Scott Littlehale, Guest Columnist
Published 3:47 p.m. PT – March 5, 2019
If you are concerned about California’s housing affordability crisis, remember these three numbers – 15, 33, and 200,000.
Fifteen is the percentage of total residential project costs consumed by construction labor. The other 85% is the stuff really driving up the cost of your homeland acquisition: Zoning, permitting, environmental compliance and related costs.
Thirty-three (percent) is how much less, on average, residential construction workers earn compared to construction workers who build our commercial facilities and public works.
Put in perspective: The last time California produced housing quantities similar to what Governor Newsom is calling for today – the 1970s – there was no wage gap between residential and non-residential construction work.
Two hundred thousand is the minimum number of new residential construction workers that California needs – under current levels of labor productivity – in order to build enough new housing units to keep our affordability crisis from getting worse.
Obviously, if you want to build more housing units, the last number is the most concerning. Construction is one of the nation’s most dangerous occupations. The industry’s jobs are amongst the most economically volatile – often the first to go during cyclical downturns and recession. Employers must be willing to offset these risks with higher compensation to attract new workers.
But most are not.
Recent research shows that the cost of living adjusted compensation for California construction workers ranks now 46th among US states. One in six construction workers faces some form of wage theft. Residential construction workers earn 24% less per year than other jobs on average, and more than half do not get health insurance at work.
Complicating matters for the housing industry is that there are no longer any shortcuts available to meet its labor force needs. The nation is near full employment, net immigration flows have been negative since 2005 and California’s population of young men without a college degree is shrinking.