In California’s quest to produce affordable housing, much has been said about project streamlining, permitting, zoning and other regulatory reforms.
Comparatively little has been said about workers. And to be clear, that’s the elephant in the room.
To increase affordability by boosting supply, Gov. Gavin Newsom has established a goal of 3.5 million new housing units by 2025, production levels California has not seen for 30 years or more.
The most conservative estimates suggest that California will need upwards of 500,000 new residential construction workers to realize such an ambition.
The problem is, we don’t have them.
The nation is at full employment, California construction unemployment is at a historic low, and our state’s existing construction workforce is only getting older.
The labor pools on which California’s residential builders have relied since the 1980s — immigrants and young men without college degrees — have been shrinking for more than a decade.
Most importantly, the housing industry is not offering market-competitive pay, while asking its employees to perform dangerous jobs that are often the first to disappear during economic downturns.
Recent research highlights the depth of the problem. When adjusted for cost of living, median California construction worker pay ranks 46th in the United States. In residential construction, workers earn an average of 24 percent less per year than other types of jobs and fewer than half get health insurance at work.
Yet construction jobs require longer commutes and have the third highest occupational fatality rate of all industrial sectors. Making matters worse, one in six of the industry’s workers face some form of wage theft.
That’s not exactly a compelling recruitment pitch. Nor does it reflect the construction industry as a whole.
Non-residential construction workers, for example, make 50 percent more than residential workers on average. Through prevailing wage standards and collective bargaining agreements, this sub-sector largely self-finances its own workforce pipeline through joint labor-management apprenticeship programs, and offers more workers health and retirement benefits that are portable between projects.
In other words, to attract the workers it needs, the housing industry needs to decide to actually compete for them.
The good news is that it has done it before.
In the 1970s — California’s historic peak for housing production that Gov. Newsom has proposed to replicate — residential and non-residential construction wages were essentially equal.
Both offered an above-average wages due to the inherent dangers and volatility involved in the work. Many residential builders paid prevailing wages or signed onto collective bargaining agreements, binding them to support apprenticeship programs that are proven to attach more workers to construction careers and refill the industry’s workforce supply pool.
Thirty years of abandoning these investments has cost the residential construction industry its competitive edge, and robbed it of its productive capacity.
According to the Bureau of Labor Statistics, nationwide construction sector output per unit of labor declined by almost 13 percent between 1987 and 2016, while productivity in other business sectors increased by 31 percent.
While the industry’s choices may well have been informed by the cost of decades of new regulatory burdens, an agenda focused exclusively on regulatory reform will only serve to compound the residential construction sector’s current labor shortage. The first step to building more housing is attracting and sustaining a labor force that knows how.
We don’t need to reinvent the wheel. But we must demand that lawmakers and industry leaders fashion solutions that restore the housing sector’s commitment to workforce investments that are sustainable and competitive in today’s economy.