6/23/08

Union-only wages make housing unaffordable

A labor-state housing official commits apostasy

A perfect storm is gathering, threatening to sink the development of affordable housing. It involves a conflict between two positive objectives — more affordable housing and higher construction wages. The conflict is embedded in the Industrial Development Agency legislation now being discussed in Albany, which would require prevailing wages on affordable housing built with IDA financing. Prevailing wages are set by government- issued schedules that largely correspond with union rates.

The fundamental issue is: Should developers of affordable housing who receive government subsidies be required to pay prevailing wages to construction workers, thus significantly increasing the cost of building?

Gaining higher wages is an understandable goal of organized labor. But the money has to come from somewhere, and funding sources for affordable housing are scarce.

The residents of new affordable housing cannot afford higher rents or purchase prices, and the pie for affordable housing is, by any measure, already too small. Take a larger slice out — for wages or any other purpose — and the pie shrinks even further. A smaller pie translates inevitably into less affordable housing. The fewer affordable units that get built, the longer the wait for working families, the poor, the elderly, people with special needs and the homeless to find decent housing.

For more than 30 years, the affordable housing industry has rebuilt communities by providing high-quality, low-cost housing for tens of thousands of low and moderate income residents. Construction workers earn good wages. Non-union skilled trades, such as plumbers and electricians, can earn in excess of $58,000 annually, while laborers can earn $40,000 and more. These jobs represent important opportunities for workers who live in the communities in which the housing is built.

Prevailing wages would push labor costs up to union scale, to between $100,000 to $125,000, and the jobs would likely go to workers who live outside these neighborhoods. Of course, this assumes that more taxpayer dollars will be available to make up the difference. Otherwise, the result will be fewer or no jobs for anyone, since the projects would be scaled back or not built at all.

Affordable housing often leads the way for further economic development, creating well-paying jobs and opportunities for local residents and minority-and women-owned firms. Impose prevailing wages and these promising businesses could well be forced to close, while the neighborhood jobs that they could create would never materialize.

Mandating prevailing wages would capsize housing policy, decreasing production, eliminating jobs and forfeiting hope. This perfect storm is not inevitable, unless we make it so. Prevailing wage legislation is bad for housing, bad for neighborhoods and bad for New York.

- Bernard Carr is executive director of the New York State Association for Affordable Housing.

(buffalonews.com)

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