Chris Elmendorf

Further thoughts on the construction-wage provisions of AB 140, the @BuffyWicks &amp; @GavinNewsom budget trailer bill.

🧵/17.

As a matter of principle, I *do not* support industry-specific, let alone task-specific, wage requirements. 

I've tweeted that so-called "prevailing wage" rules are the Democratic Party's version of crony capitalism.  

/2 

I think it's profoundly embarrassing that "intellectuals" with Democratic Party career ambitions won't publicly acknowledge this point.

/3

But success in politics requires making accommodations w/ interest groups. 

And interest groups can provide long-term support for  good public policies, support that may outlast the perhaps-fleeting curiosity of NYT columnists, major donors &amp; foundation program officers. 

/4

Seen in this light, what @BuffyWicks has accomplished with @NorCalCarpU over the last several years is truly remarkable. 

/5

Together, they have been trying to reconstitute a new, pro-housing, pro-labor coalition, despite fierce opposition from the "stationary bandit" wing of the labor movement (which cares only about preserving extremely-above-market wages for a very small number of workers).

/6 

Their first effort was AB 2011, a bill which upzoned sites along major transit corridors for by-right development of multifamily housing, provided that workers on the project are paid "prevailing wage."

/7

https://www.nytimes.com/2022/08/18/opinion/california-housing-unions-construction.html

A year later, the AB 2011 wage standard was incorporated into the reauthorization of SB 35 (which requires ministerial approval of certain housing projects). That bill passed over fierce opposition from the bandits.

/8

But developers said the AB 2011 / SB 423 wage standard was unworkable, and few projects materialized. 

https://calmatters.org/housing/2025/02/california-yimby-laws-assessment-report/

/9

The developers were right.

So-called "prevailing wages" are WILDLY out of line with market wages. Developers who undertake PW projects also face huge admin costs &amp; legal risks due to job-classification minutiae. 

/10

https://x.com/CSElmendorf/status/1937767756146806919

So Buffy Wicks negotiated a new set of "housing minimum wages" that are pretty reasonable. The new wage structure is incorporated into the budget trailer bill that will (g-d willing) get her awesome CEQA infill exemption over the finish line.

https://x.com/CSElmendorf/status/1937888459336667271

/11

Wicks's new construction-wage standards should put an end to legal fights over job classifications, enabling developers to produce housing far more efficiently while paying good wages. 

/12

True, there are some nutty carveouts and exclusions in the budget trailer bill, but if that's the price of keeping the Carpenters on board and engaged--on this and other bills--it's probably worth it. 

/13

https://x.com/CSElmendorf/status/1937767764741021698

Yes, Washington State was able to pass--nearly unanimously!--a law ending enviro review of infill housing, w/o any special labor rules. 

/14

But if the latest California Kludge builds a durable alliance b/t Wicks, YIMBYs, the Carpenters, and (hopefully!) other labor unions whose members are working-class housing consumers, it could prove better in the long run than the pristine Wash. State approach.

/15

The proof could start to materialize as early as next year. What I will be looking for:

- a big uptick in CA permit applications &amp; housing starts, relative to peer states

- new bills incorporating the "housing wage" standards of AB 140 into SB 423, AB 2011, etc.

/16

- new bills, backed by the Wicks-Labor coalition, that effectively tackle other tough housing nuts, e.g., the Permit Streamlining Act.

/end

https://x.com/CSElmendorf/status/1937788668078432507

An architect who does multifamily housing throughout CA told me recently, 

"The secret's not out, but San Francisco, erstwhile worst offender, has become one of the easiest places to get projects entitled &amp; permitted in CA."

I asked what changed. He said, "The mayor." 

1/5

"Just about everyone in every city dept now understands its their job to get permits issued, quickly. Mangers got their marching orders from @DanielLurie and workflows have gotten much better." 

(I'm paraphrasing his remarks.)

/2

S.F. still has all sorts of lousy laws &amp; policies that thwart housing production -- high transfer taxes, high IZ, expensive bespoke code requirements, de facto prohibitions on redevelopment of any building w/ rent-controlled units -- but mgmt apparently is much improved.

/3

The architect's comments really drive home the importance of rewarding / punishing cities for housing outcomes, not just preempting exclusionary zoning, de jure permitting discretion, and high fees.

/4

Getting the law right is important, but if the municipal bureaucracy (or the principals in charge of it) don't want housing development, good law will only get you so far.

/end

Opportunity cost is a real issue on sites with more than dirt