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Rising Labor Costs and Higher Construction Costs for Homes

Labor costs vary greatly throughout the country, but wages are rising in the construction industry, especially in cities like San Francisco, New York, and Los Angeles.
December 27, 2018, 8am PST | Casey Brazeal | @northandclark
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Construction Site in New York City

Construction costs are up in the United States, and labor is a big part of the reason why. "Construction costs have jumped 23.6 percent since 2004, according to 'What’s Up With Construction Costs?' a new report by BuildZoom economist Issi Romem," Patrick Sisson reports for Curbed. Why are labor costs up? In the cities with the biggest wage gains, unions are a factor. Also, the type of construction done impacts the overall cost of labor. Markets with the highest labor costs, like San Francisco, demand a lot of renovation, which can be more time-consuming then new construction.

Market forces may reverse the trend of rising labor costs. "Training more workers to meet the labor shortage in the building trades is a useful, but long-term, solution. Others see technology as a potential savior; numerous startups and new prefab companies have raised money to develop more efficient construction methods," Sisson reports. Still, many of the forces pushing up labor costs are unlikely to disappear anytime soon.

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Published on Monday, December 17, 2018 in Curbed
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