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Prevailing Wage Laws Boost Homeownership for Construction Workers

Prevailing Wage Laws Boost Homeownership for Construction Workers

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Submitted by the Illinois Economic Policy Institute 

State prevailing wage laws extend homeownership to more than 61,000 blue-collar construction workers, boost the value of the homes they own by more than $42 billion, and increase annual property tax revenues for their local communities by over $500 million, according to a new study by the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign.

Read the Report, “Prevailing Wage and the American Dream: Impacts on Homeownership, Housing Wealth, and Property Tax Revenues.”

“Homeownership has long been a core tenet of the American Dream that helps working families reach the middle class,” said study co-author, PMCR Director, and University of Illinois Professor Dr. Robert Bruno.  “Prevailing wage laws are providing more construction workers with access to homeownership.”

Prevailing wage laws establish the local market wage floor for different types of publicly-funded construction work.  Blue-collar construction incomes are an average of 5% higher in the 28 states with these laws on the books.  The study concludes that, in these states, construction workers have a 2% higher rate of homeownership and a corresponding 13% increase in the average value of their homes.  For African Americans in construction, the difference is even more pronounced—an 8% increase in homeownership and an 18% increase in average home values.

“Our study highlights the fact that inequality is not just a function of income—but also of the gaps in homeownership that can inhibit longer-term economic mobility,” added ILEPI Policy Director and study co-author Frank Manzo IV.   “Prevailing wage is enabling more workers—and especially people of color—to build a brighter future for their families.”

Manzo added that the study showed 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-$2,500 per year, on average.   In these states, rates of construction worker homeownership range from 64% to 75%—or between 10 and 21 percentage points higher than non-prevailing wage states.

With prevailing wage laws increasing the number of blue-collar construction professionals who own homes in or near the communities where they work, the study also suggests these trends are having broader community benefits.  Specifically, the research links the more than 61,000 additional construction workers owning homes as a result of prevailing wage laws to an estimated $508 million increase in property tax collections tied to their home purchases.

“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 ILEPI Research Analyst and study co-author Jill Gigstad.  “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.”

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