Heated debate over whether Calif.’s prevailing wage requirement stymies affordable housing

There’s disagreement around how much pay regulations add to cost of projects.

May 30, 2017 |

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As a shortage of affordable housing plagues California, the state’s mandates that developers pay prevailing wage on most taxpayer-subsidized low-income housing projects are a source of contentious debate.

The cost of constructing low-income housing in California now averages $332,000 per unit. In an effort to determine the causes of high price tags on these projects, in 2014 the state released a report that officially said the impact of prevailing wage couldn’t be determined.

But one of the consultants hired to do the study says that projects that paid prevailing wage were 11% more expensive to build. Labor economists were able to convince the state of enough uncertainties in the prevailing wage analysis so that the study didn’t reach a firm conclusion on the issue, according to the Los Angeles Times.

The prevailing wage requirement continues to have strong support in the state legislature.  Governor Jerry Brown’s housing plan failed last year in large part because of the Building Trades’ opposition to a relaxation of prevailing wage requirements, the Times says. This year, legislators have introduced more limited versions of Brown’s proposal that include prevailing wage requirements.

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