Monday, August 1, 2016

Many Full-Time Workers Face Housing Affordability Problems

by Elizabeth La Jeunesse
Research Analyst
Our 2016 State of the Nation’s Housing report and accompanying webcast detailed how the private market is failing to supply housing that is affordable to lower-income households. Indeed, a National Low Income Housing Coalition report found that in 2014, for every 100 very low-income renters (those earning up to 50 percent of area median income) only 57 rental units were affordable and available. The resulting gap in affordable housing supply is due in part to a lack of low-rent units, and is compounded by the fact that many existing low-rent units are occupied by higher-income households.

While statistics on the gap in affordable housing clearly indicate the magnitude of the problem, they mask the extent of the difficulties that certain low-wage workers often face in obtaining a unit they can afford, particularly in major metro areas. For example, according to 2015 HUD estimates, the fair-market rent (including utilities) for a modest one-bedroom apartment was as much as $1,635 in San Francisco, and over $1,200 in New York and Washington, DC. Data from the Bureau of Labor Statistics indicate that in these markets, most full-time cashiers, retail and sales persons, and food preparation workers would have been unable to afford even a modest one-bedroom apartment, under the standard assumption that they should spend no more than 30 percent of their income on housing. The fair market rent of a two-bedroom apartment was even further out of reach for these workers: as high as $2,062 in San Francisco and over $1,400 Washington, DC, Boston, New York, and Los Angeles.

Other occupations where median annual wages were inadequate for households to afford a modest one-bedroom apartment include—but are not limited to—EMTs and paramedics, childcare workers, security guards, and several types of healthcare support occupations (nursing/medical assistants, home health aides), as well as office and administrative support workers. All of these jobs are vital to local economies, and support a variety of businesses and services required for healthy, growing communities.

Annual Wages in Many Occupations Falls Below Income Threshold to Afford a One-Bedroom Apartment (Constant 2015 dollars)

San Francisco
New York City
Washing-ton DC
Boston
Los Angeles
San
 Diego
Phila-delphia
Miami
Dallas
One-Bedroom Fair Market Rent (FMR) ($)
1,635
1,249
1,230
1,196
1,103
1,060
959
907
728
Income Needed to Afford 1BR at FMR ($)
65,400
49,960
49,200
47,840
44,120
42,400
38,360
36,280
29,120
Median Full-time Wage, All Occupations ($)
54,780
44,720
51,560
51,430
38,560
39,760
40,380
31,990
37,400
Emergency Medical Technicians, Paramedics
48,090
35,350
46,050
35,940
29,780
26,830
35,840
29,720
40,330
Home Health Aide
25,170
22,310
21,280
28,720
23,540
26,000
20,870
23,460
20,750
Nursing Assistants
38,220
34,250
28,130
29,560
28,870
28,980
29,090
22,950
24,170
Medical Assistants
43,010
33,850
35,030
37,420
32,680
35,260
33,220
30,620
31,130
Security Guards
32,340
29,200
35,640
28,540
23,730
24,550
23,220
21,500
24,410
Food Preparation, Serving, Related
25,850
22,020
21,280
23,840
21,240
22,250
19,230
19,810
19,220
Childcare Workers
29,090
26,600
22,980
26,110
23,600
24,700
19,670
19,380
19,490
Sales and Related
37,690
30,310
27,040
32,770
27,800
26,960
24,610
24,370
30,040
Cashiers
24,910
19,560
20,190
21,230
19,890
20,320
20,720
18,850
18,670
Retail Salespersons
27,820
21,430
22,100
23,430
23,020
22,700
21,110
19,910
22,340
Office, Administrative Support
45,690
38,330
39,800
42,630
36,030
36,110
36,940
30,810
34,520
Transportation, Material Moving
35,060
32,250
34,200
34,320
27,400
27,460
31,910
26,550
28,120
Heavy, Tractor-Trailer Truck Drivers
47,600
46,770
41,350
48,380
39,960
39,080
39,210
35,510
38,740
Laborers & Freight, Stock, Material Movers
28,770
24,160
25,260
29,610
24,330
24,240
28,710
23,990
24,120
Sources: US Department of Housing and Urban Development (HUD); US Department of Labor, Bureau of Labor Statistics, Occupational Employment Statistics (OES), May 2015 survey.

Notes: Estimates are expressed in 2015 dollars. Median annual wages for all occupations in metropolitan areas and divisions is available from the Occupational Employment Statistics website. Annual wage rates for non-salaried workers are calculated by multiplying the hourly wage rate by a typical work year of 2,080 hours (40 hour work week, 52 weeks per year). Overtime pay and self-employed workers are excluded. HUD’s final fiscal year 2015 fair market rent data is available here

Many workers in our transportation and warehousing sector are also impacted. In areas such as San Francisco, New York, and Washington, DC, the median heavy truck/tractor-trailer driver and freight/stock mover each earned insufficient annual income to comfortably afford a modest one-bedroom apartment. And in several high-cost areas, the overall median annual wage among all workers was inadequate to afford a modest apartment at the same 30-percent-of-income threshold.

Wage stagnation among low-income households is certainly part of the problem. Between 2001 and 2014, the median real household income for renters in the bottom quintile fell 9.9 percent, while income for households in the top quintile was up 3.1 percent. To make ends meet, many low-wage households must reduce expenditures on food and healthcare, move to areas which are less accessible and require longer commute times, double up with family or roommates, and/or live in housing with inadequate conditions.

Meanwhile competition for federal housing assistance is intense; waiting lists for housing vouchers managed by local public housing authorities are often years long or even closed. Affordable housing options are especially limited among single parents and low-income families with children. Nearly a third of the nation’s 7 million renters earning less than $35,000 in 2014 had minors living at home, and fully half of these families reported being severely cost-burdened in the same year—paying more than half of their incomes for housing. Very low-income renters living with severe housing cost burdens face the highest rates of housing insecurity, as measured by missed rent payments, having utilities shut off due to nonpayment, and feeling under threat of eviction.

The inability to afford stable, secure, and healthy housing even while working full-time particularly impacts young children in these households. A study published in the American Journal of Public Health examined the association between housing insecurity, as indicated by overcrowding in homes and multiple moves, and the health of very young children. Researchers found that young children living in households that moved frequently were significantly more likely to be described by caregivers as being in fair or poor health and at developmental risk. Overcrowding and multiple moves were also associated with increased household and child food insecurity.

Rising housing costs, low wages among many full-time workers, and weak income growth all highlight the importance of investments in affordable, stable, and well-located housing for the millions of families serving our communities through lower-wage occupations, many with only one breadwinner. Indeed, the strength of our cities is tied to all residents having an affordable and stable place to live. Employers also stand to benefit when the workforce can afford to live within reach of employment centers.

Given the high cost of building new housing, preservation of our nation’s existing supply of affordable housing is essential. Effective preservation strategies will include not only government subsidies but also new partnerships between public, private, and nonprofit organizations to focus greater investment on these vital resources, to ensure low-wage workers are able to live in the communities they serve.

3 comments:

  1. These rents seem more fitting for 2005 than 2015:
    "For example, according to 2015 HUD estimates, the fair-market rent (including utilities) for a modest one-bedroom apartment was as much as $1,635 in San Francisco, and over $1,200 in New York and Washington, DC."

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  2. "for every 100 very low-income renters (those earning up to 50 percent of area median income) only 57 rental units were affordable and available."

    The article is not very clear, but this seems to mean that, if average household size for low income renters is 2, then there are enough affordable units for all the low income renters.

    Likewise, the table comparing wages and the rent of a one-bedroom apartment assumes that these wage earners live alone. There are many cases where working couples share one-bedroom apartments.

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  3. Further details of HUD’s methodology for calculating Fair Market Rents (FMRs) are available in the following document. In most cases HUD defines FMR at the 40th percentile of unassisted rent, which indeed falls below the median market rent. Other concepts of fair market rent certainly will register even higher rent levels for these areas.

    Affordable supply statistics cited from NLIHC refer to the number of renter households (rather than numbers of people).

    The table above indeed focuses on the mismatch between the wages of single-earner households and income needed to afford available rents.

    In total, there were 15.5 million employed single-earner renter households actively working in 2014. The annual incomes of these single-earner households were heavily distributed toward the lower end. For example, over half of these households earned less than $35K per year, and 70 percent earned less than $50K per year.

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