The fight for housing reforms in New York is often described as a battle between tenants and landlords. But any action on the state’s housing crisis this year may actually be decided by another group: labor unions.
After an ambitious set of housing policies collapsed in Albany last year, some observers attributed the failure to the fact that labor organizations were not closely involved in the discussion. Now, as state lawmakers race to find an elusive housing deal with days left to finalize a new budget, unions have become more involved than ever, according to officials in both labor and government.
“We negotiate contracts for a living,” said Candis Tolliver, vice president and political director for the powerful service workers’ union 32BJ SEIU. “We understand what it takes to bring people together, to actually get things done.”
Gov. Kathy Hochul made the arrangement explicit in her budget plan this year. Instead of drawing up her own proposal to replace the 421-a tax break for affordable housing construction, Hochul simply put in what she called a “placeholder,” which left it to the real estate industry and labor unions to hash out a deal on wage standards for eligible projects.
Unions are trying to stake out the middle ground, hoping to unite developers who want a new 421-a and left-wing lawmakers who are insisting on tenant protections such as “good cause” eviction. Labor’s involvement has been encouraging to many in Albany who are desperate for a deal — but, at the same time, unions’ growing power on housing has alarmed some housing policy experts, who fear that few apartments will get built if they are tied to high wages for workers.
“You can’t go out and say this stuff without getting your head chopped off,” said one expert, who requested anonymity to discuss the politically fraught topic. “Any of the solutions that push up the cost of building end up being self-defeating if your goal is to address both supply and affordability.”
Labor has not always held such a kingmaking role on housing. Its influence has grown, paradoxically, even as the rate of union labor membership has dropped steeply in New York.
Certain labor unions have much to gain from a housing deal — like 32BJ, which has long been involved in housing policy because it represents building workers, and the group of unions known as the building trades, which represent construction workers and are seeking a wage guarantee as part of the new tax break. But others involved in this year’s push are newer to the talks, like the Hotel and Gaming Trades Council and the city workers’ union DC37.
Unions like those have gotten involved for the simple reason that their members can no longer afford to live in New York City due to the housing crisis, said Bhav Tibrewal, political director of the influential hotel workers’ union. Their message to lawmakers across the ideological spectrum has been simple: “Don’t be the reason why the deal doesn’t come together,” Tibrewal said.
“An easier path”
State government is controlled by Democrats, and few in deep-blue New York are willing to say a cross word publicly about labor unions, which also have the power to make or break political campaigns. But multiple policy experts told Crain’s they worry about labor’s involvement if it means that a new replacement for the 421-a tax break is attached to so-called prevailing wages for unionized construction workers.
Research by the Independent Budget Office has found that prevailing wage policies increase construction costs in the city by 23%. A 2019 study by the nonprofit Citizens Housing and Planning Council found that the construction workers who benefit from prevailing wages tend to have much higher incomes than typical city workers, such as the low-income tenants that the affordable housing is being built for.
“There are these questions of, where is policy directing money?” one housing expert said. “It’s directing it away from low-income people and toward trades that are actually paid solid, middle-class wages.”
Unions’ role in housing debates in Albany became more formalized starting in 2016, when then-Gov. Andrew Cuomo left it to labor leaders and developers — the latter represented by the Real Estate Board of New York — to come up with a new version of 421-a. The program they created was allowed to lapse in 2022, amid general agreement that it failed to produce enough affordable housing.
“Real estate knew what they wanted: As large a tax credit as they could possibly get. Labor knew what they wanted: As much wages as they could possibly get,” recalled State Sen. Liz Krueger. “But nobody actually asked the question, how much affordable housing are we supposed to get for all this? Very, very little, as it turns out.”
“We’re not talking about housing”
Creating a new tax break is seen as crucial for stepping up the pace of housing construction as the state faces a severe shortage of homes. But to some observers, the current closed-door setup is bad governance, allowing well-heeled developers and powerful unions to decide the future of housing in New York without any formal seat at the table for tenants, policy experts or city officials.
“We’re not talking about housing,” said Ken Girardin, research director at the conservative Empire Center think tank. “We’re talking, to a certain extent, about a construction-union jobs program that might make a few more places for people to live.”
But Hochul has only leaned more heavily this year on Cuomo’s hands-off model. Her budget proposal leaves the details of 421-a up to the “largest trade association of residential real estate developers,” referring to REBNY, and “the largest trade labor association representing building and construction workers,” referring to the Building and Construction Trades Council.
In recent weeks, though, talks have seemingly stagnated. Labor unions last week rejected what REBNY called its final offer, which would have set average wages at $72.45 per hour for workers on large projects below 96th Street in Manhattan and $56 per hour on similar projects in parts of Brooklyn and Queens, and created a phased-in structure starting at $35 for any project citywide with 100 or more units. (REBNY said the offer marked an increase from current wages, but unions call the claim disingenuous, since the “average” wage structure allows some workers to be paid well below the cited numbers.)
REBNY said it had negotiated “in good faith,” but eight building trade unions have since called on the state Legislature to step in, saying that the real estate industry was offering only “scraps.” On Thursday, NY1 reported, Hochul summoned the heads of REBNY and the building trades to Albany in hopes of settling the housing question, which is expected to delay the budget past its April 1 due date.
Labor’s newfound influence on housing owes much to the unions’ own decision to take up the issue. But Krueger pointed to an additional factor: Democrats’ 2018 takeover of the state Senate, which guaranteed more input from labor after decades during which business-friendly Republicans had more power.
“I don’t think real estate thinks they can be that effective with us, unless they’re reasonable,” Krueger said. “And I think labor has an easier path to work with the Democratic Party than the Republican Party.”
Many lawmakers see merit in using the power of government to boost well-paying union jobs, and union labor is generally seen as safer and more reliable than nonunion. Unions, for their part, disagree with the notion that high wages will stifle construction. Kevin Elkins, political director for the New York City District Council of Carpenters, pointed to a recent announcement that a group of construction unions were contributing millions of dollars from their pension funds toward a new $400 million workforce housing initiative.
“Pension funds cannot make an investment in something like that unless there are guaranteed rates of return, enough to warrant the investment,” Elkins said. “How can, magically, union pension funds have the ability to build with union wages and earn significant profits but some of the smartest minds in real estate can’t seem to crack the code?”
New York’s labor unions are not a monolith. The carpenters, for example, have been known to stake out more aggressive positions than more institutional players like the Building and Construction Trades Council.
Such splits within the movement have led to breakthroughs elsewhere. California, which is seen as a model for how labor can push successfully for housing reforms, has managed to pass a wave of pro-development laws since 2022 thanks partly to a group of dissenting unions that have backed the bills even when fellow unions did not.
No doubt, labor’s growing interest in influencing the housing debate has to do with concern for their own future. Union membership in New York state has declined from about 35% in the 1970s to 21% as of 2022. Nonunion labor has grown its share of the city’s construction market from about 10% of the industry to 40% today, while fully union projects have dropped from about 85% to 60% by some estimates due to their higher costs.
Combined with New York’s housing crunch, which is forcing more working-class residents to leave the city altogether, the result is a serious threat to unions’ membership.
“More and more of our members are moving outside of the city,” said Tolliver, of 32BJ. “That’s not good for us.”
Nick Garber , 2024-03-29 17:36:54
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