Is this a housing crisis or a wage crisis?
The housing crisis is hardly news to anyone that lives in New York City. With our housing vacancy a little over 3%, most of us understand the idea of supply and demand that has made housing prices skyrocket.
Meanwhile, wages for most low- and middle-income households have been stagnant for years. The suppression of wages is a result of policy choices made on behalf of those with the most income, wealth, and power.
In the past few decades, the American economy has continued to grow, creating a great deal of wealth that would have allowed the standard of living to rise for us all. The expectation is that the growth will continue in the coming years, the question is whether we will adopt policies that enable everyone to participate in a shared prosperity. Or will the wealth continue to accrue excessively and disproportionately at the top.
The economic well-being of the average American household has been on a steady downward tick for the last 15 years.
The reason? Wages haven’t kept pace with inflation. Incomes are failing to keep up with inflation, and that, as each generation matures, they are earning less than their older peers did.
Despite periodic increases, the buying power of the federal minimum wage hasn't kept up with inflation, according to the Bureau of Labor Statistics. Data show that in 1968, the federal minimum was equivalent to $10.90 in 2015 dollars, nearly $4 higher than today's rate.
Jobs with minimum wage paychecks often aren’t enough to get you housing in urban areas across the country. You can make up to $20/hr in New York and hardly afford a studio apartment, let alone raise a family.
When discussing his book, Evicted: Poverty and Profit in the American City, Harvard University sociology professor and Justice and Poverty Project co-director Matthew Desmond stated “Most Americans, if they don’t live in trailer parks or in the inner city, think that the typical low income family lives in public housing or benefits from some kind of housing assistance, but the opposite is true. In reality, only one in four families who qualify for housing assistance receives it: three in four are forced to struggle on their own.” Dr. Desmond says, “We’ve reached a point in this country where the majority of poor renting families are giving at least half of their income to housing costs and one in four are giving over 70 percent of their income just to pay rent and keep the utilities on.” [Atlantic]
According to Harvard's Joint Center for Housing Studies and Enterprise Community Partners Inc, the number of renter households paying more than half their income on rent could rise as high as 14.8 million by 2025, up from 11.8 million this year.
It’s clear we have to do something and highly unlikely that the answer will be held in one policy or one sweeping move. These changes may include reforming the financial system; promoting greater investment; spending more on education, research, and infrastructure; improving regulation and the tax code; and remaking urban policy to allow higher density while preserving historic corridors, functioning transit and better public services.