NCPA - National Center for Policy Analysis

Regulations, Corruption Drive Up N.Y. Home-Building Costs

July 28, 1999

A study commissioned by New York City reveals that corruption, outdated regulations and excessive labor and material costs have left the city with the dubious distinction of being the highest- cost residential and construction area in the nation.

  • It costs an average of $183,000 to build one apartment in a typical six-story building in New York City -- 22 percent higher than in Dallas, 10 percent more than Chicago, and four percent higher than Los Angeles, where earthquake considerations narrow the gap.
  • The base hourly wage and fringe benefit rate for bricklayers in New York City is $46.64, 35 percent higher than Chicago, 42 percent higher than Los Angeles and 155 percent higher than Dallas.
  • The report says labor costs are inflated by featherbedding and inefficient work rules, such as those requiring that plumbers install toilet paper holders, and that electricians install mailboxes.
  • As a result, only 52,000 building permits for new dwelling units were issued between 1980 and 1996, even though the city's populations grew by l20,000 households.

"Extortion, bid-rigging, bribery and other illegal practices are pervasive in the construction industry," the report noted. It blamed organized crime in labor unions and construction companies.

But Edward J. Malloy, president of the city's Building and Construction Trades Council, said he did not believe "that there's a big disparity in the wage package between New York, Chicago and Los Angeles."

Source: Dennis Hevesi, "Study Finds New York City's Building Costs Are Highest In Nation," New York Times, July 28, 1999.


Browse more articles on Tax and Spending Issues