by Vanessa Newman, National Housing Conference
The cost of living near jobs, transit and amenities keeps growing in many American cities, while the minimum wage stays the same. The Center’s latest edition of Paycheck to Paycheck, detailing housing costs and wages for workers in 76 different jobs in hundreds of cities nationwide, just came out August 15, highlighting the gap even full-time workers face between how much they take home and how much they need to cover the rent or mortgage. At least partly in response to the growing need for housing affordability, cities including Chicago and Washington, D.C., are considering or already have enacted “living wage” laws to force large retailers to pay higher wages to workers. Perhaps it’s time to talk about what makes living in high-cost markets so unaffordable, what the minimum wage was designed to do, where it’s failed, and what we can do to help minimum- and low-wage workers make ends meet in communities nationwide.
|Seem cheap for Park Avenue? It was even |
cheaper than it seems. Consider that
in this apartment ad from the 1930s, the
rent listed was per year, not per month.
With housing inflation being so off the charts in comparison to the increase rate of minimum wage, not just in New York, but increasingly in urban cities, D.C.’s “Large Retailer Accountability Act of 2013”, which passed in July, is progress. The bill requires all retailers operating stores at least 75,000 square feet and whose corporate parent has sales of at least $1 billion to pay wages no less than $12.50/hr. Although that probably doesn’t affect the majority of businesses in the district, for some, that $4.75 difference may seem like a blessing. A blessing it may be, but that additional $4.75 simply still isn’t enough to bring housing costs within reach of those getting the increase. According to that fresh Paycheck to Paycheck data, the fair market rent for a one-bedroom apartment in the D.C. metro area is $1,328 per month, requiring an annual income of $53,120 to make it affordable. And while D.C. is experiencing a major construction boom, most new home construction in the city is of luxury apartments and condominiums, doing nothing to increase the supply of affordable housing and causing housing costs in once-affordable neighborhoods to rise rapidly.
Let’s use Wal-Mart as an example of being one of the companies affected by the new act. Wal-Mart employs salespeople, food prep staff and janitors, all job categories offering wages not much above minimum wage, which comes out to about $15,000 a year. However welcome an additional $4.75 an hour would be to help these workers meet their household budgets, it’s not enough to help cover the full cost of housing in an expensive housing market like D.C. That $4.75 raise would bring up workers’ annual pay to about $26,000, still only about half of what they’d need to make to afford the rent on a one-bedroom apartment, and that’s just to cover rent, not including transportation, food, healthcare, etc.
Moving farther away from job centers to areas with a cheaper average housing costs isn’t an answer, either; according to the Center’s 2012 report Losing Ground, adding transportation costs necessary to cover a long commute can make outlying areas some of the most expensive parts of a metro area when transportation costs are factored in.
Despite the efforts of D.C.’s Large Retailer Accountability Act, it simply isn’t enough, for those affected by the change, and those working in smaller retail businesses won’t be able to enjoy the raise at all. If we’re being realistic, change isn’t going to happen overnight, and although a raise in minimum wage is a bit of progress, it is infeasible to believe at this time, the government is going to take on a minimum wage reform to catch low-wage workers up entirely with the costs of living they face.
One venue of progress-making, more practical than a federal minimum wage hike, is adopting housing policies that benefit low-income residents living in these high-cost-of-living areas. Many options require federal action, but many other options can be enacted at the state and local levels.
Increasing housing vouchers for more families who may not be eligible but should be and providing services to help assist families in finding low-income housing is one action. Increasing the supply of Tax Credit and public housing for families on vouchers and of low-income to be able to have homes to find is another action we can take. Enacting zoning codes or providing incentives for builders to construct mixed-income housing, especially in income-diverse areas such as D.C., to maintain housing equality is another action we strive for. Funding bills that show promise in making progress in improving and expanding affordable housing or advocating for these policies to are both solutions to the issue of affordable housing.
Through these efforts of pushing for more affordable housing and income equality, we hope to create more environments where the cost of living will be truly affordable not just to those earning a livable wage, but minimum wage as well.
Vanessa Newman was a summer Marketing and Communications intern with the National Housing Conference. The Maryland native's last day was August 22, 2013, when she returned to American University to continue her studies.