Just days before the deadline, California lawmakers are about to reach a last-minute agreement to link one of the most ambitious and contentious housing laws of the year to a new set of minimum wages for workers in the housing construction industry. This plan has caused a hiccup in budget talks.
Buried in a massive budget measure that was printed on Tuesday, the new legal language is the result of a significant political agreement between the state’s carpenters union and pro-development activists. Advocates claim that the new agreement may change how future housing laws in California are drafted and negotiated.
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Other construction trades unions, some of the most influential interest groups at the state Capitol, are fiercely opposing the plan, claiming that it would undermine hard-won pay standards. A high-stakes battle is in store as Governor Gavin Newsom expects significant reforms to expedite housing building as part of the budget.
In a battle that has dominated California’s housing legislative politics for at least ten years, the new wage rates represent a significant turning point. Previous legislation designed to facilitate the construction of new homes has offered a compromise: easing environmental, permission, and approval requirements in exchange for increased guaranteed wages for construction workers, among other benefits. The prevailing rates, which vary by vocation and region and typically correspond to what unionized workers earn, have been the benchmark wage rate in those discussions.
These new suggested rates are intended to be a more development-friendly option and are substantially cheaper. They would only be applicable if developers choose to take advantage of a recently proposed exception to the California Environmental Quality Act, the state’s most important environmental impact regulation. At the moment, prevailing wage does not apply to the great majority of those projects, which are small-scale residential construction projects.
For this reason, proponents of the agreement contend that the higher criteria amount to a pay raise.
According to Danny Curtin, the head of the California Conference of Carpenters, the residential building business is essentially non-union. You have the power to give those individuals a significant rise that is modest but significant and significant.
Nevertheless, there has been strong opposition from other construction labor organizations.
In a letter to legislative leadership yesterday, the State Building and Construction Trades Council, an umbrella organization for construction unions that frequently disagrees with the carpenters union on labor matters, denounced the plan.
According to Council President Chris Hannan’s letter, this proposal is a pay grab of construction workers’ wages cloaked in an affordable housing measure. We implore you to give up on this dangerous and unheard-of proposition, which will ruin construction workers.
At an Assembly budget hearing on Wednesday that was crowded with union supporters, lawmakers also seemed taken aback by the plan.
Chris Rogers, a Democrat from Ukiah, stated, “I didn’t come to Sacramento to cut people’s wages.” I didn’t listen to months of budget committee meetings discussing ways to maintain our social safety net only to have it potentially expanded at the last minute.
La Mesa Democrat Assemblymember Lashae Sharp Collins described the apparent lack of consultation with the building trades as “abhorrent.”
Many Democrats in the Senate, which also had a budget hearing on Wednesday, responded to the new wage plan with a similarly cold reception.
Sen. Maria Elena Durazo, a dependable ally of the trades and a Democrat from Los Angeles, said, “You’re presenting something at the last minute, and I don’t know who you consulted with, and you came to this conclusion to completely change the structure for the way that workers in the construction industry would be paid.”
On Friday, the bill was supposed to go to a vote. A Senate budget committee hearing vote was postponed on Wednesday due to intense opposition, leaving the final vote’s date uncertain.
The party has two-thirds of the members in both parliamentary chambers, so even with large defections, the budget package has a good chance of passing, despite the controversial labor wording that was added at the last minute and threatens to split legislative Democrats.
This new plan is the most recent iteration of a policy suggestion that Oakland Democratic Assemblymember Buffy Wicks first proposed in March. The bill would remove the majority of newly constructed apartment complexes in cities from the environmental statute known as CEQA.
Lawmakers and pro-housing supporters frequently attack the 55-year-old statute, claiming it can be used as a weapon to stymie or obstruct much-needed new housing and other projects. Numerous labor unions and environmental advocacy groups support the regulation as a crucial check on unwelcome or environmentally damaging development.
Newsom’s decision to include Wicks’ plan in his proposed budget for the upcoming year last month gave it a significant boost and set it on a quicker and more certain route to becoming law. Since then, if lawmakers reject the comprehensive housing measures—some of which are still being negotiated—he has threatened to revoke his signature on the budget.
The Legislature is currently considering a trailer bill, which is a crucial component of that budget package. Along with important elements of other housing laws, such as a proposed hold on building code changes, restrictions on the fees that landlords can charge tenants, and an expansion of tax credits for renters, the package includes Wicks’ exemption linked to the new labor language.
The Burbank Democrat who wrote the bill to freeze the construction code, Assemblymember Nick Schultz, stated that neither the Assembly leadership nor the governor’s office had notified him that his idea was being included in the budget plan. He claimed that an advocacy group informed him.
It is intended to provide a more financially viable option while simultaneously increasing the pay of workers at the bottom of the labor market by setting wages significantly below the prevailing wage rates mandated by law for publicly funded projects and commonly demanded by construction unions in exchange for their support of housing bills.
For instance, in Oakland, a carpenter who works for a home project at the state-set prevailing rate makes at least $99 per hour, including benefits.
The majority of construction workers in the Bay Area who are covered by the program would simply need to be paid at least $40 per hour under the new minimum pay. Workers with less experience or expertise would need at least $27 per hour. Housing complexes with 25 units or less would be completely exempt.
Additionally, the budget draft has provisions that would allow unions to sue contractors for insurance, payroll tax, and workers’ compensation infractions.
Yes, the new contract is being celebrated by advocates in my neighborhood who have long questioned the prevailing wage laws.
According to a statement from California YIMBY president Brian Hanlon, this is one of the largest housing victories in a decade. The ecosystem is not threatened by the construction of infill homes; rather, it is preserved.
A dramatic change in California labor laws would result from striking a deal with a major labor group that permits compensation much lower than the prevailing wage, even though the new wage rates only apply to Wicks’ urban infill exemption.
The state carpenters union has previously struck a high-profile agreement to advance a significant housing law supported by YIMBY to the end of the parliamentary process.
The carpenters supported Wicks’ plan in 2022 to expedite apartment construction along strip mall corridors after she included a prevailing pay requirement and a few other benefits.
That was regarded as a political compromise at the time. The inclusion of so-called skilled-and-trained requirements, which are effectively a mandate to hire a majority of unionized workers, has been a condition of the state’s second major construction worker union body, the Trades Council, supporting housing measures for years.
In contrast to other crafts, carpenters have long maintained that, even if it means raising mandated salaries, paving the way for the construction of more dwellings is an organizing opportunity for the union.Relevant ArticlesAccording to experts, builders are reducing the size of their homes in order to control pricing.An affordable apartment development in San Jose was purchased for more than $60 million.A developer proposes to build hundreds of homes on the Saratoga vineyard.Plans from PG&E Upgrades to the San Jose power hub as economic expansion beckonsThe choice causes the real estate empire to collapse. Foreclosure is imminent for the San Jose location.
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Other pro-development lawmakers realized they could essentially copy and paste that agreement into their housing legislation after Wicks’ bill passed over the Trades Council’s vehement objections, virtually ensuring the support of an unlikely coalition of developers, union workers, and YIMBY activists.
Even so, many developers continue to argue that prevailing wage rates are stilltoo costly to make construction pencilout beyond the state s priciest metro areas, making those prior housing billsineffective at actually producing more housing.
The lower salary criterion may be the next legislative phrase used in future housing measures, according to proponents of this new agreement.
This bill is a big step forward and an important test of whether the YIMBY-Carpenter alliance can enact housing bills that generate housing production at scale, UC Davis law professorChris Elmendorf wrote on X.
This story was reported by Alexei Koseff.
