A California housing bill would raise wages to $28. Why do some unions hate it?

When is a minimum wage hike of more than $11 per hour actually a pay cut?

That question has dominated the debate over a current California housing bill that has riven the state’s two most powerful construction worker unions and many state legislative Democrats reluctant to get on the wrong side of either group. 

Assembly Bill 1751, authored by Fullerton Democrat Sharon Quirk-Silva, would kick aside regulatory barriers to building townhouses — tightly clustered, multistory homes. In exchange for this fast-tracked approval process, townhouse developers would be required to pay their workers at least $28 per hour. 

That’s a significant pay bump over the statewide minimum wage of $16.90.

But the fiercest opposition to the bill has come from what might seem like an unexpected source: The State Building and Construction Trades Council, an umbrella organization that represents electricians, plumbers, sheet metal workers and other skilled construction trade unions. 

The trades — as the council is colloquially known — argue that the new wage floor could have the paradoxical side-effect of driving down the “prevailing wages” enjoyed by many of their members. Prevailing wages are mandatory minimum pay rates for publicly-funded or supported construction projects, which include many affordable housing developments and other projects propelled forward by recent state law in California. State and federal regulators set prevailing rates based on surveys of the most common wages in each field and geographic area. Because union pay scales can cover hundreds of similarly employed workers, those union-level wages often set the prevailing wage. 

In a testy debate on the Assembly floor earlier this month, Quirk-Silva stressed — repeatedly — that the bill would in no way affect the state-set wage rates.  

“It does not replace prevailing wage,” she said. “It does not undercut prevailing wage. This bill leaves prevailing wage exactly where it stands in current law.”

The trades aren’t buying it, noting that the federal government sets its own rates for federally-supported projects. But the group’s bigger beef may boil down to precedent. 

For years, the building trades have battled any legislation aimed at easing regulations on the construction of new housing unless it also included pro-union guarantees. Those are either union-level prevailing wage pay requirements or, in more recent years, even more restrictive “skilled and trained” rules that require developers to hire apprenticeship program graduates, the vast majority of whom are union members. 

Quirk-Silva’s townhouse streamlining bill introduces a new standard: a minimum wage far lower than what most trades members already make. 

Making a meager minimum wage hike the new bone that pro-housing bills throw to construction workers would “signify the new norm,” said Chris Hannan, president of the Trades Council. “When you start a trend of doing a minimum wage, then that becomes the new go-to.”

The trades and carpenters, at it again

Standing on the other side of the debate, supporting the new wage standard, are California’s unionized carpenters. 

The trades battling the carpenters is a familiar face-off in Sacramento. This isn’t even the first time the groups have publicly locked horns over this specific wage proposal.

Last summer, Assemblymember Buffy Wicks, an Oakland Democrat and longtime ally of the carpenters, inserted residential construction worker minimum wage of between $28 and $40 per hour into a budget bill in the final hours of the fiscal year. Aside from high-rise construction developments where the use of steel and concrete tend to draw more specialized workers, unions represent relatively few laborers who build California homes, the carpenters argued at the time. The new wage standard would be a modest corrective for those non-union laborers whose current wage floor is the state minimum wage. 

For years, carpenters union leaders have argued that improving working standards for low-wage workers presents an “organizing opportunity” for the union. 

The trades were apoplectic. Dozens of union members crowded in the budget bill hearing to decry what they saw as an anti-union reversal of state labor policy. One representative likened the measure to “Jim Crow” laws.  Many labor-friendly Democrats on the committee recoiled; the proposal was shelved.

This year, the idea has been given a bit more time for debate, though the trades and some lawmakers have still complained of a process they see as rushed. 

When Quirk-Silva’s bill was introduced in early February, it focused solely on townhouse regulations. The wage language was added only in time for its second committee hearing in late April. (Quirk-Silva’s staff declined to make her available for an interview to explain that delay or discuss the bill in general, citing personal family matters. On the Assembly floor, she explained the late addition in part by noting “severe health issues” among staff and family members.)

Since then the entirety of the legislative debate has been focused on the wage issue.

That itself is a notable development: The bill exempts the construction of townhomes from both environmental review and the jurisdiction of elected local city councils and planning boards. Just a few years ago, such a proposal would have made for a capitol-shaking, headline-grabbing fight. But a year after Gov. Gavin Newsom signed a law exempting most urban housing developments from environmental litigation, the land-use implications appear to be an afterthought. 

At an Assembly floor vote last month, San Diego Assemblymember Chris Ward referred to the minimum wage issue as the “900 pound gorilla.” He, like many Democrats who spoke on the bill, said that he supported the legislation in general, but that he remained wary of the “unresolved” questions about how the new wage rate would affect existing labor standards.

The bill needed 41 out of 80 “yes” votes to move onto the Senate. It passed with just 47.

Hike or pay cut?

Quirk-Silva’s office tried to get around the prevailing wage fight early on. 

Prevailing wages are required of publicly funded works, including many affordable housing projects. They are set by the California Department of Industrial Relations, which sets its rates based on the most common wage for each job type in each region of the state. 

Quirk-Silva’s bill specifically bars the state department from taking the new $28 per hour townhome wages into account when running those calculations, lest a glut of townhome builders inadvertently bring down the wages owed to union roofers and plumbers. 

The trades aren’t satisfied with that concession. That’s because the federal government conducts its own wage surveys and set its own prevailing wage for federally-funded infrastructure projects. 

The current federal prevailing wage required for a residential roofer in Sacramento, for example, is $46.73 per hour plus benefits. That number is based on the most common wage paid for that job in the area or — if no single rate is paid to at least 30% of the workers in the survey  — on the regional average.

“The federal government won’t give a rat’s ass about what this bill says,” Scott Wetch, a lobbyist for Trades-affiliated unions, said at the bill’s April hearing. “And they will set the prevailing wage rate for all the crafts at $28.”

The trades “have a case” in this argument, said Kevin Duncan, an economist at Colorado State University Pueblo who has studied prevailing wage policy’s effect on construction costs. Imagine a smaller market with a relatively low unionization rate. If the bill uncorked a geyser of contractors paying all their low-wage workers exactly $28 per hour, “that would be the prevailing rate — and with zero benefits,” he said.

Backers of the bill dispute that, saying such a specific outcome is unlikely given how many contractors are likely to use this specific townhouse bill. They also argue that vanishingly few residential roofers do federal public works jobs in Sacramento — or anywhere in California — so changes in the federal prevailing wage for residential projects aren’t likely to affect many workers anyway. Instead, most roofers are non-union on privately-funded projects and many are being paid less than $28 per hour, said Danny Curtin, director of the California Council of Carpenters.

To say that raising those wages “will actually bring everybody else’s wages down, defies comprehension,” he said at the hearing.