Wage discrimination in building industry is common

By depressing wages and productivity and turning a blind eye to the growing wage theft epidemic, industry profits have exploded. But so has the income gap within the industry, as well as the number of Californians priced out of the housing market.

Equal pay for equal work remains elusive, even here in progressive California.

A recent study by Smart Cities Prevail showed that Latinos make up two thirds of the construction workforce, yet only make about 70 cents on the dollar of white workers with the same skills. The study noted that Latino construction workers also are significantly more likely to be uninsured and to struggle with housing affordability.

Low minimum wage standards are one factor that contributes to these types of disparities.

California legislators are soon expected to consider streamlining development of more housing across our state. At its core, the proposal involves removing certain regulatory hurdles in exchange for guarantees that a small percentage of new developments will include “affordable” units.

A similar effort failed last year when no agreement was reached on wage standards for workers on streamlined projects.

According to industry research, workers’ wages and benefits are just 15 percent of the total cost of constructing housing. By comparison, profits for developers and contractors are 18 percent of costs and growing faster than the cost of labor.

And while inflation-adjusted construction wages are down 25 percent over the last 20 years, housing prices have soared as much as 54 percent in some markets. Declining wages mean more worker reliance on Medicaid, Food Stamps and other assistance programs.

And with labor standards being eroded, other problems have become more pervasive.

For example, wage theft occurs when employees are paid for fewer hours than they worked, less than legally required, or when their employer is paying in cash and cheating on payroll taxes. California’s construction industry has seen a 400 percent increase in wage theft since the 1970s—a period that has also seen a dramatic increase in the share of immigrants in our construction workforce.

A recent study by the Economic Roundtable found that one in six California construction workers is now affected by these crimes. Construction wage theft’s annual cost to California workers and taxpayers is in the billions of dollars.

By including things such as prevailing wage in a housing streamlining package, California can take an important step in combatting this cycle of exploitation.

Prevailing wage requirements provide a livable, minimum pay rate for construction workers that is consistent with local market standards. By stabilizing the wage floor, the requirement closes pay gaps that disproportionately impact communities of color, decreases the likelihood of working people living in poverty, increases rates of health coverage and increases the probability of a non-white individual pursuing a career in construction.

Prevailing wage also increases participation in skilled trade apprenticeship programs. These programs not only expand a worker’s lifetime earnings by as much as $240,000, but enable construction workers to acquire skills that improve safety, productivity and efficiency on the jobsite. These skills are essential if we hope to boost housing supply in sufficient quantities to close the affordability gap.

To formulate sound policy consistent with California’s values, we need to have an honest conversation about how we arrived at our present crisis. By depressing wages and productivity and turning a blind eye to the growing wage theft epidemic, industry profits have exploded. But so has the income gap within the industry, as well as the number of Californians priced out of the housing market. Something isn’t working. In housing reform, we are being asked to de-regulate one of our state’s most lucrative industries. In return, aren’t taxpayers entitled to ask that this industry do right by its workers?