STUDY: LINKING PREVAILING WAGE STANDARDS WITH HOUSING REFORMS WOULD CLOSE AFFORDABILITY GAP
Alex Lantsberg, MCP, AICP
A brand new study by Smart Cities Prevail shows that linking prevailing wage standards with proposed reforms to streamline new housing development would close the affordability gap, save state and local governments tens of millions of dollars annually, and disproportionately benefit communities of color.
Overall, the study notes that it takes 13% more workers today to match the residential housing output that California enjoyed just twenty years ago. This steep decline in productivity has been matched by a 25% decline in inflation-adjusted blue-collar construction wages (the median wage is just $35,000 per year) and housing prices that have soared as high as 54% in the Bay Area.
“A productivity renaissance will be necessary to produce housing units in the numbers that will noticeably shave what Californians pay for housing,” said study author Alex Lantsberg. “Studies have repeatedly shown that the best way to realize that goal is by incorporating prevailing wage standards.”
Prevailing wage is a minimum wage for blue-collar construction work that reflects local market rates for different skilled crafts. Long associated with stronger economic outcomes and more local hiring, most research shows that prevailing wages have no significant impact on total project costs because they promote higher skilled craftsmanship. This triggers increases in productivity and efficiency as high as 15%, reduced reliance on taxpayer funded public assistance programs, and prevents workforce shortages by helping to fund the apprenticeship programs that are used to meet California’s construction workforce training needs.