Written by David Castellon
Realtors, builders and others with stakes in home building in the Central Valley came out recently with state Assemblyman Jim Patterson to voice their opposition to legislation they say will kill jobs and send home prices soaring.
“It would affect all of the economic sectors that do business with residential development – service industries, hardware stores [heating and air conditioning] installers,” said Nathan Alonzo, government affairs manager for the Fresno Chamber of Commerce.
He was among the speakers who addressed about 200 people who gathered last month at the Savannah, a 94-home development under construction in Clovis for a press conference about Assembly Bill 199.
The speakers said if this legislation is passed, construction workers building private homes and commercial buildings in California would receive prevailing wage in the same way that workers building publicly-funded projects – courthouses, schools, government offices, etc. – are paid.
Exactly how much the prevailing wage is for a governmental project is different depending on the job of the worker, and each wage is determined by the California Department of Industrial Relations.
Generally, prevailing wage is higher than wages for construction on privately-owned buildings, and Mike Prandini, president and CEO of the Building Industry Association of Fresno and Madera counties, pointed to drywallers at a nearby house under construction, estimating they make about $25 an hour. Under prevailing wage, they probably would make about $65 an hour, he said.
And that difference could drive the prices of single-family homes up $40,000 to $60,000 here in the Valley, said the speakers opposing AB 199.
That, in turn, also would drive up prices for existing homes and rental units, Alonzo said. “We will be just like San Francisco and Los Angeles when it comes to home affordability.”
But Patterson, R-Fresno, noted that the law also will affect San Francisco, Los Angeles and other, more urban areas in the state where the price of building a home already is higher than in the Valley, and those prices would increase more under AB 199.
The California Association of Realtors put the median price of a detached, single-family home in the state at $489,580 in January, with San Francisco having the highest median home price in the state at $1.25 million.
In Kings, Tulare, Fresno and Madera counties, January’s average median price was $216,850.
Patterson noted that about 30 percent of Californians already can’t afford a house, and passage of AB 199 with its current wording would widen that gap.
“Why do you think schools cost so much? Prevailing wage,” he said.
“We’re not saying people don’t deserve a good wage,” Alonzo said, but he and others at the press conference said the resultant affects on new home prices could drive down the demand for new homes and reduce construction jobs and additional jobs in industries tied to construction.
And the legislation could hit especially hard people who can afford only cheaper, “starter” homes, putting them outside their budgets,” Alonzo said.
“If wages are driven up by laws of politicians, you’ll have additional wages, but you’ll have less work,” Patterson said.
“I have never seen an attack that is directed at private users using private money,” and California lawmakers shouldn’t be compelling them to pay prevailing wages, as they would on a public-sector projects, he added.
AB 199 was introduced in February by Assemblyman Kansen Chu, D-San Jose, with the backing of the California Building and Construction Trades Council, a Sacramento-based group representing construction trade workers.
Repeated calls to the council weren’t returned, and Chu’s chief of staff, John Nam, declined to speak on the record about the legislation.
Supporters of AB 199 have said the bill will not affect wages paid to workers on privately-funded construction projects, as its opponents have claimed, but Prandini said any construction work needing a permit would be affected by the law, including expansions and renovations of homes, because that permit essentially would be seen as a contract with a city or county under the law.
But this was not the law’s purpose, he said, noting that Kansen’s intent was to close up loopholes in the existing prevailing wage law that might be used to get out of paying prevailing wages for private projects using public money.
Prandini sajd there are discussions underway on both sides to make “corrections to make the bill more acceptable.”