
Or the state might have employed the same number of people, paid them $10 an hour and saved taxpayers $219,000 a week.
Better yet, instead of contracting with a nonprofit agency to staff the project, the state could’ve contracted with a local private firm to restore the creek, on the condition that some of the labor be hired from the ranks of unemployed youths. This would’ve had the added benefit of boosting a local taxpaying business — which, in turn, might have offered permanent jobs for the best workers.
Under this project, if all 150 workers each get the $12,000 maximum, the total grant will be $1.8 million — or seven times more than the $257,000 allocation for all other youth employment in Dutchess County (which includes Poughkeepsie) under the governor’s $25 million Summer Youth Employment Program.
The Fallkill cleanup is funded out of a total National Emergency Grant to New York of $16.2 million. It’s still not clear what other projects that’s funding, and if all are paying “prevailing wage.”
Well, on top of restoring the Fallkill, the project illustrates how government all too often works — that is, as wastefully as possible. It also stands as a testament to the power of unions in dictating government wage rates.
Russell Sykes is a senior fellow with the Manhattan Institute’s Empire Center for New York State Policy.