April 15, 2019

HMM: California must invest in workforce to meet housing goals.

Even under the rosiest of regulatory scenarios, California’s residential construction industry needs at least 200,000 new workers to produce enough new housing to improve affordability.

But it is struggling to compete for them. Industry leaders often claim it’s because “Young people don’t want to get their hands dirty;” “Parents are pushing college instead of vocational training;” or because “Schools have abandoned shop classes.”

Actually, research shows that the seeds for today’s housing construction labor shortage were planted by the homebuilding industry itself — more than three decades ago.

The last time California produced housing on a scale that state leaders say is needed to boost affordability today was the 1970s. During those years, residential and non-residential construction wage rates were equal. Builders routinely employed apprentices and made binding commitments — often through collective bargaining — to fund skilled trade apprenticeship programs.

During the 1980s, homebuilders refused to renew collective bargaining agreements and began replacing higher skilled crews with lower skilled workers. As land and regulatory costs grew, contractors relied on a strong supply of young men without a college degree and a growing pool of immigrant laborers to offset these burdens by working for less.

Construction labor productivity began to shrink alongside these shifts, but it has taken decades for annual deficits in housing supply to reach a crisis point. Today, we need to double our housing production just to tread water. To boost affordability, we need to produce even more. Either scenario demands more workers.

In the meantime, where will they live?