Intro

In 2008, CHPC published a report examining the impact of prevailing wage regulations on affordable housing in New York City. The report, called Prevailing Wisdom, scrutinized the implications on housing supply, affordability, government subsidy, racial equity, worker safety, and housing quality.

Public policy should be clear about the problem it intends to solve, how it will address the problem, who it helps, and who it leaves behind.

In 2019, prevailing wages are once again a central topic in New York City and New York State, so CHPC is taking another look at the latest policy thinking on this topic.

CHPC has launched a data portal to provide clarity about the impact and trade-offs of prevailing wages on affordable housing.

Public policy should be clear about the problem it intends to solve, how it will address the problem, who it helps, and who it leaves behind. Policy should also be data-driven and understood within economic, social, and political contexts. CHPC created the prevailing wage data portal to provide clarity about the challenges, benefits, and trade-offs involved in prevailing wage policies for affordable housing construction.

Use the CHPC’s Data Portal to explore answers to questions such as:

  • How much does the prevailing wage raise the wages of the city’s construction workers and does it help some workers more than others?
  • How do wages in the construction industry stack up against other sectors?
  • How many workers are represented in different sectors of the workforce?
  • How do wages in construction and other job sectors compare to AMI levels?
  • What is the gap between entry-level and experienced-level wages in various occupations?

LABOR MARKET DATA

Click more topics below to see their interactive and sortable data tables.

Social & Economic Policy Topics related to prevailing wage policy

Prevailing wages are about more than just income. In addition to wages themselves, prevailing wage proponents have multiple other socioeconomic goals that they aim to achieve. Meanwhile, opponents fear that prevailing wage policies will interfere with other social policy goals. CHPC is exploring available research and data to assess such claims. These are some of the topics that CHPC is exploring.

Note: Further analysis is required to explore the impact of prevailing wages on worker safety, racial disparities in the workforce, taxpayer costs and public benefits, local hiring, and more.

Impact of prevailing wages on ...

Click here to explore the table 2018 Hourly Wage by Occupation Category in the New York City Region

Click here to explore the table 2018 Hourly Wage by Occupation Category in the New York City Region

Click here to explore the table Average Entry Level & Experienced Wage for Project High Growth Jobs in NYC, 2014-2024

Prevailing wage policies are unlikely to increase wages for undocumented workers on construction sites. On the contrary, the increase in oversight may dissuade contractors from employing these workers. Depending on your perspective, it is either advantageous to discourage the practice of hiring undocumented New Yorkers, or it makes the financial situation of these New Yorkers more tenuous during a period when they are already particularly vulnerable.

In 2008, it was more common to have affordable housing projects that were dedicated to one or two income bands, for example, if 100% of the units created serve households at 60% of AMI. At the time, inclusionary housing policy allowed an off-site option where affordable housing could be built in a separate building from the market rate housing that received the benefits. In 2019, Mandatory Inclusionary Housing (MIH) has eliminated the off-site option and most of HPD’s term sheets have been updated to incorporate as many income bands in a single building as is feasible. Including different income tiers in a single affordable housing development and incorporating affordable housing in middle- or market-rate developments is far more common and has been a central feature of affordable housing today than it was a decade ago.
 
The federal prevailing wage requirements established under the Davis-Bacon Act, run directly counter to this trend and inhibits the creation of mixed-income housing. Davis-Bacon requires that workers receive prevailing wages on any project that includes eight or more federally-assisted units in the case of rental assistance, or includes 11 or more federally-assisted units in in a project receiving HOME program funding. By requiring prevailing wages on an entire project if at least 8 (or 11) units are federally funded affordable housing, this encourages projects to limit the number of affordable units below that cap, or to incorporate none at all, lest the entire project bear an increased cost for only a small number of affordable units, making the entire project financially unfeasible as a result of the inclusion of a small number of deeply affordable units.
Another evolution in affordable housing advocacy and policy is an increased awareness of the need for affordable housing units for households who earn Very Low (50% of AMI and below) and Extremely Low (30% of AMI and below) Income (sometimes colloquially known as “ELI/VLI Units”). When CHPC’s 2008 study was published, it was more common for low income units to serve households at 60% of AMI, the limit for the Low Income Housing Tax Credit (LIHTC) program. Today, there is increased awareness and pressure that many NYC households fall under the 60% AMI threshold, and the latest Housing New York Plan reflects that need.
 
Under Davis-Bacon requirements, the federal sources that enable the creation of ELI/VLI units (including HOME and Project-Based Section 8, and, when federal funds were more available, the HUD 202 program for senior housing) are also the ones that trigger Davis-Bacon wage and reporting requirements. Although because of the threshold that triggers Davis-Bacon, the federal regulations encourage buildings that are either 100% ELI/VLI, or create a project that falls just below the threshold of 8 or 11 units. As described above, this limits the flexibility to create affordable housing projects that include apartments at a mix of affordability levels.
 
Of course the creation of units using these funds is limited by their overall scarcity, but the requirements do run counter to the current wisdom that mixed-income developments are a better housing policy rather than concentrating extremely low households in self-contained buildings. The Davis-Bacon thresholds have a disproportionate impact on a large dense city such as New York, where buildings are far more likely to have a larger unit count.
Another issue has plagued the NYC affordable housing industry since CHPC’s last report in 2008: the rise of homelessness. In January of 2008, the average number of New Yorkers staying in municipal shelters each night was 35,094, and declared a crisis by housing advocates. By the end of 2018, that number reached 63,498.* Homeless households are far more likely to be ELI/VLI, and require a rental subsidy to remain affordably housed and out of the shelter system. Tenant-based subsidies do not trigger prevailing wages, but they are also not linked to any particular building in a way that can underwrite debt. So the ability to create units specifically set aside for homeless households is limited by the phenomena described above with regard to mixed income housing and ELI/VLI housing. The City has attempted to mitigate this by creating the Our Space program, which uses city capital to underwrite very low rents without triggering Davis-Bacon wages, and the cost per unit (without a prevailing wage requirement) is $185,000 of City Capital per homeless unit.
 
In supportive housing, a prevailing wage requirement that covers building management staff could create inequity between the property management staff and the case management staff who are contracted with city and state resources to provide social services to disabled and chronically homeless tenants but who would not be subject to prevailing wages under current proposals.
*Source: Coalition for the Homeless

Labor & housing policies since 2009 related to prevailing wage policy

ACA was enacted in 2010 and greatly expanded healthcare coverage in the private market and through Medicaid. Greater access to benefits, including health coverage, is one of the core advantages that prevailing wage policies hope to achieve. The passage of ACA is a more direct way to mandate healthcare coverage, though recent challenges to ACA’s mandate may compromise that mission.

The minimum wage for all New York State and New York City workers has gone up to $15 since CHPC’s 2009 report.

In 2017, The NYC Council enacted Local Law 196, which mandates that all construction workers, on both prevailing and non-prevailing wage sites receive safety training.

In 2017, the renewal of the 421a tax abatement (later known as the Affordable New York Housing Program tax abatement) required a minimum average wage for projects over 300 units that receive the tax benefit. For projects in Manhattan, the required minimum average wage is $60/hour. For projects in the other four boroughs, the minimum average wage is $45/hour. Please note this is a minimum average wage for all construction workers on the site, and not a minimum wage, (ie, many workers may still earn less than $45 per hour).