Evaluating the Impact of Project Labor Agreements on the Cost of Affordable Housing Projects: Proposition HHH in Los Angeles

Enrique Lopezliraand Aida Farmand

Abstract

The effect of Project Labor Agreements (PLAs) on construction costs has been a source of debate for a long time. This research note evaluates the impact of PLAs on the costs of affordable housing construction projects under Proposition HHH in Los Angeles, making it a critical case study given the city’s efforts to address homelessness. Drawing on empirical data from completed projects, we employ a methodological approach that contrasts with previous studies by using actual total development costs. Results indicate no statistically significant relationship between the use of PLAs and the actual development costs of Proposition HHH projects, suggesting that PLAs did not lead to per-unit cost increases. We acknowledge the need for a multifaceted evaluation of PLAs, considering factors such as workforce unionization, their impact on non-residential spaces, and the duration of the approval process. Additionally, we emphasize the broader benefits of PLAs, including enhanced cost efficiency, improved work quality, and broader economic impacts, which should be factored into a comprehensive assessment.

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