Chance for mayor to tackle labor costs
The whisper campaign about the high cost of union labor in this town is deafening. Developers, contractors, and real estate executives will tell you there’s a big reason why Boston can’t build more middle-class housing: construction workers’ fat paychecks.
It’s a front-burner issue because Mayor Marty Walsh has been on his own campaign to solve Boston’s housing crisis. The middle class can no longer afford to live here, with the average price of a downtown condo approaching $1 million. The Walsh administration is considering several ways to boost production, including making city-owned land available for development and handing out tax breaks.
But curiously missing from the Walsh agenda is how, and if, our labor-backed mayor — who was once the head of the Boston building trades — would ask his brethren to budge on wages.
Would he? The answer is yes.
“Let’s put all the problems on the table — cost of construction, cost of land, cost of labor,” Walsh told me during an interview last week in his fifth-floor office in City Hall.
He pointed out that’s why labor representatives sit on the housing task force he formed. “Labor costs are clearly going to be one of the issues we are going to talk about,” he said.
But will it be more than just talk? We should all hope so.
More than anyone, Walsh is uniquely qualified to make Boston a city where working families are welcome again. We worried that this card-carrying union guy from Dorchester would stay in the pockets of big labor that spent millions to get him elected. On the campaign trail, he assured us he would be the union guy who could stand up to the unions. He stayed true to his word when he negotiated a firefighter’s contract that didn’t drain the city budget.
Now comes along another issue near and dear to Walsh, and he is thinking about how the unions can help. Some locals, he pointed out, already offer a discounted residential rate when they build homes instead of office towers. The carpenters, for example, have a separate division that charges a residential rate of $28 an hour, plus benefits, compared with a commercial price of $40 an hour.
Walsh suggested that structure could be adopted on a wider scale to attract developers to build workforce housing because they can then make the numbers work. If the city can reach a critical mass of homes under construction, the unions could create a new wage category because there would be plenty of jobs to go around.
“In the past, there hasn’t been enough of a market for this moderate low-income housing to really justify creating a separate division,” said Walsh.
Brian Doherty, who succeeded Walsh as head of the Boston building trades council and sits on the mayor’s housing taskforce, said it’s too early to talk specific solutions. But he added, “We believe in collaboration and appreciate the opportunity to bring workers’ voices and values to the table.”
Developers have shied away from the lower end of the residential housing market because it’s hard to make a decent profit. Construction costs are roughly the same — whether you build a luxury apartment in the Seaport District or an affordable unit in Mattapan — so you follow the money.
Now when real estate types talk about reining in labor costs, it’s often about going “open shop” and using skilled nonunion workers without the fear of getting blacklisted by the Boston Redevelopment Authority or seeing a giant inflatable rat at your work site.
Is there a big difference? One developer offered this example: He recently put up an apartment building in Watertown and another one in South Boston. Putting in the “expensive stuff” — like mechanical, electrical, and plumbing elements — cost him $32 a square foot in Watertown using nonunion workers versus $82 a square foot in Boston with union.
That means to get a return on his investment he will need to rent it out for $4 a square foot in Boston compared with $2.50 a square foot in Watertown. Do the math on an 800-square-foot apartment and you’ll see it’s the difference between affordable and unaffordable for many: a monthly rent of $3,200 versus $2,000.
Walsh may be willing to support lower labor rates to help build housing, but he doesn’t buy the argument that the city’s union construction costs are so out of whack that we need to cut wages on other projects or that we need more nonunion labor.
“Reducing the salary is not the way to go,” said Walsh. “We already have an economic gap in Boston between the rich and middle class and the poor. I don’t want that gap to widen.”
In the push for more housing, our new mayor has a chance to stand for — and up to — labor.