The state\u2019s construction injury liability laws are costing New York\u2019s economy billions of dollars on Metropolitan Transportation Authority projects and other capital improvements, killing jobs and stalling affordable housing progress, according to a report published on Wednesday.<\/p>\n
The Building Trades Employers\u2019 Association (BTEA) released a report from HR&A Advisors, an economic consulting firm, on Dec. 10 that they said shows in detail the \u201cdevastating economic toll\u201d of the state\u2019s absolute liability standard, known as the \u201cscaffold law.\u201d\u00a0<\/p>\n
The scaffold law holds employers and property owners fully liable if a worker is injured due to a fall while working at high elevations without safety equipment. Some elected officials and others in the construction industry have blamed the law for rising insurance costs.<\/p>\n
Supporters of the law say it is necessary to protect the many workers who perform some of the state\u2019s most dangerous construction jobs.\u00a0\n<\/p>\n
The new report shows that insurance costs in New York are 200% to 500% higher than other states because of the law, which researchers said drains \u201cbillions of dollars\u201d from the economy.\u00a0<\/p>\n
Per the analysis, which is based on a proprietary look into the books of some of the state\u2019s largest builders, insurers and public sector institutions, shows that insurance premiums now consume 8% to 10% of total development costs in New York, compared to just 2% to 4% in states like New Jersey, Massachusetts and Illinois.<\/p>\n
Agencies like the MTA could be affected by the high costs, according to Elizabeth Crowley, president and CEO of the BTEA.\u00a0\n<\/p>\n
\u201cFor decades, New York\u2019s insurance law has pushed construction budgets to the brink, forcing developers and public authorities like the MTA to waste billions on premiums that don\u2019t make construction work any safer and are a driving force behind the affordability crisis that is crushing our state\u2019s economy,\u201d she said.\u00a0<\/p>\n
She said money on the dollar is often wasted on insurance premiums covering \u201cabsolute liability\u201d that no other state embraces.\u00a0\n<\/p>\n
\u201cThe scaffold law isn\u2019t just setting our economy up for failure, it\u2019s killing our ability to embrace abundance on everything from affordable housing to new schools and subway lines,\u201d Crowley continued. \u201cBetween the Penn Station redevelopment and Phase 2 of the Second Avenue Subway alone, the MTA could save over a billion dollars of taxpayer money through this one simple reform.\u201d<\/p>\n
Although the state-run MTA relinquished oversight of the Penn Station redesign, it continues to work on a significant handful of construction projects, including massive ones like the Second Avenue Subway and the Interborough Express.\u00a0<\/p>\n
According to the report, the Second Avenue Subway Phase 2 could save up to $550 million dollars if the Scaffold Law was reformed. The report also shows that a Bronx affordable housing development\u2019s \u201cwasted premiums\u201d cost $15 million to $30 million.\u00a0<\/p>\n
Meanwhile, the report details government data that shows New York construction workers are \u201cno safer\u201d in neighboring states with a comparative liability standard. In 2023, New York City\u2019s construction fatality rate of 11.6 per 100,000 workers, and New York State\u2019s rate of 10.4, significantly exceeded the national average of 9.6, per the report.\u00a0<\/p>\n
\u201cWhen we compared real project costs in New York against peer states, we found that New York\u2019s insurance costs are multiples higher, making it significantly more expensive to build here,\u201d Kate Wittels, a partner at HR&A Advisors, said. If New York were to adopt a comparative negligence standard in line with the rest of the country, it would allow the state to unlock a 1.4x economic multiplier, generating hundreds of millions in new economic output and thousands of jobs from capital that is currently being spent on construction insurance.\u201d<\/p>\n
Support for the scaffold law<\/p>\n
But saving money should not be the only factor considered when it comes to reforming the law, opponents of reform have said.\u00a0<\/p>\n
\u201cNew York has some of the strongest labor laws in the nation, laws that set the benchmark for upholding workers\u2019 rights,\u201d Gary LaBarbera, president of the Building and Construction Trades Council, wrote in an Albany Times-Union<\/a> op-ed. \u201cAmong them is the Scaffold Law, which has been a beacon of construction site safety and contractor accountability for more than a century.\u201d<\/p>\n Jay Gorayeb, an attorney at Gorayeb and Associates, P.C., said the law is essential for protecting workers, especially as the increasing dangers and new risks inherent in modern construction require more safeguards.\u00a0\u00a0<\/p>\n