The Birmingham age-herald., 1923-07-08
LABOR BUT SMALL ITEM IN REAL COST
 OF HOME BUILDING
Fifty Per Cent Reduction Would Save Only $650
 On $5.OOO Home

A straight reduction of 50 per cent in the wages of labor employed on an average house that costs S5,O0o to construct would result In a saving of only $650.
 That Is the answer of the United States department of commerce to charges circulated freely in t. Q building industry that "eXorbit2St wages entering into the cost of con struction are responsible for the high prices that are making tenants" in- stead of home owners" out of people of moderate means.
 pr. John NJ. Cries, chief of the ai- vision of building and housing of tne department of commerce, after careful survey of building conditions all over the United States, gives it as his opinion that labor charges ac count for only 26 per cent of the con- struction cost of the average house.
 The other costs he divides as fol- lows: Building materials, 29.3 per cent; land 19 per cent; contractor. 12.6 per cent; financing, 6.7 per cent; architect and real estate fees, GA per cent.
 "These figures show that 1t Is not generally possible to blame one sin gle factor, such as labor costs, for high prices of houses" Dr. Cries ex- plained. He contended that while the daily wage of building trades men might seem high to a man em ploYed all the year, they are not necessarily high when the seasonal character of the employment Is con- sidered."
 SI.3OO Labor Cost In S5.OOO House.
 Taking 5000 as an estimated cost of constructing an average moderate priced home before it is put on the market for sale. the actual labor cost entering into the construction, on - basis of 2G per cent, represents $1,300 of the whole. The cost of materials, at 293 per cent, would be $1,465, making a total for both of S2,765. Add to this the sum of $950 repre- senting the cost of the land if unim- proved, and the combined three fac tors of construction costs would amount to $3,715. That would leave $1,2S5 for the average overhead" charges. Incidentally, this "overhead' to take care of the contractors prof it's, financing and fees is only $15 be- low the total labor costs and offers a plausible reason for the high cost of building.
 What the purchaser has to pay for this house, constructed at a cost of $5000, is altogether a different mat ter The department of commerce has no available figures as to the actual cost to the buyer, since the selling price would depend largely on the location of the house and the prevailing market at the time of sell ing.
 It is clear, however. that this s1,2S5 is passed on to the purchaser who must pay in addition for the dealers profits on the sale and often plus the 3 or per cent commission fee of the agent through whom he buys. If the selling price is $6,000, a very con servatiye estimate for a residence costing 5000 to erect, the actual overhead" above the cost of labor, material and land which the pur- chaser must meet out of his own pocket would be $2,285.
 Public Fooled By Misstatements.
 With every advance in wages to building tradesmen the public is led to believe that the advance necessi- tates a corresponding increase all along the scale. For instance, 10 per cent advance in wages, according to this theory, would add $500 to the cost of a $5,000 house.
 In reality, it represents an insignif- icant item of the whole cost, S130 to be exact, just as the recent advance in wages to steel workers added merely a few cents to the cost of pro ducing a ton of steel. An increase of 50 per cent in the wages of labor em- ployed on the house in question would actually represent $650, or just II per cent of the total cost of construction and decrease in the same propor- tion would simply work the other way around.