A lot has been said lately about the proposed Assembly Bill 199, and for good reason. This bill would have a devastating impact on our states already troubled housing inventory. California ranks 49th out of all 50 states with regard to home ownership and is at its lowest level since 1940. The average California home costs 250% more than the national average. Adding the additional costs of a prevailing wage labor rate to the construction of privately funded housing developments would add an additional 46% to the cost of a new home.
These figures are staggering. With close to 70% of the state’s residents already priced out of the market for a median priced home ($511,000), the math just doesn’t add up. Our state has a massive housing shortage and to make matters worse, it is already one of the most expensive states to build in. All costs, fees, taxes, regulation expenses etc. that are mandated by state and local agencies, ultimately cause the price of homes to increase and private builder profits to decrease. This is simply bad economics, Many people believe that housing is more expensive in California because of the old “location, location, location” mantra. That may be true but it’s only a half truth. The location alone isn’t what has been driving up the costs. It’s the elected officials making decision on matters involving a complex industry that they have little knowledge or experience in.
While a higher income for those who build our homes is a respectable desire, just who receives a higher wage, should be left to the free market to determine. We have many friends in the building industry who have made a successful career in the skilled labor segment. From carpenters to masons, to electricians and plumbers, each trade is known for providing great opportunity where those who do the best work, earn the best reward. Requiring an increased flat rate of pay across the board, removes the incentive that a laborer has to improve his craft and expand his area of expertise. All decisions, including those related to wage rates, are usually best made by those closest to the situation. Politicians, bureaucrats, and lobbyists are far removed from our job sites, making it difficult for them to fully understand the impacts of the decisions they make when it comes to housing.
Having government officials that enlist the guidance and support of industry experts before making decisions that directly affect us all, would be a welcomed addition to the effort to make housing affordable again.
Landon Boucher | Innovative Structural Engineering | www.ISEengineers.com