A place to hang your hard hat
Prevailing-wage laws boost homeownership for construction workers, pad tax base
A Chicago construction worker sweeps up on a sewer project. (Shutterstock)
By Ted Cox
Laws establishing a base wage for public construction workers boost their rate of homeownership and dramatically pad the tax base, according to a new study released Wednesday.
The Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign conducted the study, “Prevailing Wage and the American Dream: Impacts on Home Ownership, Housing Wealth, and Property Tax Revenues.” It found that prevailing-wage laws setting a local market wage floor on publicly funded construction work have enabled homeownership for more than 60,000 blue-collar workers, boosting the value of their homes by $42 billion and putting an additional $500 million in local property-tax revenues.
According to the study, construction workers in the 28 states that have such prevailing-wage laws earn 5 percent more than workers elsewhere, with a resulting 2 percent higher rate of homeownership and a 13 percent increase in the value of their homes. “For African Americans in construction, the difference is even more pronounced — an 8 percent increase in homeownership and an 18 percent increase in average home values,” stated a news release accompanying the study.
“Homeownership has long been a core tenet of the American Dream that helps working families reach the middle class,” said study co-author Robert Bruno, a UIUC professor and director of the Project for Middle Class Renewal. “Prevailing-wage laws are providing more construction workers with access to homeownership.”
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Homeownership has long been a core tenet of the American Dream that helps working families reach the middle class.”
Prof. Robert Bruno (University of Illinois at Urbana-Champaign)
“Inequality is not just a function of income, but also of the gaps in homeownership that can inhibit longer-term economic mobility,” added Frank Manzo IV, a co-author and ILEPI policy director. “Prevailing wage is enabling more workers — and especially people of color — to build a brighter future for their families.”
According to the study release, “The regional effect of prevailing wage on homeownership appeared highest in the Midwestern states of Ohio, Illinois, Minnesota, and Missouri, where strong prevailing wage laws boost blue-collar construction wages $2,000 to $2,500 per year, on average. In these states, rates of construction-worker homeownership range from 64 percent to 75 percent — or between 10 and 21 percentage points higher than non-prevailing-wage states.”
The research suggests prevailing-wage laws have enabled homeownership for 61,000 construction workers, producing a $508 million increase in local property taxes.
“While there is a clear link between prevailing wages for construction workers and increases in their rates of homeownership, it is equally clear that taxpayers are getting a strong return on their investments,” said Jill Gigstad, ILEPI research analyst and study co-author. “It’s not just the quality roads, bridges, schools, and other vital infrastructure that these workers are building in their communities. It’s the hundreds of millions of dollars in increased property-tax revenues that their home purchases are generating to help fund these critical investments.”
In 2016, according to the study, the average home value for construction workers was $235,500 in states with prevailing-wage laws and $166,200 in states without.
Last year, Illinois strengthened its prevailing-wage laws, while also passing a record $45 billion capital plan, Rebuild Illinois. As it stands, two-thirds of male construction workers in the state own their own homes, and prevailing wages in 2016 alone increased their housing wealth by $2.3 billion and generated $52 million in property-tax revenues for school districts and local governments.