Researcher ORCID Identifier

0009-0002-0008-6177

Graduation Year

2026

Date of Submission

12-2025

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Government

Second Department

Philosophy, Politics, and Economics (PPE)

Reader 1

Professor Eric Helland

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@2025 David E Taylor

Abstract

California’s housing crisis, which has been marked by extreme prices, chronic underbuilding, and severe affordability pressures, has generated widely understood need for more housing, yet the state remains constrained by disagreements over which cost drivers policymakers should address. This study examines whether labor costs, given organized labor’s central role in the California Democratic Party coalition, meaningfully drive housing prices to an extent that would justify politically costly reforms. Upon performing a 25-year, 25-MSA, fixed- and mixed-effects empirical analysis, the paper finds that while higher construction wages do raise home prices, their impact is modest and diminishes substantially once structural factors—especially land values and land-use constraints—are accounted for. The results show that land value and land value share of project cost far outweigh labor effects in determining both cross-regional price differences and long-run cost trajectories. Consequently, the study yields little evidence that reducing labor costs would reduce housing costs, while policy attention to land use, density, and regulatory constraints offers far greater leverage for addressing the housing crisis in California’s political environment in which unions hold a major stake. This study runs the risk of endogeneity, as many factors assessed in the study which are attributed to affecting home costs are also affected by housing costs themselves, creating a cyclical relationship. It is also limited by lack of consistent data across the study’s timeline for some variables.

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