ALBANY — In a classic struggle between business and labor interests, a battle is raging at the statehouse over legislation that would impose prevailing wage requirements on construction projects that are supported with tax incentives or public subsidies.

The latest volley was fired Tuesday by a coalition of more than 40 organizations calling for the defeat of the measure, which is backed by the New York State AFL-CIO, an influential labor federation that is an ally of Gov. Andrew Cuomo and the Democratic leadership of both the state Senate and Assembly.

In what it cast as "an open letter to New Yorkers," the Don't Block New York Building coalition called the measure advancing in both legislative chambers a "job killing proposal" that will discourage private sector investment in economic development projects.

Among the group's diverse members are: the Buffalo-Niagara Partnership, the North Country Chamber of Commerce, Unshackle Upstate, the Food Industry Alliance, the Business Council of New York State and Commerce Chenango.

"Redefining 'public works' in the radical way that is being proposed here would have an extraordinary negative effect on the economy across the entire state," Michael Elmendorf, the president of the Associated General Contractors of New York State, told CNHI. His group is also a coalition member.

E.J. McMahon, research director of the Empire Center for Public Policy, estimated that expanding the prevailing wage mandate in New York to all projects that get public support would boost construction costs significantly. In an essay published after the legislation was filed, McMahon argued the proposed expansion resembled a "costly protection racket" for New York's "politically powerful labor cartel."

The New York AFL-CIO has a very different view.

In a bill memo sent to lawmakers, the federation said the state constitution "clearly requires prevailing rate be paid to workers on public works projects" so that taxpayer dollars help to spawn job creation.

As to the need for the legislation, the AFL-CIO said: "Attempts to exempt projects that include private investment in publicly owned and/or financed facilities and a myriad of other distractions designed to deflect prevailing rate requirements have been worked into the process, often creating confusion and frustration for workers and employers alike."

The federation, noting it represents some 2.5 million New Yorkers, said the legislation ensures that all projects getting taxpayer resources are defined as "public works." It said the measure would help to create new union apprenticeship opportunities and "prevent unscrupulous contractors from exploiting workers by driving down pay."

Current law is unclear on what constitutes a public works project in New York. But the legislation, authored by Sen. Jessica Ramos, D-Queens, and Assemblyman Harry Bronson, D-Rochester, defines public works as a project that would get a public subsidy, tax credits or tax-free bonds.

Cuomo has identified an expansion of the prevailing wage mandate as one of his legislative priorities.

In his State of the State speech in January, the governor stated: "Construction with public subsidies should be subject to the prevailing wage so they're built right, they're built fairly, they're built union."

In construction trade jobs, the prevailing wage is usually several dollars more per hour than the market wage.

Elmendorf said that he believes the current law could be amended to clarify what constitutes a public works project, though he urged that it be done in a way that does not discourage private investment in construction projects.

He acknowledged that projects that provided new offices for the State University of New York Polytechnic Institute campus in Albany are examples of ones that should be classified as public works.

"There is something to be fixed, but what is being proposed here would wreak economic havoc, and I think disproportionately so for upstate," Elmendorf said.

Joe Mahoney covers the New York Statehouse for CNHI's newspapers and websites. Reach him at jmahoney@cnhi.com .