President Donald Trump has an opportunity to significantly reduce the estimated $6 billion to $7 billion cost of redeveloping New York's Penn Station by advocating for the waiver of a 141-year-old state law, according to a coalition of New York builders and former legislators. The law, known as the Scaffold Law, is cited as a primary driver of inflated construction costs in the state.
The Scaffold Law establishes strict liability for property owners and contractors in cases of worker injury on construction sites, regardless of fault. This differs from the comparative negligence standard used in the other 49 states, which assesses fault based on the actions of all parties involved. This strict liability standard in New York reportedly leads to insurance costs that are up to 500% higher than in other states, with insurance consuming 8% to 10% of construction value compared to the national average of 2% to 4%.
This cost differential inflates overall construction expenses by an estimated 6% to 10% in New York, impacting all building projects. Advocates suggest that repealing the Scaffold Law could allow the state to build additional schools annually. Furthermore, the law has contributed to a reduced number of insurers willing to operate in New York, further increasing costs and decreasing competition.
Rep. Nick Langworthy (R-NY) has proposed federal legislation aimed at waiving the Scaffold Law specifically for federally funded projects. The Build More New York coalition estimates that this action could reduce costs on highway and transit projects by up to $2.3 billion over the next five years and potentially save $10 billion in unnecessary federal spending over the next decade.
While proponents of the Scaffold Law, including some trial lawyers and unions, assert it enhances worker safety, data from other states does not support this claim. Construction site injury and fatality rates in New York are reportedly higher than in many neighboring states. Every other state has reformed similar absolute liability laws, with Illinois being the last to repeal its standard in 1995.
Critics also point to the Scaffold Law fostering fraudulent construction accident claims orchestrated by some lawyers and medical providers. Beyond cost savings, proponents argue that reducing these expenses would ultimately be passed on to the public, making projects more affordable, stimulating more construction, and creating jobs. New York has seen a decline in construction jobs, with fewer positions available now than before the pandemic.
John Faso, former New York state legislator and congressman, chairs the Build More New York coalition. The group believes Trump, a developer himself, could leverage his influence to address the Scaffold Law, citing his past success in completing the Wollman Rink repairs in the 1980s as an example of his ability to tackle challenging projects. This effort to reform the Scaffold Law presents another opportunity to address long-standing issues and potentially improve the state's capacity for development.