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Labor woes must be addressed to solve California’s housing crisis (CA)

Posted by National Alliance for Fair Contracting on

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.

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Op-Ed If residential builders pay prevailing wages it would help – not hurt – California’s housing crisis

Posted by National Alliance for Fair Contracting on

By Alex Lantsberg
May 19, 2017, 4:00 AM

California has a housing crisis. Supply has not kept pace with demand. Rents and home prices are soaring and many working families are being priced out of the market altogether.

The state Legislature is considering myriad ideas for reform. One that has generated a lot of push-back from the building industry is incorporating prevailing wage standards into more residential projects.

“Prevailing wage” refers to what’s generally paid to skilled craft workers in different regions. Based on local employer surveys, it includes hourly pay, benefits and training costs for dozens of different construction occupations. It sometimes, but not always, reflects union rates. Typically required on publicly funded construction projects, prevailing wages encourage contractors to compete based on workers’ skill, experience and productivity, as well as on innovative project management – not merely on who can pay their workers the least. Decades of peer-reviewed research have linked prevailing wages with higher-quality craftsmanship, more local hiring and lower poverty rates among construction workers.

Peer-reviewed research has linked prevailing wages with higher-quality craftsmanship, more local hiring and lower poverty rates among construction workers.
Some builders and developers falsely claim that paying prevailing wages would lead to higher housing prices and make the state’s affordability crisis worse. They’re wrong; they want to maintain a status quo that allows them to line their pockets at the expense of workers and taxpayers.

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