Odd Lots Podcast Summary

Episode: How Insurance Costs Make NYC Construction So Expensive

Date: February 26, 2026
Hosts: Joe Weisenthal & Tracy Alloway
Guests:

• Elizabeth Crowley (President & CEO, Building Trades Employers Association - BTEA)
• Michael Capasso (President & CEO, CAC Industries, Inc.)

Episode Overview

This episode explores why construction in New York City is so costly, with a particular focus on the impact of insurance costs. The discussion covers a range of factors—union labor, material and labor costs, regulatory and permitting delays, project management, and, most notably, New York’s unique “scaffold law,” which drives up insurance premiums. The guests break down exactly how these costs accumulate, why certain laws persist, and what avenues might exist for reform. The conversation is rich with concrete examples from major infrastructure projects, industry data, policy debate, and current trends in labor and technology.

Key Discussion Points & Insights

1. The Many “Buckets” of Construction Costs

[01:37-04:18]

• Cost pressures in New York construction stem from multiple factors: materials, labor, insurance, regulations, and financing costs.
• NYC especially suffers from “no productivity growth” in construction, compounding problems (03:06, Tracy).
• “We don’t have robots building houses yet.”—Joe Weisenthal (03:19)

2. Union Labor: Costs, Perceptions, and Reality

[05:02-07:27]

• Union labor typically comprises 30-35% of construction costs (06:24, Capasso).
• Prevailing wage laws mean non-union contractors do not save much versus union rates; non-union often means cutting corners on pay and safety.
• “We’re proud that we’re union contractors. You know, we’re the good guys...We’re paying for benefits and wages and that’s just part of the cost of construction.”—Elizabeth Crowley (05:28)

3. Delays and Their Expensive Ripple Effects

[08:59-12:52]

• Delays stem from multi-layered land use processes, extensive environmental reviews, and project changes due to design/field mismatches.
• Delay example: Fully funded, simple park turf replacement took seven years due to unexpected subsurface repairs and review cycles (12:27, Crowley).

Memorable Dialogue:

• “Why would that cause additional expenses?” — Tracy Alloway (08:59)
• Indirect overhead (project management, safety, supervision) gets charged to the project regardless of productive work—these people can't be reassigned during delays (11:32, Capasso).

4. NYC’s Challenging Geography & Logistics

[13:30-14:47]

• Manhattan's density, reclaimed land (e.g., Battery Park City), limited material access, and the need for complicated utility work drive costs up.
• “Most of the manufacturing base is not within the five boroughs...The cost of that transportation into the five boroughs...” — Michael Capasso (14:06)

5. Insurance: The Scaffold Law’s Outsized Impact

[17:18-22:26]

• Scaffold Law: NYC contractors are 100% liable for any height-related injury regardless of worker negligence. Only state left with such a law (17:34, Crowley).
• In 49 other states, comparative negligence applies, dividing blame and reducing insurance costs.
• “If we were to put comparative negligence on [Penn Station], we can save over $500 million. That’s half a billion dollars.” — Elizabeth Crowley (18:14)
• Insurance can be up to 10-12% (even 15-20% for some subcontractors) of project costs, compared to 2% in other states (21:08, Crowley).

Notable Dialogue:

• Insurance carriers have fled the NY market; the few remaining demand high deductibles and offer poor terms (19:34, Capasso).
• “Contractors in New York are paying 10% of total construction costs to insurance, that’s 500% more than other states.”—Elizabeth Crowley (21:08).

6. Fraud, Litigation, and Political Inertia

[22:26-26:50]

• Surge in claims and payouts from third-party lawsuits, including staged accidents.
• Trial lawyers and lack of reform sustain the Scaffold Law (“cash cow” for litigation, 22:26, Crowley).
• Illinois repealed its scaffold law in 1995, and fatalities declined there afterward.
• Growing political awareness (Governor targeting insurance fraud in auto, but not yet construction insurance).

Notable Quote:

• “It’s all public information of just one building or a couple of buildings where multiple claimants from the same building with the same law firm utilizing the same medical practices filing these lawsuits.”—Michael Capasso (26:50)

7. Availability of Insurance and Effects on Market Competition

[27:24-29:41]

• Previously, there were many insurance options; now, contractors face minimal choices with steep deductibles and rates (27:49, Capasso).
• Insurance limitations also keep out-of-state contractors from bidding in NYC, reducing competition and likely driving up prices (29:41, Capasso).

8. Insurance Applies Even to “Non-Height” Projects

[30:58-32:09]

• “Scaffold law” can apply to injuries from falls of just a few inches—even in gravely, sewer, or non-high-rise works (31:14, Capasso).

9. Beyond Insurance: Are the Outrageous Construction Costs Real?

[34:07-36:04]

• High-profile projects (elevators, parks) may sound expensive due to necessary utility relocations and subsurface complexities, not merely the direct physical installation.
• But NYC is still the most expensive major city in the US for construction (35:46, Crowley).

10. Positive Reform Examples

[37:09-38:40]

• Progressive design-build contracting used successfully in recent projects (e.g., Shirley Chisholm Park) has reduced time and costs.
• “So there are ways we could work together, putting our minds together to bring about real reform.”—Elizabeth Crowley (38:40)

11. Safety and Outcomes: Are Strict Laws Making Things Safer?

[38:40-39:59]

• Despite some of the strictest liability laws, NYC has higher construction fatality rates (about 20% above national average) (39:34, Crowley).
• “We have nearly 12 fatalities per 100,000 workers, whereas the national average is under 10.”—Elizabeth Crowley (39:34)

12. Labor Pool Pressures and Technology

[39:59-43:28]

• Skilled labor shortage is persistent. Young people aren’t going into trades; industry faces an aging workforce (40:19-41:20, Capasso).
• Non-union jobs now dominate residential/affordable housing and see the most job site injuries (41:20, Crowley).

13. Tech & AI in Construction

[42:17-45:36]

• AI is mainly used for process and project management analytics, not robot labor (yet), but robot-aided tasks (like remote heavy equipment operation, rebars tying) are emerging.
• Insurers like Zurich deploy AI to analyze worksite footage, flag safety issues, and reduce claims and risks (44:32, Crowley/Capasso).

14. Materials Cost and Availability

[45:36-46:29]

• Material prices have not come down post-pandemic; “fuel surcharges never go away” (46:02, Capasso).
• No ongoing shortages, unlike the immediate COVID aftermath.

15. Consultants and Incentives

[46:42-47:53]

• Use of third-party “owner’s reps” (project consultants) has expanded, sometimes creating misaligned incentives—they may slow projects to continue billing (47:30, Crowley).

Notable Quotes & Moments with Timestamps

• “We don’t have robots building houses yet.” — Joe Weisenthal [03:19]
• “We’re proud that we’re union contractors. You know, we’re the good guys...” — Elizabeth Crowley [05:28]
• “Insurance was an add on...maybe up until even 10 years ago. And in the last 10 years we’ve seen a significant rise in the cost of insurance.” — Michael Capasso [23:12]
• “[Scaffold Law] is a 140-year-old law. It’s antiquated, it’s broken policy. Even both the Democrats and the Republicans, when you speak to them one on one, they know this is bad policy.” — Elizabeth Crowley [21:47]
• “There are contractors based in other states that won’t work here because their insurance companies will exclude their policy from working in New York...That then may drive down competition.” — Michael Capasso [29:41]
• “Despite having such a strict liability on contractors, New York has a higher rate of fatalities...We’re 20% higher in New York.” — Elizabeth Crowley [39:34]
• “Employees who use AI will replace the employees who aren’t.” — Michael Capasso [43:16]

Important Timestamps

• [05:28] Union labor cost perceptions debunked
• [06:24] Labor as % of construction costs
• [07:27] Delays and the high cost to projects
• [17:34-19:30] Scaffold Law defined and its financial impact
• [21:08] Insurance cost comparison to other states
• [22:26] Political obstacles to reform
• [27:24-29:41] Evolution of the insurance market
• [31:14] Scaffold Law’s reach to all types of projects
• [39:34] Safety rates—strict laws but higher NYC fatalities
• [43:16] AI's rising role in construction
• [46:02] Persistently high materials cost
• [47:30] Consultant-driven project delays

Conclusion

The cost of construction in New York City is unmatched in the US, driven by a combination of union rates set by law, layered regulatory and approval processes, unique logistical headaches, persistent insurance premiums exacerbated by the Scaffold Law, and consultant bloat. Despite claims that stringent liability laws should lead to safer worksites, New York’s safety outcomes lag behind those of other states. Reform (particularly of insurance policy) is seen by guests as essential to kickstarting both productivity and abundance in New York construction, but faces entrenched opposition. Meanwhile, technology offers some hope for process improvements, but fundamental legal and regulatory changes will be required for meaningful cost reduction.