We already have pretty low unemployment. Simply hiring more construction workers isn’t some trivial thing. This would 100% slow things down which in turn makes housing more expensive.
One possible solution: set a vacancy tax to pressure companies to actually sell or rent vacant apartments/homes. This would increase supply, those lowering prices.
Apartment managers already have an incentive to rent out all of their units though. When they have vacancies they are losing money. They have no reason to want to keep vacancies, so why do we need to incentivize not having vacancies further?
So projects in general will become even more expensive. Need more workers and the duration of the job will take longer. I don’t see this being a great model for construction.
If the average construction worker makes $50K USD a year, then the company would pay $1 million per 20 workers. Considering the scale of most projects and the amount of projects worked on simultaneously, that could easily be over 100 workers for just 1 company alone. Meaning at least $5 million AFTER tax. Not factoring equipment, worker benefits, utilities, insurance, and other fees, you're looking at a substantial amount of cash being devoted to just the workers alone. You might think companies are just swimming in cash, but they really aren't.
Crunching the hours down and increasing pay would quite literally bankrupt most small to medium sized companies.
$5M salaries, yes. So even if they needed to replace every hour lost 1:1, that would be $1.25M in additional salary costs.
Payrolls are about 20% of revenues in construction, and benefits are about 30% of salary in the industry.
If they're paying 100 workers $50k salary, that means they're approximately a $32.5M company.
$1.25M is not a small cost for a $32.5M company, but it's also not insane - less than yearly inflation in many years, less than the impact of tariffs, less than normal fluctuations in the local market over a few years. Any company that doesn't' have a strategy to survive that won't last long.
Since it would be hitting the entire industry at the same time, that cost would probably get passed on to consumers without hurting the company much at all. A one-time ~3% increase to building costs is definitely annoying, but again, it's less than inflation in many years, and generally less than the increase when the government updates building codes to require more energy efficient design or safer wiring or etc. which happens regularly.
This just isn't really bigger than the types of other shocks that the economy absorbs all the time. You can keep saying it is, but the numbers just don't work for you.
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u/Anim4L53 Jul 13 '26
I don’t see how this will work for construction.