Dear Governor Brown and California State Legislators:
To solve California’s housing crisis, we must take steps to increase our housing supply and close the affordability gap for working families.
We can make real progress by incorporating prevailing wage standards into state housing reforms.
Housing prices have soared as much as 54% faster than inflation over the past twenty years, but real wages for nearly a million Californians who work in the construction industry have actually declined by 25%. The median wage of $35,000 per year prices most construction workers out of the housing market—particularly in high cost coastal cities.
In fact, most are immigrants and people of color earning $.70 on the dollar of similarly skilled white workers. Nearly half have no health insurance, and one in six face some form of wage theft.
Most research shows that low wages reduces productivity and invites workforce shortages. It takes 13% more workers today to equal California’s construction output of twenty years ago. Low wages will make it harder to attract the skilled workers we are going to need to build our way out of this crisis.
This has been a windfall for residential developers and builders, whose profits have grown 50% faster than either labor or material costs. But it’s been a burden for taxpayers, because poverty wages for construction workers increase spending on Medicaid and other public assistance programs by tens of millions of dollars every year.
Housing reforms that fail to include prevailing wage standards will only make these problems worse.
Long associated with more local hiring and stronger economic outcomes, prevailing wages are the local market based minimum wage for skilled construction work. By raising the “floor,” these standards can help close the affordability gap by pulling thousands of construction workers out of poverty and reducing income disparities that disproportionately impact people of color.
Most research shows prevailing wage standards do not increase total project costs. Instead, they reduce worksite waste and improve productivity by as much as 16%. And with profits now representing a larger share of total residential construction costs than workers’ wages and benefits, it is clear that the industry is well positioned to make the workforce investments that are needed to close the affordability gap.
Real housing reform needs to do more than simply streamline more development. We need to promote investment in the people who are doing the building, and struggling to pay the rent in our communities.
Please include prevailing wage standards in your state housing reform package.
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