Yesterday in the break room I was reading a newspaper article about the ATF Gunwalker Scandal where the ATF, the FBI, and the DEA had failed to communicate about their separate operations among the drug cartels in Mexico. The result was that the Mexican drug cartels had been provided access to weapons that they were able to move across the border and then were paid as informants. Talk about win win. For the drug cartels, I mean. The ATF looks pretty sad right about now.
Today I was reading the latest Jobs Report from the Bureau of Labor Statistics and I had a similar gut feeling – not that I think the BLS is running guns or anything. But that there is a giant disconnect between what is actually happening in each separate segment of our economy – hell, our existence – and our understanding. We like to partition things into understandable chunks. Jobs are stagnant. Residential rents are up and vacancies are down. Educational attainment is dismal. Commercial vacancies are increasing. Crime rates are dropping. But prisons are still bursting.
To make matters more interesting, there is a dramatic need for more affordable housing – especially if rents are going to continue rising as vacancies drop. The State of California, though it requires local governments to address affordable housing needs, has eliminated the only viable affordable housing tool for most local governments by eliminating redevelopment. But the requirements to provide affordable housing remain. Now here is where things get really complicated.
Affordable housing doesn’t pencil as far as most for-profit developers go. It needs to be subsidized in order to be financially feasible – or as feasible as anything that inherently requires a subsidy to be built can be. Yet there is an incredible demand for affordable housing. There are also thousands and thousands of construction workers out of work. The construction sector has borne the brunt of the employment downturn in California. The state is also plagued by aged and failing infrastructure. That isn’t even taking into consideration the potential for infrastructure upgrades that could dramatically improve efficiency and accessibility for the state. There are thousands of vacant buildings and lots scattered throughout California cities that could be re-used or demolished and built-anew.
It is like looking at a bunch of puzzle pieces on a table without any picture on the cover of the box for reference. Why can’t we put the unemployed construction workers to work building needed affordable housing and upgrading infrastructure? Because it needs subsidies. But putting people back to work filling actual community needs would bring in new revenue and reduce unemployment. Yet there is no money for those sorts of improvements. It’s like a snake swallowing its own tail.
This conversation has one other elephant in the room. Any project associated with state or federal money has to pay “prevailing wage”. If anyone wanted to take a beneficial community project and kill it dead, all they’d have to do is require that the builders pay prevailing wage. The cost of prevailing wage is almost three times what the market rate for the same skill set currently supports – which is funny, because that means that the prevailing wage really isn’t all that prevailing. For the cost of one affordable housing project at prevailing wage, a community could build two at market wage. For the cost of employing one worker at prevailing wage, a company could employ two or more at market wage. That is one more person off the unemployment rolls – who, while they many not be making prevailing wage, are very likely to be making more than they get in unemployment – if their benefits haven’t already run out. But that isn’t how it works.
So even if there was some money to start those projects that meet community needs, there isn’t enough money to meet the standards we have set for ourselves in our own regulations. Which means no project. Which means no new employment.
This is not to say that prevailing wage is the only bug in the works. It is one of many. There are a lot of reasons that public infrastructure and construction costs have skyrocketed over the last several decades – why it is now so very expensive to build new railroads or to repair sewers or to fix roads and bridges. Finding those bugs and figuring out how to eliminate them would be the first step at making infrastructure improvement and affordable housing production truly fiscally viable.
It’s just another piece of the fix-it puzzle.
urbanhistori 