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This story was produced by the Oregon Journalism Project, a nonprofit newsroom covering the state.
When the Oregon Legislature convenes for the 2026 session on Feb. 2, the Senate’s No. 2 leader on housing and development will introduce legislation to make small but significant changes to Oregon’s prevailing wage laws.
Sen. Dick Anderson (R-Lincoln City) says he has seen builders in his coastal district and across the state struggle with recent interpretations of Oregon’s prevailing wage laws. Those rulings have resulted in fewer new units of housing and unnecessary obstacles to the provision of vital services such as child care.
“Oregon’s housing crisis is well documented, and as vice chair of the Housing and Development Committee, I’ve seen firsthand how prevailing wage mandates inflate project costs and stall development,” Anderson tells OJP.
“My bill aims to provide targeted relief by ensuring that the language in statutes will make sure affordable housing at multiple levels is being built without prevailing wage triggers.”
Current Oregon law exempts “affordable” or publicly subsidized housing that is privately owned and less than five stories tall from having to pay prevailing wages. That exemption can make a big difference: Studies have shown that a requirement that contractors pay prevailing wages can add 10% to 20% to overall project costs.
But as OJP has reported over the past year, the Oregon Bureau of Labor and Industries, the agency that interprets and enforces prevailing wages laws, has increasingly nullified the affordable housing exemption for a number of reasons: the inclusion of commercial space, such as child care facilities; the previous use of a building set for renovation into affordable housing; the installation of adjacent public infrastructure, such as streets and utilities; and the characterization of money raised by state bond sales and loaned to private developers. (A dispute remains over whether money from the state’s Low Income and Fast Track, or LIFT, bond program constitutes “funds of a public agency,” which triggers prevailing wages.)
Anderson pointed to the Oregon Journalism Project’s reporting as a catalyst for Senate Bill 1566.
“OJP’s investigative pieces on prevailing wage and its impact on housing have been some of the most thorough and impactful reporting out there,” Anderson says. “They’ve underscored why targeted reforms are needed to balance worker protections with the urgent need for more affordable homes.”
Anderson’s bill would change current law to make clear that commercial uses are allowed in affordable housing without jeopardizing the exemption of the entire project and that the previous use of a building is irrelevant to whether it qualifies for an exemption. It would also increase the maximum height under the affordable housing exemption from four to seven stories in certain counties and clarify that the installation of streets, sewers and other utilities shouldn’t force an adjacent project to pay prevailing wages as BOLI determined on a massive Willamette riverfront project in Eugene.
In Anderson’s district, an affordable housing project that would have included space for child care was halted because of a BOLI determination that the child care space would have required the payment of prevailing wage for the entire project. He and others believe the appropriate response is for BOLI to specify that affordable housing developments can include up to 50% commercial space on their ground floors.
“These common-sense clarifications will help developers build more units affordably while also addressing child care shortages—two priorities that directly support working Oregonians,” Anderson says.
Tensions around prevailing wages—which understandably draw strong support from the trade unions whose members benefit from higher wages—have grown as the Legislature pumped more than $1 billion of new funding into subsidized housing over the past decade—up from virtually nothing the decade before.
That means a lot more public money is going into affordable housing. Anderson and housing developers say BOLI’s interpretation of existing laws means that the investment of those public dollars is far less efficient than it could be. Meanwhile, despite Gov. Tina Kotek making increasing housing production a top priority, the number of new housing starts in Oregon has declined in each of the past three years.
On the eve of the February session, as Kotek and her recently named Prosperity Council and Democratic legislative leaders have turned their focus to the state’s flagging economy, Anderson hopes his bill will garner bipartisan support although Democrats have typically favored expanding the scope of prevailing wage coverage. (Kotek, Senate President Rob Wagner, D-Lake Oswego, and House Speaker Julie Fahey, D-Eugene, did not respond to requests for comment.)
“The governor and Democratic leaders have rightly elevated economic development, and I see real synergy here,” Anderson says. “The Prosperity Council, with voices from labor and trades, is focused on growth—but we won’t achieve that if high construction costs continue to choke off affordable housing supply.”
