New federal legislation will spur unionization of other workers, such as public employees and farm workers.

A minimum wage increase to $2.76 an hour this year under H.R. 3744, now being studied by the House Labor Committee.

Last year's median price of a new home was $44,325, up 12.7 percent from $39,300 in 1975. Five years ago the median price was $27,600, so the jump since then is 60.6 percent. Some of this was due to increase in the size of homes, and some resulted from the large areas of land we required to build new homes. But most of the increase was due to increases in the costs of all the items that go into the building of houses, including the cost of labor.

On-site labor as a percentage of total contract costs1

1 All of the above exclude cost of land and land development from the total.

Single family housing share including the cost of land and land development

Today the cost of materials, measured as a share of the price of a new singlefamily home, is only about 30 percent. After the end of World War II this share was estimated to be about 45 percent.

Put another way, only 30 cents out of each dollar we pay for a new home today goes for bricks, lumber, electric wiring, equipment, pipes and other materials vs. 45 cents spent 30 years ago.

One major reason for this relative decline has been the sharp drop in the share of all hard costs-what the house is actually built of, the bricks and mortar, including labor and materials. Last week I examined some reasons for the decline of the labor share to 16 cents from almost double that amount in 40 years. Now I will show what happened to materials, the other portion of hard cost.

The hard cost share 30 years ago was estimated to be about 69 cents of each dollar purchasers paid. Just seven years ago this share was still about 54 cents. Today it is 48 cents.

If hard costs take a smaller share of the buyer's dollar, where has the rest gone?

A larger share of the cost today is going for land. This share was about 11 percent of the price after the war and is more than double that amount today.

Most of this increase is due to three factors: (1) Increased cost of raw land, including farmland, because of high demand. This has been especially true in the last several years. Farmland prices shot up because of a sharp increase in

farm incomes; (2) Environmental cost increases involved in land and land development, and (3) Restrictions that limit the supply of usable land, such as nogrowth policies and various moratoriums.

Increases in overhead and other costs connected with a much more complicated process of getting a project under way. Costs also are higher because of the longer time required. "Ten years ago, we could buy land and open a model in four to five months in Montgomery County," said Milton Kettler of Kettler Brothers, builder of Montgomery Village. "Today it takes two or three years before we can put a shovel into the ground. The cost of carrying the land over this extended period has increased enormously."

Increases in the share that construction financing takes due to the overall increase in interest rates. This, of course, is caused by inflation. During the Eisenhower era inflation was less than one percent. Inflation at 2 or 3 percent at that time was unthinkable.

Today we accept a 5 to 6 percent inflation rate and keep fueling the price increase by expectation of more rather than less inflation. In a climate of continually larger government deficits, it's no wonder that people are skeptical about bringing inflation down.

Another point to ponder is the fact that risk in building has increased. It is no longer a foregone conclusion that you can build a given project or, for that matter, even one single-family house. The uncertainty, as well as waiting and red tape, costs money.

Many major materials-other than lumber and oil-connected products-have behaved quite well with respect to price.

Many building items-such as paint, plumbing fixtures, heating equipment, water heaters, building blocks, clay tile and insulation board-have increased in the last 20 years at a slower rate than the average for all commodities. Others, such as concrete products, asphalt roofing and millwork, have increased at about the average rate.

Materials that have increased at a higher rate are lumber (more than twice the rate for all commodities), plywood, brass and fittings, and brick. They increased about one-third more than other types of materials.

Since lumber plays a major role in housing costs, comprising between 14 and 15 percent of the price, this alone tended to dampen the decline in the overall materials share. Yet, even with the wholesale price index of Douglas fir, for example, jumping to 282.4 in January 1977 from 87.3 in 1957, the materials share of the sales price still dropped.

Changes in materials, better design and improved engineering have combined to save on the amount of materials we use today.

Many materials have changed only a little, while many others are considerably altered. A brick is a brick, although people who know maintain that brick is better engineered today and is available in greater variety than ever before.

Lumber is lumber; yet finished structural lumber is smooth and easily handled as compared to the rough, unfinished pieces we knew in the past. On the other hand, a 2-by-4 no longer is 2 by 4, but as much as 1⁄2 inch less due to the finish. Walls no longer need 2-by-4s spaced every 16 inches. We have 24-inch spacing where there is no bearing wall. This was made possible by the development of trusses which typically require only one center support. All other walls just "hang" there and don't carry anything. Why waste lumber?

Yes, it's true: We don't have solid doors any more. We use doors that are hollow-core with cardboard inside. They are light and easy to damage, but for inside they serve the purpose and they are considerably cheaper.

We used to have slate roofs. Now most of our roofs are of asphalt shinglesfast, less expensive, easy to replace, and they come in various colors.

Water lines used to be made of steel. Then we changed to copper. Now we have plastic. Easier to install, lighter and just as good.

What about tubs? Well, we used to use cast iron, then steel, and now we have plastic, including the sides.

Another truism is the fact that walls are no longer plaster, but drywall. This means that walls are thinner, but in single-family houses who really notices? They are considerably cheaper and much faster to install.

We are finding less and less hardwood flooring. How lovely they are to look at. And what a backbreaking job it is to install them.

On the plus side, equipment has changed drastically, and much more is available than we ever dreamed possible. Kitchens are fully equipped. Nobody with

any savvy would even try to sell bare kitchens, although some builders overseas still do, even in West Germany.

We now get much more insulation. Glass is no longer single-strength, and therefore has much more insulation value. Furnaces are much smaller, yet much more efficient, as are hot water heaters. A host of other materials such as wallboard, pre-finished panels and cabinets and dropped ceilings did not exist 30, or even 20, years ago.

What about the future? The best judgment available is that the cost push for materials will continue in the next five to ten years, probably at an accelerated pace.

Undoubtedly lumber will get more expensive, because of the political clout of the environmentalists. The most efficient way to harvest lumber is by clear cutting and reforestation.

This is just about out. Pushed by well-meaning but misinformed groups, we are now giving more protection to birds than to people.

Small lumber mills are disappearing. They served in the past as competing forces, helping the market to work better. Now, with several large companies controlling a substantial proportion of production, there is a serious question as to how well the free market really operates.

The anti-pollution issues, especially clean air and clean water, will make it more, rather than less, expensive to produce many materials used in housing construction.

Energy-intensive materials such as insulation, steel, aluminum and plumbing fixtures, as well as petroleum-based products, very likely will increase in price at a higher rate.

We can except further intervention of government at all levels. Tougher housing codes and regulations, more inspections and more red tape instead of less are likely. Naturally, all of this will cost more.

Note. "Hard" construction costs of the Stanmor model in 1972 and 1976. These do not include land, land development, marketing, financing, overhead, profit or incidental expenses.

Source: Business and Defense Services Administration, U.S. Department of Commerce, Construction Review. Bureau of Labor Statistics, U.S. Department of Labor, Wholesale Prices and Price Indexes. Bureau of Labor Statistics, U.S. Department of Labor, CPI Detailed Report. Data compilation and analysis by NAHB Economics Department.

LAND LEADING FACTOR IN HOUSING COST PUSH

Four years ago Kettler Brothers built a two-story colonial house in Montgomery Village, 2,200 square feet in size, and sold it for $61,500. Today that same house sells for $91,650, nearly 50 percent more.

In the same four years the cost of this structure itself—the brick and mortar, or the living space-increased only 31 percent.

What pushed the overall price so high? A leading factor was the increase in land and land development cost-an increase of 103 percent to $19,900 from $9,800.

In addition, there was a 91 percent increase in the cost of construction financing for the house, plus approximately the same increase in costs identified with delays of construction, government red tape and other government intervention. Kettler is not alone.

Just seven years ago, builder-developer Edward R. Carr of nearby Virginia built a house which was sold for $40,950. Today the same house sells for $80,000. Actually, this house is selling for $74,823. Carr had to drop the single carport and a fireplace from his design in June 1975 in order to get the price under $80,000. The Story of his house is pretty much what has happened to most new homes in other parts of the nation. Environmental costs have pushed the cost of land and land development so high that today the consumer pays $23,000 for the same lot that in 1969 cost $7,442-one third as much.

A buyer is bewildered by such exorbitant increases.

"People just don't understand what is happening to cost," said Carr. "Eight years ago the share of the land cost was 18 percent. Today it is close to 30 percent."

What is left, of course, is less money for the house itself. Today Carr can allocate only 46 cents out of each dollar of the sales price to the living space. Eight years ago he had 58 cents to build the house-bedrooms, baths, family room, carport, appliances, all the sticks and stones, brick and mortar which go into living space.

So, big deal! What's 12 cents? A great deal. In the house Carr is now selling for $74,823 the difference is $9,236. Put another way, if the structure had remained at 58 percent of the total price, the consumer would have gotten $43,397 worth of space in which to sleep, eat and relax.