Tuesday, October 22, 2013

What our neighbors can teach us about working families

by Lisa Sturtevant, Ph.D., National Housing Conference and Center for Housing Policy

For a researcher, definitions are important. Defining precisely the target population for assessing needs or evaluating program outcomes is essential for producing reliable research results.
Center Director and NHC Vice President for 
Research Lisa Sturtevant, Ph.D.


In the Center for Housing Policy’s Housing Landscape report, working households are defined as those that have household members working at least 20 hours per week, on average, and earning no more than 120 percent of the area median income (AMI). In our Paycheck to Paycheck analysis, we compare the wages of workers in occupations with low and moderate wages to rents and home prices in metro areas across the country to measure affordability.

But I wasn’t thinking about definitions or research reliability during a recent conversation with Lucas.

Lucas is the parking garage attendant around the corner from my office. He started at his job the same week I started at mine, in mid-August. I see him every morning when I pull into the garage and every evening when I leave for home. A few weeks ago, I had an unusually long day. I pulled up to the parking garage just after 6:00 am and Lucas was opening up the garage door. Lucas and I said “Have a good day” to one another. When I returned to the garage at 6:45 that evening, Lucas was still there and wished me a good night.

As I drove home trying to unwind from a nearly 13 hour day at work, I realized that Lucas had also had a 13 hour day. Did he work 13 hours five days per week? Did he have a family he was supporting? What kind of opportunities did he have for getting ahead?

The next day I asked him about his work schedule. It turns out that he does, indeed, work from 6:00 am until 7:00 pm five days a week. On top of that, he comes in on Saturday mornings to power wash the garage and several days during the week he leaves the parking garage at 7:00 and works at a restaurant until 11:00. He has a 12-year old daughter with cerebral palsy, and his wife has to stay home to take her to doctor appointments and to school. He says he gets only about three hours of sleep each night and has a constant headache that recedes only when he closes his eyes. He says they are just getting by.

Lucas typifies the struggles that many working families face. There is evidence that the situation for people like Lucas has been getting worse over the past few years. Data reported by the U.S. Census Bureau indicate the median household income in the U.S. was $51,017 in 2012, virtually unchanged from 2011 and about nine percent lower than at the beginning of the recession. The highest income households, however, have been seeing their incomes grow. According to an analysis by Emmanuel Saez, an economist at University of California, Berkeley, incomes of the top one percent of households grew by 11.2 percent between 2009 and 2011, while households in the bottom 99 percent shrank by 0.4 percent.

The wealth divide is also growing during the economic recovery. As the stock market has improved, the wealthiest households benefited disproportionately as nearly two-thirds of their wealth comes from financial holdings. But among lower wealth households (those with net worth of less than $500,000), just 33 percent of their wealth is in the form of financial assets; 50 percent comes from their home. While home values have been rising, many homeowners remain underwater. In addition, stringent lending requirements have shut out many potential homeowners, reducing their opportunities for building wealth through their home.

Everything about the current economic situation seems like it’s making it tougher to get ahead.

In the face of growing income and wealth disparities, many families also face high and rising health care costs. The risk of unexpectedly large health care costs weighs heavily on many families’ minds—perhaps including Lucas’s—and unanticipated medical expenses are a primary main driver of foreclosure and bankruptcy.

Lucas works over 70 hours per week to keep a roof over his family’s head, to put food on the table and to pay for medical care and education for his daughter. What opportunities does Lucas have to get ahead? How many other people are there like Lucas across the country, who work as much as possible but face tremendous obstacles to moving up the economic ladder and who are one unfortunate event away from falling far, far behind?

The growing income and wealth inequality, and the difficulty of people on the lower rungs of the economic ladder to be able to get ahead, suggests that housing affordability problems will only increase for those in the more modest income groups. It suggests a need for an increased supply of housing, particularly in fast-growing and high-cost areas. It also suggests the importance of the transportability of housing vouchers within a region, as was recommended by Bruce Katz and Margery Austin Turner, to make it easier for working households to move within a region for a better job or a better neighborhood.

The situation also suggests a need for critical analysis of how working households in the middle and bottom of the income spectrum are to build wealth. Historically, for these households, owning a home was the primary way they accumulated wealth. Even as homeownership became ostensibly more affordable across most of the country, access to homeownership has declined through tighter credit markets and stricter standards.

The ability of working households to get ahead depends on more than just access to affordable and decent housing near jobs. But the lack of accessible and affordable housing is most assuredly a barrier to having a chance.

When I saw Lucas later in the week, he thanked me for asking about his situation. “It sounds like you worry about me,” he said. “I worry about me, so it’s nice to think someone else is.”

What should we be doing beyond worrying? From a researcher perspective, we can remain steadfast in our efforts to document and disseminate data on the economic circumstances of working families. Furthermore, researchers in the housing field, including the Center for Housing Policy, can raise questions and suggest answers for how housing policies and programs incentivize or discourage wealth creation. And researchers should serve as a resource to advocates and others who need to be armed with rigorous and thoughtful analysis as they seek change.

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