The evidence piles up against prevailing wage for rental projects

As revisions go, this was a big one: Last week, the Independent Budget Office changed its estimate of how much more it would cost to build affordable housing with a prevailing-wage mandate for construction workers. Instead of another 13%, it would be 23%. That's important because unions are demanding the mandate for new rental housing that receives a property-tax break for including units with below-market rents.

The extra 23% for labor works out to another $80,000 per apartment. That may be a rounding error in the realm of luxury Manhattan towers, but for the typical low-income tenants in the de Blasio administration's affordable-housing plan it is a profound, life-altering difference. It means thousands fewer units for such families, condemning them to remain in substandard housing in poor neighborhoods, with all the associated social and economic consequences.

Of course, there are benefits to higher wages. But they accrue almost entirely to construction unions' members rather than the city as a whole. Labor's claims that prevailing wage results in dramatically safer worksites or better-built apartments remains debatable. In fact, affordable-housing builders point out that the more money that is spent on construction labor, the less is available for quality materials and design.

But the real losers are the tenants who don't get to live in the 23%-more-costly apartments because the more units cost to build, the fewer there will be. Stable housing in good neighborhoods goes a long way toward breaking the cycle of poverty. Paying carpenters $50 an hour instead of $32 does not.

It is telling that even Mayor Bill de Blasio, a longtime union supporter and self-professed champion of the working class, opposes a prevailing-wage mandate for affordable-housing construction. Simply put, society gains more by allowing market-based wages in the building of affordable projects.

The unions recently had six months to negotiate a wage deal with developers, under state legislation to reform the abatement program, called 421-a. They failed, and the tax break expired. Should the legislature revive it, wages should be left out. Skilled workers on 421-a projects typically earn fair pay, and to reduce accidents, the city and state should enforce safety standards. Mandating artificially high wages effectively give unions all the work—and doesn't guarantee safety anyway. The benefits of housing-construction tax breaks should go to the poor, who need far more help than union construction workers do. — THE EDITORS

Source: Crains New York