For the first time in a long time, New York is dreaming big. From building hundreds of thousands of affordable housing units to expanding our aging transit system, the ambitions of leaders like Gov. Hochul and Mayor Mamdani reflect a growing acceptance of the fact that to make New York the most affordable and dynamic economy it can be, we must embrace the promise of the abundance movement. But to do that meaningfully, we have to find ways to build more, build it faster, and build it cheaper without straining public budgets.
While there are many factors at play to blame for the skyrocketing cost of building in an economy the size of New York’s, one culprit looms above all others as not only massively influential, but also fixable: the Scaffold Law. And no, that’s not scaffolding law, which the city recently reformed, but an arcane state labor law that has exponentially inflated the cost of construction beyond reason for decades.
In short, whereas every other state in America relies on a comparative negligence model to determine liability for who is to blame for a construction accident, New York imposes absolute liability on property owners and contractors no matter what.
For years, the debate around this issue has been quietly deadlocked between the forces for common sense reform to dramatically lower the cost of construction, and personal injury lawyers who reap increasingly large windfalls by exploiting this law. But just last year the New York Civil Justice Institute reported “there is widespread abuse of the law” as judgments stretch “to multiple millions of dollars based on injuries that are self-inflicted, exaggerated or fabricated.”
Despite what opponents of reform claim, insurance firms aren’t the issue. Rather, it’s exorbitantly high legal fees that are draining settlement funds and so singularly burdening New York builders. As a result, in less than a 25-year span, the number of Scaffold Law personal injury cases increased more than fivefold, even as injury rates declined.
Now, a new economic report by HR&A Advisors exposes the true scale of this law’s cost on our economy. Drawing on proprietary data from more than 50 of the state’s largest builders, developers, public authorities — such as the MTA and School Construction Authority — and insurers, HR&A found that insurance premiums in New York are four to five times higher than other states without actually improving worker safety. In effect, this invisible tax is siphoning off money that should be spent on bricks, mortar, and worker wages to line the pockets of well-heeled trial lawyers.
The burden falls heaviest on subcontractors — the small and mid-sized businesses, including the vast majority of Minority and Women-owned Businesses, that perform the work. To that point, HR&A’s study found that for high-risk trades like concrete, bridge painting and steel erection, insurance costs can devour 15 to 20% of their total revenue.
Most alarmingly, the report reveals the harsh reality of this issue: from the largest infrastructure upgrades to the smallest parks projects, the Scaffold Law is a poisonous pill on every construction budget in the state.
By reforming the Scaffold Law, New York could save more than $1.1 billion on the Penn Station redevelopment and Phase 2 of the Second Ave. subway. As Mamdani plans to spend upwards of $100 billion on affordable housing development in the next decade, the city could save $8 billion, or increase the number of units the city builds by up to 10%.
Of course, nothing is more important than worker safety, but the data proves the irrefutable: we can protect workers, build more efficiently, and create jobs all at the same time. When 6 to 8% of every construction dollar spent in New York is wasted on insurance premiums covering absolute liability, the Scaffold Law is killing our ability to make anything affordable from housing to new schools and subway lines. For every $100 million saved on insurance costs, builders could create 600 full-time prevailing wage jobs.
Encouragingly, Mamdani has expressed strong support for insurance reform, acknowledging it is an obstacle to our shared housing and infrastructure goals. And as leaders in Washington have put forth legislation in Congress to address the issue, there is hope yet. But as long as the sky-high cost of construction insurance goes unaddressed, it will be impossible for New York to embrace an affordable future — and put more New Yorkers to work building it all at the same time.
Crowley is president and CEO of the Building Trades Employers’ Association.
