California’s Housing Crisis, Construction Labor, & the Costs of Multi-Family Housing

As the housing policy debate escalates and various solutions are proposed, costs become an inescapable topic of discussion. Linkage of construction wage standards to streamlined residential project approvals processes quickly became a particular focus of attention in 2016. We argue that it is unlikely that elevated wage standards could have major impacts on total housing costs, given that construction labor comprises only 14 percent of total California housing costs. The preponderance of academic research on prevailing wage standards[1] cost impacts has found no significant overall impacts on the construction of nonresidential structures.[2] Misconceptions about construction labor are prevalent in the public sphere. We have prepared a two-part post that covers (1) construction labor in the overall cost picture of the multi-family housing sector and (2) the question of whether the workers building new housing will themselves be cost-burdened and require housing subsidies in the absence of policy intervention.


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