A working paper released in September 2003 by the Program on Housing and Urban Policy at the University of California, Berkeley presents new evidence on the increased costs of prevailing wage laws on construction. The paper estimates that new prevailing wage requirements signed into law by eventually-recalled Governor Gray Davis in 2001 increased costs on state-subsidized low-income housing in California between 9 percent and 32 percent under the most credible statistical models. According to the paper, under reasonable conditions, the authors' mid-range estimate of the prospective decrease in dwellings in California subsidized by tax credits alone exceeds $2,600 per year.
The U.C. Berkeley study conclusions are consistent with California Institute for County Government at California State University, Sacramento showing the expansion of prevailing wage coverage in California to affordable housing increased the cost of that housing by an average of 11 percent.
Read the report: The Effects of Prevailing Wage Requirements on the Cost of Low-Income Housing