ATTACHMENT 2 – 1
1 SUMMARY OF POTENTIAL IMPACTS AND BENEFITS OF
CONSTRUCTION WORKFORCE PROGRAMS AND POLICIES
The following Workforce programs and policies were analyzed in the Report:
• Prevailing Wage
• Skilled and Trained Workforce (“STW”)
• Apprenticeship
• Local Hire
BENEFITS – The following Workforce Program and Policy benefits were identified through Literature Review and interviews with stakeholders:
• Prevailing Wage often is a Living Wage , or the wage needed to cover basic family expenses (covering costs of food, childcare, health insurance, housing, transportation, and other necessities). A Living Wage over the baseline market rate wage is often higher, resulting in additional income over the base market rate wage.
• STW and Apprenticeship programs can lead to opportunities for career growth through increase experience, job promotions, and increased pay.
• All four workforce programs may result in the s timulation of the local economy, with potential economic growth if some of that new income is spent locally.
• Prevailing Wage can result in reduced reliance on and cost of social safety net programs.
According a 2021 UC Berkeley study, about 48% of construction worker families in the State are dependent on these safety net programs with an annual cost of over $3 billion.
• STW and Apprenticeship programs result in higher project quality, efficiency, and safety, with fewer workplace accidents.
IMPACTS – The following potential impacts are associated with the imposition of workforce programs and policies.
• Increased Project’s Construction Cost. It is estimated that workforce policies/programs increase construction costs by up to the following percentages above the baseline cost of development:
Prevailing Wage or STW cost impact – 16.4%
• Prevailing Wage and Skilled and Trained workforce were analyzed together, since these two programs are almost always implemented concurrently.
ATTACHMENT 2 – 2
2 Apprenticeship cost impact – 14.1%.
• This cost impact is not additive to Prevailing Wage or STW costs.
Apprenticeship programs reduce the construction cost as opposed to Prevailing Wage and STW projects without Apprentice Programs.
Local Hire cost impact: 1.7%.
• This cost increase reflects hiring delays and administration costs.
• Impede Housing Production. The imposition of workforce programs and policies as mandatory requirements will have Implications on construction costs for Private Housing Construction. The increased cost may impede private housing production, which affects the City’s ability to facilitate housing production and meet the City Council’s goal of facilitating 12,000 by 2035 and meet the state’s RHNA allocation to build 8,772 units by October 2029.
• Impact on Affordability. In the case of market rate housing projects, increased costs can trickle down to renters or homebuyers, making housing less affordable in already competitive markets.
• Project Funding Shortfalls. City may need to explore incentive programs or subsidy programs to achieve desired housing production.