How Well-Meaning Rules in California Hit Lower-Income Families Hardest
California leads in progressive regulations, whether it’s construction standards, price controls on insurance, or occupational licensing. But a June 2026 Berkeley Economy and Society Initiative paper argues that lower-income households pay a heavy price for these well-meaning rules. The author calls this “regressively funded progressivism”: well-meaning rules whose costs hide in prices and weigh more on households that spend a larger share of their income on essentials.
For example, strong building standards can make more sustainable buildings, but amid a massive housing shortage, each rule’s cost can make it harder to build more homes, ultimately driving up housing prices. Home insurance serves as another cautionary example. The paper argues that limiting premium increases sounds nice but will likely make cost problems worse over time.
In To Make California More Affordable, Reform Regressive Regulations, researcher Samuel Trachtman examines how building code rules, insurance regulations, and other laws raise the cost of essentials like housing and energy. This summary focuses on the housing and insurance examples.
Key Takeaways:
- Second Stairwell Mandate: Allowing single-stair midsize apartment buildings could cut costs by about 10 percent, with no notable loss in safety.
- Complex Local Codes: Building codes are meant to keep residents safe, but some standards lack strong evidence of safety benefits. Yet these complex rules lead to expensive, custom design work. And since building codes can vary by city, homebuilders cannot always reuse the same designs to lower costs.
- Insurance Premium Caps: After regulators limited homeowners’ insurance premium increases, insurers canceled policies and more homeowners ended up on the state’s more expensive FAIR Plan.
The paper reviews outside research, including analyses from Pew and the Center for Building in North America on stairwells, a 2025 RAND housing cost study, and an Independent Institute insurance analysis.
Here is how these rules add costs:
Second Stairwell Adds Cost Without Clear Safety Gains: California requires two stairwells in apartment buildings over three stories. The requirement follows model-code guidance meant primarily to promote fire safety. However, the second stairwell uses materials, labor, and rentable space, and Pew and the Center for Building in North America estimate that dropping it from midsize buildings could cut costs by 10 percent. New York, Seattle, and Honolulu have long allowed single stairs in four-to-six-story buildings without a difference in fire deaths.
City-by-City Code Differences Block Cost-Saving Common Designs: San Francisco’s building code is stricter than Oakland’s in several areas, including energy, seismic design, and egress. Variation like this forces projects to be redesigned city by city, which keeps developers from using common templates. A RAND study the paper cites attributes high architecture and engineering fees in part to complex building codes. The paper notes that a 2025 law, AB 130, freezes residential building code updates for six years, adding predictability but locking in many costly existing provisions.
Premium Limits Can Backfire: Unlike the safety rules above, limits on insurance premiums were meant to address affordability. According to the Independent Institute analysis the paper cites, as wildfire damage raised insurance costs, regulators controlled how much insurers could raise premiums. This caused many insurers to cancel policies, and more homeowners moved to the state’s more expensive backup plan, the FAIR Plan. The paper argues that price controls increase the state’s exposure and encourage continued development in fire-prone areas, which worsens the affordability problem over time. It offers this as one example of a broader pattern: new regulations meant to address the cost of living that are likely to make it worse in the long run.
The paper recommends allowing single-stair midsize apartments statewide. It also proposes a cost-benefit review of code provisions and a state appeals process for local code interpretations. Because the costs of these rules are largely out of public view, the paper argues that accounting for them could preserve safety while making homes more affordable.
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