Massachusetts: Prevailing Wage Could Cause Housing Project Costs to Skyrocket
According to The Boston Globe:
Builders of large affordable housing projects in Massachusetts would be required to pay construction workers higher wages, based on a little-noticed amendment to a housing bond bill moving through Beacon Hill.
If adopted, the amendment would drive up construction costs on those projects, which would reduce the buying power of the housing bond. The legislation would authorize more than $1 billion in funding for affordable housing; about half the money would be available to subsidize development by nonprofit and for-profit companies.
The amendment would require developers to pay a "prevailing wage" to workers on projects of at least 75 units or at least $25 million in total development costs. Massachusetts already requires payment of a prevailing wage on government construction projects.
"Prevailing wage" is a legal term that means the state Department of Labor sets minimum hourly rates, which can be twice as high as the hourly rates paid to nonunion workers doing the same job.
A 2007 study by the Massachusetts Housing Partnership of multifamily developments between 2002 and 2006 found projects that paid prevailing wages spent 34 percent more on each unit, or about $60,000 per unit.
Some affordable housing advocates say the amendment promotes one public good at the expense of another: higher wages, less housing.
"It's likely to increase the cost of developing affordable housing significantly," said Aaron Gorstein, executive director of the Citizens Housing and Planning Association, an affordable housing umbrella group. "It could lead to fewer units being available for low- and moderate-income families."...click to continue.
