Opinion: Prevailing Wage Bill for Building Workers Would Harm Affordable Housing Efforts

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HNY site on 127th

Jarrett Murphy

An affordable housing construction site on 127th Street in Harlem.

The City Council’s work on Intro 1321, while well intentioned, may very well cripple efforts to create deeply affordable housing in New York City. The legislation as currently written would require that building service workers – even in subsidized housing for extremely low and very low individuals and families – be paid the prevailing wage.

Prevailing wage is a specifically defined hourly rate and, upon comparison, it is approximately twice what non-union workers are currently paid. While this is a well-meaning effort to increase the salaries of and provide benefits to porters, handymen among others, it will add literally billions to the cost of developing deeply affordable housing – money that the Council is not including in the bill.

Some unintended consequences, in addition to the reality of fewer affordable homes, include the fact that expenses will begin to exceed income at many existing low-income housing developments, inequities will be created among different workers (including community health and other program staff, educators, and afterschool providers), and additional pressure on many projects if more subsidies are not provided to fill the financing gaps created by the bill. All of this at a time when New York City is experiencing an unprecedented affordable housing and homelessness crisis.

I am proud to run a mission-driven nonprofit community and housing organization that has preserved, developed and operates 2,000 affordable apartments in New York City spanning over 30 years. The work of building and preserving affordable housing for the lowest income New Yorkers is an increasingly difficult task given rising costs and diminishing land on which to build.

Maybe it doesn’t need to be said, but hundreds of thousands of New Yorkers are in need of very affordable housing (we lost over 400,000 apartments that rent for less than $1,000 in just the last fifteen years). Meanwhile over 60,000 New Yorkers are in shelters. No one disputes the need to create more affordable housing as quickly as possible and no one disputes the need for fair wages with benefits for all working people.

New Yorkers must recognize that passing Intro 1321 in its current form would require the City to provide approximately $10,000 of additional subsidy per affordable apartment. This is the equivalent of $1 million for a typical 125-unit apartment building that includes affordable homes for families at a range of income levels.

And if Intro 1321, were enacted today, inequity between maintenance workers and other human service workers would take place in affordable and senior housing, as well as shelters. The proposed compensation for a residential building handyperson under 1321 is $83,699 ($57054 in wages); for a porter it is $78,437 ($51,792 in wages). By contrast a Service Coordinator in senior housing earns around $42,000 in wages. Shelter workers earn around $37,000 in wages. Human service workers’ wages are often determined by city and state contracts.

It is our fervent hope that City Council will work to lift up these salaries – including for jobs predominantly held by women – in the near future, but in the meantime the gap between the staff impacted by Intro 1321 and the other building and service staff would be in stark contrast. In addition prevailing wages increase regularly while service workers, on the other hand, have been waiting for a 2.5% cost-of-living adjustment for ten years.

Additionally, ongoing income and expense operations over time will be negatively impacted. Currently the City and developers underwrite income and expense at 2% increases annually for each. Prevailing wage increases are independent of this projected underwriting and are set externally and increase faster than the current underwriting. Even if the City were to put additional development subsidy into its most affordable housing developments; over time the gap between income and expenses shrinks quickly and in less than twenty years the buildings as projected run an operating deficit.

I believe that the City Council did not intend to thwart efforts to build much-needed new affordable apartments for extremely low, low and moderate income New Yorkers, nor impact the City’s ability to preserve thousands of developments with expiring Section 8 and other HUD contracts. However, this would be the unfortunate reality if Council members choose to move forward with Intro 1321 as it currently stands.


A different view:
Opinion: To Address Affordability, Housing Must Pay Decent Wages


The good news is that there are several ways to achieve a sensible compromise on this legislation. The Council could simply move to exempt shelters and a wider range of newly constructed or preserved housing serving households at an average of 60% of area median income. It is not too late to have a real discussion about making these amendments to the bill so it does not derail citywide affordable housing efforts.

I believe that all working people deserve to be paid well and receive benefits, but I also understand the obligation to operate and manage affordable housing developments for New York City’s low-income families over the years to come. I hope there is an opportunity for increased dialogue and additional changes to Intro 1321 to ensure it will advance its stated goals without creating serious unintended consequences.

Ismene Speliotis is executive director of the Mutual Housing Association of New York (MHANY).

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