Will Building Affordable Homes be Affected by California’s Housing Deal?

Beginning January 1, 2018, construction workers will be paid higher wages and benefits after a decades-long battle with California’s building industry. Five of 15 housing bills signed into law by Governor Jerry Brown this year include prevailing wage rules for employers and contractors to pay laborers higher wages and benefits for new construction projects. The requirements represent the biggest expansion of union backed pay mandates for construction workers since the late 1990s. State Sen. Scott Wiener (D-San Francisco), stated,

As we saw, labor is a very powerful voice in California. We have a lot more work to do, but getting this done was a very heavy lift. It would be very hard to move this kind of legislation forward without labor as part of the coalition.

Even union advocates acknowledge that paying construction workers a prevailing wage increases the cost of building, but state labor representatives argue that the benefits of employing a skilled workforce far outweigh the higher cost of construction. However, building industry representatives are skeptical that much new housing will be built given the wage requirement. Over the past decade, California has built an average of 80,000 homes per year, while 180,000 are needed to meet current demand, which state housing officials attribute to the affordability crisis. Wage rates vary by county and region, but pay is supposed to be in line with an area’s cost of living. Hopefully, California is able to increase the construction of new homes to start catching up with the demand for housing.

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