The last time California produced housing in quantities commensurate with what industry leaders, our governor, and the basic math of population growth says is needed to promote more affordability today was the 1970s.
Since then, the housing industry has changed in two major ways.
The first change has been regulatory—a patchwork of often well-intentioned laws dealing with permits, zoning, environmental and other considerations that determine what type of housing can be built, and where. In recent years, state government has sought to respond to concern over these burdens with everything from new laws that “streamline” housing development, to lawsuits that hold cities accountable for failing to build.
The second change, however, is one that the housing industry brought on itself by making residential construction jobs—already among the most dangerous and economically volatile occupations in our economy—less appealing.
Recent research shows that in the 1970s housing construction workers made essentially the same wages as the skilled professionals who built our public works and commercial facilities. During those years, residential construction firms utilized skilled trade apprentices, and actively invested in the training of new workers—often via prevailing wage requirements or collective bargaining agreements.
Today, everything is different. Residential construction workers face a widening income gap of 33 percent compared to their peers in public works and commercial building. Wage theft — in the construction industry alone — is up 400 percent. Residential firms have largely abandoned collective bargaining, prevailing wage, and investments in apprenticeship training.
They were able to skate by for a while on a pool of lower skilled young and immigrant workers.
However those pools have been shrinking since 2005. The nation is close to full employment. The housing construction industry’s workforce is getting older. And residential construction firms are simply not competitive in today’s labor market.
California’s public works and commercial construction projects aren’t getting shelved due to a lack of available labor. However many housing projects are because the industry is struggling to find workers willing to perform this dangerous and economically volatile work for comparatively lower wages and fewer benefits.
It does not take a PhD in economics to see that the foundation of any housing affordability plan for California is to expand housing supply. But to reach Governor Newsom’s ambitious supply goals — even under the most optimistic productivity scenarios — we need to recruit at least 200,000 new residential construction workers.
History tells us that regulatory reform and lawsuits will not make these workers appear. Only competitive labor standards can do that. Just like we had in the 1970s. Just like we have on most public works and commercial projects today.
However well-intentioned, any housing bargain that doesn’t reflect this basic principle will fall short. And that’s an outcome Californians can no longer afford.
Scott Littlehale served on the Technical Committee of CASA (the Committee to House the Bay Area) and has been researching the US political economy and labor policy since 1993. He is the author of “Rebuilding California: the Golden State’s Housing Workforce Reckoning.”