Should prevailing wages prevail? Re‐examining the effect of prevailing wage laws on affordable housing construction costs

Matthew Hinkel and Dale Belman

British Journal of Industrial Relations, 2022, vol. 60, issue 4, 761-783

Abstract: The United States faces two parallel crises: one with affordable housing supply, and one with maintaining residential construction labour standards. Historically, issues with labour standards have been addressed on public works through prevailing wage requirements. Labor standards—while good for workers—may increase construction costs; higher costs, in turn, negatively impact low‐income families by reducing supplies of affordable housing. In this article, we re‐examine whether this trade‐off exists and, if so, its implications. We estimate that prevailing wage requirements add, at most, 6 per cent to the costs of affordable housing construction.

Date: 2022
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