I really don't like the idea of keeping a doggie crated or penned for most of the day. If he will be there for more than a few hours, please find the largest space that you can to section off for him.
I'm glad that you really don't want to put him on the porch....yorkies are particularly social little animals, and can be so delicate. They need to be around the comforts of home, and he will certainly be ready to romp and play and love with you at the end of the day!
Yorkies are also notoriously hard to housebreak, and some never are....and others can take up to two years I've heard. I have one a little over a year, and one a little less, and scarcely a day goes by that we don't have accidents. This is just part of being a yorkie owner for most of us, and hopefully your wife will be able to understand that he WILL need to have SOME freedom around the house when you're home, and be prepared to deal with this.
I soak up as much of the pee as I can with a papertowel...pour on a mixture of white vinegar and hydrogen pyroxide and baking powder...and then use a no-vacuum foam pet deoderizer. It's quick, and seems to control the smell.
Anyway! Back to the idea of building a pen of some sort. This may seem off-the-wall, but I built a huge guinea pig cage based on this concept:
http://www.guineapigcages.com/
The base is made of a corrogated plastic, or "coroplast", like election signs and such are made from. You can buy sheets relatively cheaply from sign companies, and the site I linked gives instructions for building the "box" if you so desire.
I've never seen this suggestion here, but I think that coroplast would be a great base to protect the carpet (or hard wood!) under a dog pen. Of course, you would make sure that he had a soft spot for bedding down, toys to play with, and keep his food/water and piddle pads areas separate.
Good luck!