The development and re-use project at the former Concord Naval Weapons Station has now been nearly 15 years in the making. With plans for 13,000 housing units, a college, and more than 8 million square feet of commercial space, the Naval Weapons Station could be a regional economic engine for decades.
In winning the Concord City Council’s selection as master developer for the project, the Florida-based developer Lennar made a number of commitments to the community, and has entered into discussions with the city and relevant labor stakeholders regarding the best ways to honor them. Among them, an agreement that would cover things like the hiring of local construction workers and paying the local market prevailing wage.
Recently however, reporting indicates that Lennar may not sign onto an agreement that does right by the skilled workers by paying them prevailing wages, because it claims that doing so does not pencil out. Before any hasty decisions are made, it is important to dispel such myths.
Prevailing wage is the local market wage floor for specific types of skilled construction work. It includes not just wages, but investments in apprenticeship training that ensure communities can meet their long-term construction labor force needs. Both the federal government and 25 states, including California, have laws that prescribe these standards for schools, roads, and other types of public construction to ensure taxpayer-funded projects are done right the first time.
Over the years, armies of economists have studied whether prevailing-wage standards make construction projects more expensive. The overwhelming consensus of peer-reviewed studies is that they do not. The reason why is because construction labor constitutes less than a quarter of total project expenditures on average. In other words, it is simply not what drives costs. And research also shows that projects paying prevailing wage consistently offset higher wages with higher levels of productivity and less spending on materials, equipment, and other purchased services.
Since 2013, six different U.S. states have repealed their prevailing wage laws. Each said doing so would save taxpayers a bundle by paying workers less. Post-repeal research has concluded that it hasn’t.
In fact, the Assistant GOP House Leader of Indiana, the first state to initiate such a repeal, famously told an audience in 2017 that “it hasn’t saved us a penny.”
The research also shows that prevailing wage supports strong local economies. It means more bids going to local businesses, fewer construction workers living in poverty, and more local workers building careers that pay enough to afford housing, food, and other basic necessities in their communities.
It’s important to remember that these are among the central economic development goals of the Concord Naval Weapons Station Development and Re-Use Project. And it is presumably why Lennar made — and honored — similar labor commitments when it led the Treasure Island and Hunter’s Point base re-use projects in San Francisco.
As it relates to the residential housing aspects of the Naval Weapons Station project in particular, the truth is that establishing strong labor standards on something this large and consequential is about something far bigger than just what happens in Concord.
In the 1970’s, California produced enough housing to keep pace with demand, there was no real difference between the wage rates paid to residential construction workers, and the prevailing wage rates paid to those who build our bridges, schools, and other public works. Both sides of the industry invested in apprenticeship programs, which replenished the state’s supply of skilled craft workers.
Since then, everything has changed. Housing developers have largely abandoned bargaining agreements that institutionalize the workforce-training investments on which our construction industry depends and become more reliant on lower-skilled, lower-wage workers from out of town. Today the pay gap between residential and non-residential construction stands at 33 percent. Surveys routinely show that the low-wage model has undermined the housing sector’s ability to attract enough skilled workers. As a consequence, housing production is just a fraction of what it once was, and research suggests we need at least 200,000 new construction workers to address our state’s supply-driven affordability crisis.
We can finally begin to address these issues by making sure large, mixed-use construction developments like the Naval Weapons Station project sign binding agreements to invest in their workers. If the last 30 years of fighting over prevailing wage and shrinking housing supply has taught us anything, it’s that failing to do so simply doesn’t pencil out.
Matthew Miller is a is a labor compliance specialist with Smart Cities Prevail, a Northern California non-profit research and education organization focused on construction industry and fair contracting policies.