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One Way to Create Less Affordable Housing
March 4, 2019
Simple math: Prevailing-wage hike would mean fewer homes
New York's most recent successes—record economic and population growth—present new challenges for lawmakers to keep our state affordable and livable for all. For instance, they threaten to exacerbate the severe housing shortage driving up rents and contributing to an affordability crisis for too many New Yorkers. That is why it is so important to take a hard look at new legislative proposals that would undermine affordable-housing initiatives in the city and the state by expanding prevailing-wage mandates in the construction industry.
It is particularly surprising to hear arguments that Gov. Andrew Cuomo and the state Legislature should advance these bills for economic reasons. One opinion piece argued that “prevailing-wage mandates are critical to get the best return on investment for taxpayer dollars.” It is worth exploring that claim in further detail.
Driven by the affordability crisis, the governor and the Legislature committed $20 billion to a historic plan that would create 100,000 units of affordable housing statewide. This policy already has had an impact on the lives of countless families, but the new suite of prevailing-wage bills threatens to undercut that progress.
In the five boroughs, city-level efforts have combined with Cuomo’s statewide initiatives to create and maintain hundreds of thousands of affordable homes. Similar programs are underway in municipalities across the state.
Expanding the prevailing wage in the construction industry would have deeply negative effects on these vital initiatives. No doubt the bills would raise costs significantly and reduce the number of available affordable units.
In fact, when the city’s Independent Budget Office last evaluated the issue, it found that a prevailing-wage mandate would increase the cost of the city’s affordable-housing plan by $4.2 billion—or $80,000 per unit. Because the program has since expanded, the impact would be even more dramatic today.
Subsidy and financing programs used to preserve and maintain affordable homes also would become subject to construction prevailing-wage requirements, meaning countless families would see their housing stock depreciate and possibly even disappear.
According to city data, the suite of bills would cost the city 77,000 affordable homes before 2026—and the losses would be replicated statewide. This isn’t getting “the best return on investment for taxpayer dollars.”
Lawmakers are faced with a choice: Fund a program that provides affordable homes for lowincome residents or mandate that (for example) a plumber earn wages and benefits 99% higher than the trade’s market-rate compensation across the metropolitan area.
Amid a housing crisis, the answer is obvious: We cannot dismiss New Yorkers in desperate need of affordable places to live.
When we rely on data, not rhetoric, it’s clear that arguments for a wide-ranging expansion of the prevailing wage don’t stand up.