Don’t Kill Affordable Housing with a Prevailing Wage Mandate

This is a response to an op-ed City & State ran on Tuesday by Matt Ryan of ALIGN. 

The New York State Association for Affordable Housing agrees with Matt Ryan’s view in City & State that affordable housing and good jobs should go together. The renewal of the 421-a property tax abatement would do exactly that: promote good jobs and good wages for the workers building new affordable homes for New Yorkers.

Affordable housing developers already pay living wages on construction projects, many of which use 421-a tax incentives. Within the industry, the mean wage for carpenters on affordable housing projects is $31 per hour, or about $64,000 a year.

Ryan and the construction unions backing him, however, are trying to mandate far higher prevailing wages on 421-a projects as part of the program’s renewal. These rates, based on union wages, are in many cases three times the mean wage. A recent contract with the New York City District Council of Carpenters, for example, requires carpenters to be paid almost $100 per hour (including benefits) by 2016—or about $202,000 a year.

That’s nice work if you can get it. But requiring union wages at that rate would drive up the cost of affordable housing—meaning fewer units would get built or much more government subsidies (i.e., taxpayer dollars) would be needed. It could be the death knell for affordable housing in New York City.

The city is in a housing crisis. Housing lotteries attract tens of thousands of applicants for a tiny number of affordable apartments. And the city’s population is growing. It is estimated that we will need 20,000 new affordable units every year for the next 20 years to meet demand.

The 421-a program is a vital part of any strategy to meet this overwhelming demand for affordable housing. That is why Mayor Bill de Blasio supports extending and reforming 421-a as part of his effort to create more affordable housing.

NYSAFAH does not support the status quo. We want to improve 421-a so it can help create more affordable housing. We support, for example, the mayor’s proposal to increase the number of affordable units receiving property tax credits and eliminating 421-a benefits for condominiums.

Moreover, Ryan’s attack on NYSAFAH for its opposition to Local Law 44 has nothing to do with the debate over 421-a. Local Law 44, which requires wage disclosure at publicly funded projects, places a significant administrative burden on small businesses and provides little value to the public. It creates extensive reporting requirements along with punitive repercussions for noncompliance that will only discourage businesses from working on city-funded projects.

Renewing and improving 421-a is vital for the future of our city. It will promote affordable housing in every borough; it will encourage the creation of middle-income housing and diverse communities; and it will encourage developers to hire local workers for affordable housing projects.

Income inequality is an important issue facing us all. But requiring excessive wages will only raise the cost of affordable housing for city taxpayers, and a higher wage base means fewer workers will be hired. That is not a path we want to travel. We need more affordable housing and more jobs—and reforming 421-a is the way to do both.

Jolie Milstein is president and CEO of the New York State Association for Affordable Housing.