The Union Debate Over Housing in California

New housing laws lead to major shift in union support as the Carpenters and the Building Trades diverge in labor requirements.

There’s been a revolution in union power in Sacramento unfolding this legislative season that’ll have major ramifications on housing laws. There’s a major power broker in the California legislature: the state Building Trades. The Building Trades is a federation of various construction trade unions and are the largest amalgamation of organized construction labor.

In 2016, arguably the most monumental housing law today, Senate Bill 35 was passed with the Building Trades’ blessings. If a jurisdiction was behind on its RHNA targets (the quota of homes a city needed to approve) in a bi-annual progress report, SB 35 would streamline development projects in the area. Local planning administrators must grant permits for valid housing developments within a couple months, thus cutting out a voting procedure by city councils and planning commissions that normally occur over several years.

There’s two versions of streamlining in SB 35. For jurisdictions behind on their market-rate housing quota, development with at least 10% affordable homes are streamline approved. This is aimed at moving forward majority market-rate housing projects. For jurisdictions behind on their low-income housing targets, development projects with at least 50% affordable homes are streamlined. This is aimed at moving forward nonprofit and publicly subsidized housing, as 50% affordable is usually not feasible for a private developer.

There was also a difference in the labor requirements for the two categories of streamlining. For the 10% affordable / market-rate category, “skilled and trained” requirements were employed to effectively have a plurality or more of union contractors on those housing projects. Technically, skilled-and-trained is defined as a worker who has gone through an apprenticeship program under the supervision of a union. The 50% affordable catagory required “prevailing wage”, where union-level wages must be offered to construction workers, but it doesn’t require that those workers went through an apprenticeship or are in a union.

SB 35’s labor standards was widely celebrated by the Building Trades, with prevailing wage being the new floor of labor standards. But as Senate Bill 35 played out, the results on the two divergent labor standards became similarly divergent. The 50% affordable streamlining component lead to a massive boom in low income housing units. Over 2,000 low income homes were streamlined and built in just San Francisco alone, and a lot of them union built as prevailing wage intended.

But not a single market-rate housing project in the state of California was built under SB 35’s 10% provision with the skilled-and-trained rules. Despite that about 268 jurisdictions in California are under the market-rate (10% affordable) streamlining vs. 238 under the affordable (50%) streamlining.

Residential construction workforce count from the Federal Reserve in California. This includes union and non-union workers. (FRED)

Since the Great Recession, the residential construction sector has slowly recovered workers as housing needs exponentially grow. The residential workforce also has a low ratio of unionized workers — about 5 - 10% of the labor force. This is in contrast to the more populated commercial construction labor force, whose constant construction makes it a more reliable career. California doesn’t build much residential housing because of the high cost of construction and zoning / permitting barriers, so the residential industry is notoriously cyclical as is its workforce.

Around 2019, after SB 35 was proving successful and ADUs were skyrocketing under new state laws, the Building Trades’ leadership decided that skilled and trained was the new labor standard and not prevailing wage. And they meant it when they shocked Sacramento by smoking the entire 2020 housing legislative agenda. The Building Trades then got caught up in a hard-to-watch political fight with affordable housing nonprofits, the latter of whom supported prevailing wage.

The nonprofits argued that in areas with low amounts of union labor — inland and away from the coasts — there isn’t enough unions to satisfy skilled and trained, especially for a social cause like low income housing. The Building Trades have argued that they’re receiving special and undeserved exemptions in labor laws. Shockingly, affordable housing developers struck back by outright opposing their own bills meant to help them when skilled-and-trained standards were added.

(For-profit developers under the California Building Industry Association, don’t like either prevailing wage or skilled-and-trained, but the pro-housing legislators have made clear they want prevailing wage so it doesn’t matter.)

Since then it seemed clear that the Building Trades were not going to budge from anything short of skilled and trained. Now from the Trades perspective, skilled and trained is a jobs guarantee, especially during a recession when employment shrinks. But also during this new “YIMBY era”, where there’s lot of popular, bipartisan demand for new housing and a building boom on the horizon, they want trained union labor building it exclusively.

Some people ask: “well why don’t they just join a union?” The apprenticeship programs have historically been hard to get into for workers of disadvantaged backgrounds, although that’s changing. There isn’t sufficient apprenticeship graduates for contractors to take on more apprentices. Moreover, tens of thousands of union workers haven’t actually done apprenticeship training and thus are ineligible under skilled-and-trained. And a large ratio of trained workers don’t even work on residential projects. So by dramatically shrinking the amount of residential workers that can build housing — upwards of 90% — it would likely lead to significantly less housing being built as workers would leave the industry.

So the Carpenters Union, who build the most residential projects of any trade union and also lead in apprenticeship graduates (but they are not in the Building Trades’ federation), began to argue that they supported prevailing wage. They claim that all workers, union or not, should have sectoral protection and that prevailing wage are the baseline national standards set by major unions. That prevailing wage prevents employers from undercutting unions with non-union labor; that in areas where union concentration exists will often result in union contractors; and that keeping residential construction high keeps union organizing high and apprenticeships up.

This was a big deal because this was a major trade union distancing itself from the Building Trades’ position, although the Carpenters are a fraction of the Building Trades’ size. This came to a head last year, when Assemblymember Buffy Wicks rallied a strong coalition with the Carpenters (along with non-construction unions) to pass a major zoning reform of commercial corridors and strip malls for housing. The Building Trades’ leadership ultimately ended their opposition and focused instead on passing a competitor zoning reform law that had the skilled and trained requirements.

So this year the legislature is running into the same thing with the same teams staking out their positions. The Carpenters came out in favor of Senator Scott Wiener’s bills SB 4 and SB 423, while the Building Trades are opposed. SB 423 eliminates the sunset provision on SB 35, making it a permanent law. It also re-configures the market-rate / 10% affordable labor requirements into prevailing wage like its 50% counterpart. SB 4 is known as the “Yes In God’s Backyard” bill that empowers religious organizations and nonprofit colleges to build low income housing on their property. It too uses prevailing wage as nonprofit developers desire.

Now as the Carpenters and Sen. Wiener began to negotiation with the Building Trades in a predictable early gridlock, there’s been some major momentum shifting in the labor world. A few weeks ago it was announced that the California Council of Laborers and the Conference of Operation Engineers, two huge unions in the construction trades, broke away from the Building Trades’ position and backed Wiener’s bills. Then the Southern California District Council of Laborers threw their support down for SB 423 shortly after.

So now, officially, a majority of all California union construction workers support the housing package and prevailing wage requirements — not just a majority of residential union workers. This is a big revolution in how this started out a mere two years ago. Now the Carpenters’ coalition are the majority of union labor on this issue and the Building Trades’ are in the minority. But both are still sizable populations to induce gridlock.

The Building Trades’ position is clearly shifting in response.For the first time in years, the Building Trades have offered up new labor language they’d like to see beyond just skilled and trained requirements in SB 423. They released it just 48 hours before the bill’s hearing in the Governance and Finance committee, although the language wasn’t delved into yet.

The committee was remarkably optimistic about the bills chances to become law despite the labor debate. A flurry of support from nonprofits, religious organizations, YIMBYs and local governments supported SB 4. While the trade unions marched outside the capital building and flooded public comment to support SB 423 under the banner “Protect All Workers.” As a result, both SB 423 and SB 4 passed 5 - 1 and 5 - 2 respectively on Wednesday. Their next committee will be Appropriations.

Committee chair and Senator Caballero said that the powerful union divergence on SB 423 was akin to stumbling upon a “gang fight”, but stated she was optimistic that a resolution would come about. I’m pretty optimistic as well. I’m impressed that the trade unions disagree with each other but often refuse to attack each other in press and focus on their demands instead.

To be clear: all unions want to increase unionization and the debate is simply how. By simply requiring it as the Building Trades believe, or by creating opportunities to organize the workforce as the Carpenters coalition believes. I’m siding with the majority of trade union workers here in that more housing and union-level wages affords the best strategy of growing our trained and unionized residential workforce.

I’ll update you as more information comes out.