Southwest Washington labor press. [volume] (Hoquiam, Wash.) 19??-19??, 1923-06-29
LABOR COST SMALL
ITEM IN BUILDING
Overhead Charges Almost Equal Labor
According 70 survey Made by HOus-
Ing Bureau, Department Of Conn.,

Ing Bureau, Department Of COM
meree.
A straight reduction of so per cent
in the wages of labor employed on
an average house that costs $4,000 to
construct would result in a saving of
only $3.50.
That is the answer of the United
States Department of Commerce to
charges circulated freely in the build
ing industry, that "exOrbitant" wages
entering into the cost of construction
are responsible fer the high prices
that are making tenants" instead of
"home owners" out of people of mod
crate means.
DR.. John M. Cries, chief of the di-
vision Of building and housing of the
Department Of Commerce, after a
careful survey of building conditions
all over the United States, gives it
as his opinion that labor charges ac-
count for only rs per cent OF the con-
struction cost of the average house.
The other costs he divides as fol-
lows: Building materials, 1913 per
cent; land, 10 per cent; contractor,
1z.6 per cent; financing, 81 per cent;
architect and real estate fees, 6.4 per
cent.
These figures show that it is not
generally possible to blame one sin
gle factor, such as labor costs, for
high prices of houses" DIR. Cries ex-
planned. He contended that while
the daily wage of building trades
man might seem high to a man en-
plOyed all the year, they are not nee
essarily high when the seasonal
character Of the employment is con-
sidered."
$500 Labor Cost on $4,000 House
Taking $1,000 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 a
basis Of 26 per cent, represents $1,000
Of the whole The cost of materials,
at 2s.S per cent would be $1,465, MAX
ing a total for both of $2,765. Add
to this the sum of $3.50 representing
the cost of the land, If unimproved,
and the combined three factors of con-
struction costs would amount to
$3,715. That would leave $1,285 for
the average overhead" charges. In
cidentally, this overhead" to take
care of the contractors profits, H.
nancing and fees, is only SIS below
the total labor costs and offers a
plausible reason for the high cost OF
building.
What the purchaser must pay for
his house, constructed at a cost of
$4,000, is altogether a differen 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 prevail
ing market at the time of selling.
1t is clear, however, that this 81, 285
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. II
the selling price is $4,000 a very con-
sentative estimate for a residence
costing $4,000 to erect, the actual
overhead" above the cost of labor,
material and land which the purchaser
must meet out Of his own pocket
would be s2,2S5.
Public Fooled by Measurements
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 $1,000 house.
In reality. it represents an insight.
ficant item of the whole cost, $3.50
to be exact, just as the recent adj
vance in wages to steel workers add
ed merely a few cents to the cost of
producing a ton of steel. An increase
Of so per cent in the wages of labor
employed on the house in question
would actually represent $3.50, or just