You get better results if you redefine "unaffordable". Also, the report did specify that 1BRs were also not affordable in 95% of counties going this metric. That's not to say some metrics aren't representative, rent in rural areas and cities in the same states may vary widely. They have it down by county in this report.
"Out of Reach is consistent with federal housing policy in the assumption that no more than 30% of a household’s gross income should be consumed by gross housing costs. Spending more than 30% of income on housing is considered “unaffordable."[1]
Yes, and no. Directly yes. But no, because the numbers are so insanely over I question whether they can afford 30th or 20th percentile too.
It smells like the 40th-%tile is the number that the data exists for. I would welcome graphs showing this data at other %-tiles, and whether that changes the outlook significantly.
But the report puts ~50% of the workforce below the national housing wage for a 1-bed. 50% of the workforce cannot all obtain better than 40th %-tile rents.
N.B. that the "fair market rent" also excludes public housing rents. Would it be reasonable to suggest that we could expect people earning only minimum wage to be consumers of public housing?
There's an important caveat, before everyone jumps on the title by itself:
> The report, released Tuesday, defines “affordable” as spending no more than 30% of monthly income on rent, in line with what most budgeting experts recommend.
The second caveat is this is rent for a 2 bedroom apartment; though they do say that it's also ~95% of 1 bedroom apartments. No comment is made on studio apartments or having roommates.
> No comment is made on studio apartments or having roommates.
To me this is the most telling part. When you are poor you need to have one or more roommates to afford housing and this is not new. What is wrong with roommates?
I do think the US could use more small/studio apartment options for those who have a bit more money and prefer to live alone. I lived in a small studio once and enjoyed it, though I usually had roommates.
The problem is the globalized economy. Ireland tax laws provide an example. Governments have little power over corporations as you can simply pick and choose which laws you want to operate under. Corporations have pushed governments to compete on favorable terms. Until governments unify basic tax and labor laws, these problems will continue.
Minimum wage is designed for whatever we choose it to be. The original intent is somewhat unclear as all it did was establish a wage floor. Debating what abuse means is a different matter.
One issue with roommates is that rental laws are rarely designed to accommodate for that situation. For example, if one person is unwilling or unable to pay the rent the other(s) have to make up the difference with no real recourse. If they don't, well, the landlord does have recourse (even if it is heavily regulated and burdensome). This is a particular problem for older people or people with limited social connections since the options are more limited. The problem can be further aggravated if landlords have the right to veto the arrangement.
If anything, the pandemic illustrates why it is important to spend no more than 30% of monthly rent. People simply do not have the savings to fall back upon in times of crisis. This forces a reliance upon some form of social safety net or homelessness in the case of lost employment. It forces people to continue working in unsafe conditions if they manage to keep their job.
Of course, the consequences go well beyond pandemics. People are forced to accept illegal labour practices, have minimal savings if they face a loss of income for personal reasons, and cannot plan for retirement even under normal circumstances.
As for the second caveat, note that the article mentions that the average minimum wage worker has to work 97 hours per week to meet that threshold. That is effectively a two income household where at least one person is working more than 40 hours per week. That is very difficult to keep up for people with children.
The problem is, contemporary zoning laws make the construction of (relatively) inexpensive housing illegal, by mandating excess parking requirements and forbidding multifamily housing on the vast majority of usable parcels: https://www.theatlantic.com/business/archive/2012/03/the-ren....
Until we resolve that problem, we're going to keep getting headlines like the original one. We've regulated ourselves into ultra-high costs. Liberalization can improve matters.
I agree, yet I also find the situation ironic. The attitudes that keep wages low seem to be the same attitudes that are driving housing prices up while rejecting (or at least inhibiting) the idea of social assistance.
I was going to say this. When I was working minimum wage, I had small studios or roommates. I have never rented a 2 bedroom apartment by myself, and only once did I rent a proper 1 bedroom by myself. It wasn't until I got married that I could afford a house.
Minimum wage workers should mainly be teenagers, young single people, and other dependents who don't need to live alone or for a family, and for whom minimum wage makes sense while they advance in careers. I honestly don't care if minimum wage means you can afford rent.
I'm most interested in what percentage of those with dependents are working minimum wage jobs and what percentage of those that started out with minimum wage jobs have been unable to increase their earnings. MY guess is that these numbers are also terrible, but this is the thing to get down.
We need to remove minimum wage laws and instead focus on making sure those with dependents and a need to live by themselves have wage growth through their lifetimes. It is no scandal if a young person makes little money at a time in their life when it is okay to live with family or with roommates.
Because you say so? Or do you have thoughts on specific policies that will make this true? Because currently, many people who need to support a household rely on minimum wage jobs (or close to it), and often without guaranteed full time hours and no health insurance.
I'd say 20% is not a small number! I'd also point out that "just above minimum wage" isn't much better than minimum wage. For example, if you work for many large chains that pay minimum wage you're likely to get a raise at some point. That raise may take you from, say, $10.00/hr to $10.50/hr. Hurrah!
I think a better metric might be (minimum wage + (20% * minimum wage)). That snags all those people who work at "minimum wage jobs" but have stuck around for a few years and gotten a few small pay increases, but are still being paid a wage that is a function of minimum wage.
Just riffing here to be honest, but I do get a little uppity when people claim minimum wage jobs are just for teenagers or other "less important" wage earners. Part of this was from working in retail and food service when I was much younger and knowing a lot of adults, many single parents, working for close to minimum wage. Anecdotal, I know.
Well what percentage of these are non-breadwinners? Could it be stay at home parents who are making supplementary income?
> I think a better metric might be (minimum wage + (20% * minimum wage)). That snags all those people who work at "minimum wage jobs" but have stuck around for a few years and gotten a few small pay increases, but are still being paid a wage that is a function of minimum wage.
Yes, there needs to be better information.
> Just riffing here to be honest, but I do get a little uppity when people claim minimum wage jobs are just for teenagers or other "less important" wage earners. Part of this was from working in retail and food service when I was much younger and knowing a lot of adults, many single parents, working for close to minimum wage. Anecdotal, I know.
This is terrible, and just goes to show my point -- we need to be tracking the important number: how many people who need to afford rent for a separate unit (usually those with dependents but not always) cannot afford to do so.
No, because this is the policy outcome government should seek, not a uniform raising of the minimum wage.
> Or do you have thoughts on specific policies that will make this true
No I don't... but I'm curious in solutions to this problem, rather than 'solutions' to minimum wage jobs.
> Because currently, many people who need to support a household rely on minimum wage jobs (or close to it), and often without guaranteed full time hours and no health insurance.
Yes... i know. We need to formulate policies that make this not true, so that the group I said should make up the majority of min wage workers actually comprises the majority.
It's kind of an underhanded trick where the guy is redirecting the conversation to something else. I'd probably prefer that people meet him head on and debunk him instead of downvoting him into oblivion, but I don't blame people for just booting his bad-faith argument out of the conversation.
To meet with the comment head-on: You assert that nobody is supporting a family on minimum wage, so there's no reason to increase the minimum wage or have social welfare programs that help people on minimum wage.
That's not true. A lot of people are stuck at minimum wage and supporting themselves and supporting families on it.
You can go off the rails here and assert that "Any competent adult should be able to ..", and maybe it's true. But that argument is a VERY slippery slope. Personally, I think that anyone posting on this site SHOULD be able to go out and snag a job that pays well over 400k a year if they work hard and pull themselves up by their bootstraps. Actually I think that most of the people here should be able to start a valuable startup and become millionaires. I'm not going to roll in and take a dump on someone if they can't pull it off, though.
It's not an underhanded trick. Please respond to the most charitable interpretation of my comment, as per HN guidelines.
> To meet with the comment head-on: You assert that nobody is supporting a family on minimum wage, so there's no reason to increase the minimum wage or have social welfare programs that help people on minimum wage.
That's not at all what I'm trying to insinuate. I even said that:
> I'm most interested in what percentage of those with dependents are working minimum wage jobs and what percentage of those that started out with minimum wage jobs have been unable to increase their earnings. MY guess is that these numbers are also terrible, but this is the thing to get down.
I literally said that I bet the numbers that I'm interested in will likely show that there are too many people with dependents working minimum wage jobs. That doesn't mean we shouldn't track the data. That is what shows us what will help.
Not only is it no crime for young people to have low wage jobs it could be of benefits in learning. No one can pay someone to learn anymore because its to expensive to even if you find a young person willing to learn and a business owner willing to teach.
Australia does something interesting - minimum wage scales with how old the person is. Say it's $15/hr for 18 year olds; 19 year olds get $16 as a minimum, and so forth.
I think it's certainly better than the alternative, but I would like to see minimum wage dropped for the youngest ages honestly. So much good experience could be had if the youngest and those just about to embark on their career could get some experience.
But I'm mainly interested in non-minimum wage solutions. There are even good reasons for adults to work for less than minimum wage. Think of non-volunteer tasks that a stay at home parent may be interested in working in part-time but still would like to make a modest income for.
There are some laws like this in the US. Some are state based, but some are federal...
"...a special minimum wage of $4.25 per hour applies to employees under the age of 20 during their first 90 consecutive calendar days of employment with an employer"
"Other programs that allow for payment of less than the full Federal minimum wage apply to workers with disabilities, full-time students, and student-learners employed pursuant to sub-minimum wage certificates. These programs are not limited to the employment of young workers."
Exactly. Minimum wage jobs should be jobs that require little skill. They should be easy to train people for, and employers should expect a high turn over rate as their employees find better jobs.
Unfortunately, that is not how things work in the real world. Many people simply have been unable to find better paying jobs. And the old way of working your way through college doesn't work. Both because college is so expensive, and because it no longer guarantees a high paying career.
Plus there are people who have just had life screw up everything for them. Whether because they made bad choices or just suffered the consequences of someone elses bad choices.
So what can we change? I'd argue that raising the minimum wage will do little to help. I remember someone, who overall supported that idea, reporting that their research showed the long term effect would be negligible since the cost of goods would just go up until the buying power of the minimum wage was back where it started.
I also think the focus on the minimum wage is because it is a simple idea and politicians can use it to gain votes.
I think the real solution is going to be complicated, and take decades. It would include strengthening peoples support structures.
As in when you need help, you have a family or group of friends who help you. I think current American culture encourages broken families and the idea that your friends should go to the government first. Not to you.
Also, as a Christian, I firmly believe the Church in America should be a LOT more active in this area. We do good work a lot of the time, but we can do a lot better.
Then there's education and choosing a career. Currently everyone goes to college. End result is that a degree doesn't mean anything any more, and people who choose to forgo college can be looked down upon. A cultural change that addresses that is need. (See MikeRoweWorks for some ideas.)
And we need a restructuring of our current welfare systems. I remember seeing data showing that the government spends something like $60,000 a year on each recipient. Then I see the private non-profits that get people into life long careers on budgets much smaller than that. What's that definition of insanity? ;)
Anyway, just a few thoughts. I don't believe I have all the answers, just that it is a very complicated problem, and we shouldn't let politicians and activists buy our votes with overly simplified ideas like "raise the minimum wage."
Is minimum wage workers affording an average 1-2 bedroom apartment with no other householders a goal we have set? The French minimum wage is 1,521 euro per month. 30% of that is 456 euros, or about $513. According to the underlying study, the average 1BR in Alabama is $665. Is housing in France, on average, really that much cheaper than Alabama?
I don’t think these abstract targets are very helpful. According to the OECD, the US has some of the most affordable housing in the world: https://read.oecd-ilibrary.org/economics/the-average-oecd-ho... (showing percentage of disposable income left after housing costs).
Also, the demand for a “federal affordable housing policy” is pretty breathtaking. Look at the list of states that have the least affordable housing: New York, Massachusetts, etc. A federal program would basically mean bureaucrats from these states would be imposing housing policy on the whole country. That sounds like a great idea!
Is working 40 hours per week but not being able to afford a 1 or 2 bedroom apartment a goal we want to set? If so, we have achieved it!
I think most of us like the idea that if you put in 40 hours of work every week, regardless of the specific job, you are able to afford a basic standard of living.
You’re begging the question. Is having your own 1BR apartment a “basic standard of living”? When did we decide that? Is that a goal other developed countries have set and achieved? Those are the pertinent questions, not what ideas “we like.”
According to the study, that standard would require a $30-40 minimum wage in places like New York. Is that something any country has done?
Personal attacks aren't allowed and will get you banned here, so please don't.
Also, while I have you: could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
Since local zoning laws effectively rule out boarding houses (or other affordable living spaces) in most of North America, 1BR is essentially the entry level in most jurisdictions.
You ask "when did we decide that?". That implies that there is some discrete point in time in the past when societal decisions are made. But that's not how societies work, not how politics work. The way it works is that we are continuously "deciding" things like this, through conversations like the one here, and articles like the one we're talking about. It doesn't make sense to say, "this article is reaching for abstract targets that we haven't decided on", because there is no decision point in the past like that, we're discussing what we want right now, in this moment, and the article is part of that discussion.
You claim that ideas "we like" are not what is pertinent. But that's also not the way societies and politics work. If we as a society decide that this is a good thing to strive for, that "we like" the idea, we can do that. We can decide we want to do that and discuss it and brainstorm ways to achieve it. Looking at what other countries have done is definitely an interesting input in that discussion, but it certainly isn't the only thing that is pertinent.
I think you should just say "I am unconvinced that this should be a goal we have as a society". You seem to be trying to appeal to some larger power, some discrete ledger of things we have decided on, but really I think what you're saying is that you are personally skeptical of this, and perhaps that you believe many others in the society are skeptical of it. Which is cool (I may even agree with that, I'm not sure yet), but it would be more clear to just say that.
No, the framing of the article is disingenuous. If you want to make an argument that someone working minimum wage should be able to live in a separate 1BR, go ahead and make that argument. But that’s not what the article does. It claims there is a “housing affordability crisis” because minimum wage workers can’t afford an average 1 or 2 bedroom apartment. That isn’t an argument for raising the standard. It acts like we have already decided on that higher standard.
Ah, see, the way I read the article is that it is saying that they have already decided that this is the standard for a crisis, not that we have decided. Where "they" in this case is the National Low Income Housing Coalition, and perhaps also the author and maybe by implication the editorial voice of CNBC. I don't see an attempt being made to put words in my mouth; I see an author using their own words to make an argument mostly based on a study by another institution.
You're right that articles and studies often use terms like "housing crisis" that don't have objective definitions in a way that fits their subjective definition without doing any throat-clearing to call that out. But I don't think there is any real way around that, it seems like you just have to read things with that in mind. Maybe I'm wrong though. Should every article say things like, "there is no objective definition of a housing crisis, but the NLIHC believes this should be considered one". Perhaps they should!
Not all 40-hour-a-week jobs are valuable enough to support a high adult standard of living. If adults are still doing those jobs, it’s not a problem with the jobs.
This is the real issue. Imo: there's not enough upwards mobility in jobs because people are retiring later in life. We need to make it cheaper to retire and for workforces to move up the ladder. I know this sounds elitist, but when I worked in a shop, I didn't expect to be able to afford a house.
This is an interesting point I have not contemplated in my musings on the issue so far. Something I should have thought of earlier since my dad came out of retirement and thus is taking up a position that otherwise could have been occupied by the promotion of someone who graduate more recently.
It’s a long article but if you just skip along and read around the graphs you get a lot of context on this situation. I also found it fascinating when I first stumbled upon it .
Just musing a bit further, there are multiple ways you could attack this. For instance, you could also encourage people to work shorter hours—we've all become much more productive in the past century, so why are we still working 40 hours a week at minimum?
This is a purely moral judgement - you can argue, in the most extremal case, that every aspect of a person's behavior is purely "circumstantial". After all, your personality and capabilities are entirely shaped by circumstances like genetics and life experience.
Of course, we understand this is a pretty useless way of looking at things.
From a consequentialist standpoint, the incentives work out the best when we use the heuristic of assigning responsibility for low labor value to the person performing the labor, so that's the approximation I choose to use. You could choose to think that e.g. being very stupid is no one's fault, so a very stupid person should get paid as much as a brilliant doctor, but the net social consequences of this are pretty well explored and pretty bad.
I don't think most of think this. It doesn't scale. That would mean you could have households of one people with another rent to afford 4 houses. Thats 1.2 billion units of housing just in case people want to live alone.
Even if you only do half thats a crazy stat. 600 million units and having to hit that right on the head in terms of the distribution of humans at all time.
I'm for regulation of the housing industry, but he's not wrong that public housing policy is a shit show. What he is wrong about is that landlords actually prefer it this way, because they prefer subsidies to pricing regulation.
Is expecting minimum wage workers to all live in Alabama a goal we have set?
Look what happens when politicians responsibly build post offices and the numerous other programs that made money until political meddling.
Look at what happened to workers when taxes were way higher! Omg those stupid politicians!!
Is the profiteering of a minority of the species a goal we have set?
Is your ideology the goal we should have set? Or is it just automated energy sucking deflection away from ideas that rustle your jimmies wrapped around your limbic system?
We share one physics, one planet. Just because you can imagine and emit alternate sounds to someone else doesn’t mean the ideas are feasible or real?
Reality comes with some pretty tight constraints. Progressivism away from grandpas political talking points is one of them.
Are we less free in some real way given the time wasting mess of our “free market”? Or would it be that your brain is just not used to processing the idea?
Are you measuring the impact to society and reality or just chomping at the bit to react?
Bureaucrats aren’t going away and already control your life in very intimate ways! Human society has yet to create that magical completely free system or completely gridlock itself to death.
Kind of wonder if you’re just shouting at a mirage. It’s just people.
Having worked a lot in a rental market with a very active housing subsidy program, I agree that the administration of such programs is an actual nightmare, but you really are missing the point I think.
Start with the assumption that people need to be able to afford a place to live, and that a full time job should be able to achieve that. Do you agree?
Now, if we both agree that a housing subsidy program is an administrative nightmare, what's left? Simple: Regulating prices on the housing market.
A subsidy is a nightmare to administer; is subject to corruption, mis-targeting, abuse, and extreme wait lists; and drains public resources. So why do we do it? Simple: Because the real estate industry has lobbied the government to pursue this as a means to address housing inequality. Rather than being told that the earnings of their investment properties will be capped by regulation, the government is writing a check to make up the difference.
So now, after years of waiting, a single mother of two might get a 3/4 of her rent paid by a subsidy. The apartment needs to pass ridiculous inspections which are conducted historically by specialized contractors who benefit from failing due to re-inspection fees, and they will fail an inspection because a screw is missing from a light switch cover, blowing up a lease deal and elongating the timeline for a subsidized move-in by months. It sucks for the residents, and it sucks for the landlord from a administrative/management perspective (mainly dealt with by hired management), but at the end of the day, they have a government-guaranteed rent payment for a greatly inflated rent market. Coronavirus cut your tenant's hours?! No problem! At least 3/4 the rent will be paid, and the margins are still profitable.
And we wonder why wealth inequality is growing in the US! This literally inflates the rental market by creating more demand for overpriced housing than exists, by creating a class of people who can afford it only through a majority subsidy. It also encourages investment property purchases by doing so, in turn creating more competition in the buyers market and causing price inflation there as well. This also has the effect of keeping more people renting instead of being able to buy.
In conclusion, PEOPLE NEED HOUSING! Real estate industry doesn't need subsidies. Yes,that includes private landlords with investment properties. Someone else's housing or health care shouldn't be an unregulated investment opportunity if we care about the well being of the people.
> Start with the assumption that people need to be able to afford a place to live, and that a full time job should be able to achieve that. Do you agree?
For me, it’s the definition of a minimum place to live. When I was young, I had roommates. I don’t think every working person should be able to afford a 1 bedroom apartment.
There are multi family dwellings, studios, boarding rooms, etc. If I’m by myself and making minimum wage then I think it’s ok to not be able to get my own one to two bedroom in the city of my choosing. I’m ok with having to live in the burbs and train or drive in. It sucks, but there’s no reason why minimum wage is a permanent condition.
> When I was young, I had roommates. I don’t think every working person should be able to afford a 1 bedroom apartment.
Not everyone working minimum wage is doing it "when they were young." Do you really think it's a good objective for a 55 year old cook for a non-profit organization to be living with room mates? Would you want that?
The solution is there if you are willing to reduce the wealth generated by investment properties for an already much wealthier investment class. How do you justify your priorities ethically?
If the recommended rent is 30% of your income... well, the most you could afford on twice minimum wage is $768.
Where I'm at the cheapest rentals are 900 or so (rural utah).
Seems to me it takes almost 3x minimum wage just to really be able to live comfortably, and many will never get to that level, because they already work 2-3 jobs just to keep a roof over the heads of their children.
There's a reason that $75k is the 'happiness level', it really is the lowest of the low wages that will make someone feel like they're not poor and 'needy' and over-worked, etc... That should be our goal, to get us to that level for everyone over 25 who isn't in school. (Or able to reach that w/ a full-time job (even at McDonalds) + GBI/UBI)
> The solution is there if you are willing to reduce the wealth generated by investment properties for an already much wealthier investment class. How do you justify your priorities ethically?
Do you think the world works according to ethical priorities or market forces? Imagine if engineers could use similar logic as political theorists. We could will our airplanes to fly by setting the right priorities!
Market forces are real, but can be regulated to align with our priorities. It's not a matter of explaining "how the world works." The market works how we design it to work. If it is unregulated, it frequently reflects exploitation.
You make a quip about engineers and political theorists, but fail to explain why a market cannot be regulated in order to benefit society in general. We do it all the time.
Regulation doesn't change market forces. Regulation adds additional elements which in combination with the market forces moves the market to a different equilibrium. It's like pushing on a balloon--you can't change the physics, but you pushing on the balloon in different ways will produce different results dictated by those physics.
The difference between those two views of the world is the difference between political theorists and engineers. A political theorist asks questions like "how do you justify your priorities?" An engineer asks "how much do I have to give up on this one priority in order to achieve this other priority?" Engineers deal with a world where achieving every priority means giving up some other priority.
Applying this logic to your statement exposes the flow: "The solution is there if you are willing to reduce the wealth generated by investment properties for an already much wealthier investment class."
Sure, things like price control prioritize affordability at the expense of "wealth generated by investment properties." If that was it nobody would argue against price control. So why do so many people oppose price controls? (The answer is not, I'm sorry to say, that many people simply want owners of investment properties to be rich.) See: https://www.brookings.edu/research/what-does-economic-eviden...
> Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive.
Countries and places with the most extensive housing regulation have some of the most unaffordable housing. Stockholm’s housing market, for example, is a basket case.
How can that be, exactly? If it's "extensively regulated", then why is it so expensive? Can you point to a relationship between capping the price and inflating it? They seem to be inversely related.
When prices are capped, it's not like supply increases, so in practice you end up with waiting lists that can be several months to years long.
I knew people who moved from Stockholm to Berlin and kept on paying their rent in Stockholm, just so they don't lose their apartment. That's how hard it is to get one.
Berlin also had a rent cap, so instead of competing on price, you had to compete on intangibles like: letters of recommendation from previous landlords, proof of income and good conduct, having a high-profile job, nationality, etc.
Since supply is low, demand is sky-high and prices are capped, you had 30-40 people applying for the same apartment.
Add the fact that once a landlord takes you in, there is almost no way that they can kick you out and you will end up with a very complicated and long vetting process that doesn't exactly favor the working class folks.
Also, you can end up with other costly requirements like: the landlord will only choose a tenant who buys all the furniture in the house. That's one example of an unregulated cost increase that is not affected by the rent cap.
Agreed, it doesn't provide an answer for lack of supply, and growth needs to be controlled to pace with things like public and private infrastructure, and even jobs.
However, it doesn't justify the runaway inflation of the entire housing market. Also, I'd point out that generally speaking, the population of an area will be limited by the jobs available in that area, so there is an external limit on the demand for housing to at least some extent. There are jobs and money to be made in development of additional housing to meet the demand. Supply issues are not insurmountable, and should be addressed as such.
I'll also note that in the USA, all of the "intangibles" you listed are already typically collected by the landlord along with the leasing application itself. This isn't a result of rent caps, just high demand and standard tenant screening practices.
To solve problems, you may actually have to try. Obstacles don't justify problems, they just need to be addressed.
In the US, cities frequently have "zoning requirements" so it's very difficult to get a new high-density structure built in a neighborhood of 1-floor single family homes. Also, NIMBY groups usually have a veto vote of sorts, which makes it more expensive for a real estate developer to come into a pre-existing neighborhood and make more units (because it's a gamble and usually they have to spend more to acquiesce to the NIMBY if they are able to build at all).
Even when there is a rental price cap, that tends to only work in the short term and exacerbates supply/demand problems long term. San Francisco, for example, implemented a rent control system in ~1980. Since then, only 40% of rental units are eligible for rent control and lots of potential rentals stay off the rental market. There are loopholes which allow conversion of a rent-controlled unit to a market-priced rental and no new built units are rent controlled, so there is a bifurcation of the market. Rent controlled units are very affordable, but increasingly scarce. Market priced units are growing (slowly) in numbers, but cost 2x - 5x what a comparable rent-controlled unit does.
> Even when there is a rental price cap, that tends to only work in the short term and exacerbates supply/demand problems long term. San Francisco, for example, implemented a rent control system in ~1980. Since then, only 40% of rental units are eligible for rent control and lots of potential rentals stay off the rental market. There are loopholes which allow conversion of a rent-controlled unit to a market-priced rental and no new built units are rent controlled, so there is a bifurcation of the market. Rent controlled units are very affordable, but increasingly scarce. Market priced units are growing (slowly) in numbers, but cost 2x - 5x what a comparable rent-controlled unit does.
True, there are real supply issues in some very hot markets, but few markets are like San Francisco.
So--why do you say that the price cap is what exacerbates the supply/demand problems long term, when you clearly understand the issue is that there are loopholes being utilized to reclassify units to get the back to market price? Those loop holes aren't accidents--the NIMBY groups put them there intentionally. But they aren't just NIMBY--they are also private investors who do not even live there.
I'm all for building additional housing to meet demand in general. However, it does need to be done carefully. By that I mean, upgrading train stations, roads, grocery options, etc. in order to deal with the increase in population. You can't just add 15,000 people to a neighborhood and not add parking or public transit capacity.
I guess I'm just approaching the policy issue from a practical perspective (the US isn't going to be able to craft anything close to a theoretically perfect policy, especially right now with our tribalism, NIMBYs and corporate lobbying) rather than a theoretical policy which is more pure.
I'll admit that the assumptions I make about rent control assume that the policy is far from well crafted and probably assume that it gets worse over time because US policy makers tend to get worse at upkeeping existing systems the longer they last.
These assumptions probably shouldn't be attributed to a perfect rent control policy.
> You can't just add 15,000 people to a neighborhood and not add parking or public transit capacity.
That's exactly why suburbs in Silicon Valley are stressing the large cities and the cities are suing each other to ensure they alleviate traffic congestion as they grow the residential units.
Those who live in the burbs and commute into the cities don't want city dwellers to be able to make the reverse commute to come to their neighborhoods. In the 1960s, the Bay Area Rapid Transit (a light rail system) was designed to be a loop between San Francisco, Oakland and the South Bay. The NIMBYs rejected plans to close the loop in the South Bay, so it became much less valuable at reducing street traffic as it otherwise could have.
In Stockholm, decades of rent regulation has created a massive undersupply of housing. That means there is a 9-year wait list for apartments. The way rent regulation usually works is it caps rent increases for a given tenant. Tenants thus never leave their apartments, so the prices for the few openings (and newly built apartments) is astronomical.
> Another legacy of Sweden's post-war efforts to develop a more equal society — known as "Folkhemmet" or "the people's home" — is rent regulation, which applies to both municipal and privately owned properties. While millions of Swedes have benefited from the highly affordable rent levels set since the 1960s, the caps have had a damaging effect on the provision of new housing.
> Historically, the low returns from rents for private landlords have made the investment case for building new rental properties difficult to justify, the Swedish bank analyst said.
> The love for rent-capped municipal properties among the Swedish people is strong. Almost 500,000 people were on Stockholm's waiting list for public housing, according to figures released in 2015, double the number from seven years prior. In 2014, the average waiting time to get an apartment in Stockholm was 9 years. Once a person is given an apartment, they often stay there for life. "People are sitting in 300 square-meter apartments because they are so cheap that they can't leave them," said Pelles.
This i such a paperthin take on the Swedish housing market that I'm starting to assume that you're intentionally manipulative. I can even remember explaining this to you once.
The government made sure that there was enough supply of apartments. This was removed 30 years ago or so. The "Market" took over instead.
or just institute a UBI program specifically covering housing that is the average rent cost for a 2 bedroom apartment in the locale in which you live.
So you always have rent covered, regardless of your paycheck. They could maybe double that, and have it cover food stamps too, to cut out some of the administrative costs to manage both programs.
This works for married couples too, because you'd get double that, which is closer to what a mortgage would be, and would esp, help lower income families.
I think we could look into a VAT if needed for supplmental tax to cover it, but there's plenty of governmental spending we could also cut like maybe 1/3rd of the defense budget for one.
I agree, but I also believe housing regulation and health care reform must accompany these things. Allowing these markets to buoy with the increase in everyone's income will negate the positive impact, having the effect of routing the additional income into the hands of the same people who already hold all of the wealth.
Not sure on housing regulations, but definitely need healthcare for everybody. Couldn't hurt to have the government also build some public housing to offset supply. It'd probably be cheaper. In the old west you could stake a claim on some land and just build a house, and live in it.
Those days are long gone and aren't coming back. So there needs to be some other contract that can guarantee a home for everybody.
Do you have any idea of the scale of the numbers you’re talking about here? 1/3 of the defense budget is nothing, about $250 billion. A UBI that’s double the cost of a 2BR in NYC would be $7,500 per month, or $540 billion per year for every adult in NYC. And NYC is just 2.5% of the country’s population. You’d have to cut 1/3 of the defense budget about 80 times.
It costs what it costs because of supply and demand. If you paid for people’s housing no matter where they wanted to live, everyone would move to highly desirable areas and $7,500 would look like pocket change because the demand would greatly exceed the supply.
>Is minimum wage workers affording an average 1-2 bedroom apartment with no other householders a goal we have set?
There's a very good chance there are people whose quality of life would be drastically diminished if they had to share an apartment. Off the top of my head, those with embarrassing or inconvenient medical issues, single parents, people who always feel some level of stress around other people (there are a lot of us).
When setting floors by policy, we should think of the people who don't fit the norm. If they don't get help from somewhere else, they're screwed.
Doesn’t it make sense to set the floors based on the typical person, and accommodate other people in personalized ways? For example, the vast majority of low wage workers are not parents. If we want to set a floor for parents, we can have housing subsidies for families with children. Isn’t that better and more efficient?
> Is minimum wage workers affording an average 1-2 bedroom apartment with no other householders a goal we have set?
It's not a goal we set but it's one we mostly achieved none the less, depending on your specific area and minimum wage. A blue collar (minimum - low wage) worker used to be able buy a house and raise a family on a single income. People are poorer than they were decades ago, at least where it counts.
This is likely one of the unintended side effects of 1) women entering the workforce 2) higher retirement age. With double the supply, it meant you could no longer raise a family on a single income, because the money is shared between more people.
I wasn't looking at a single variable, I was looking at two. You're right of course. The problem is many of those things you're referring to (e.g. cost of living) is directly influenced by said supply. People aren't having families as much, but that means there's now an oversupply of expensive family homes.)
Where does the article make mention of no other householders?
If anything, the article suggests the opposite. It notes that the average minimum wage earner would need to work 97 hours for a two bedroom, and 79 hours for a one bedroom. That reflects two full time minimum wage incomes: a working couple for a one bedroom, and a working couple with children for a two bedroom.
It is also worth noting that this is a very privileged position in many cases. If you are a committed couple, are rooming with a close friend or family member, or fit a limited number of other circumstances - this may be acceptable. Otherwise, it is effectively saying that it is okay to expose minimum wage earners at greater risk because, well, they are minimum wage earners.
Paris is expensive, but I've rented studio apartments here in Grenoble, France, for about 450eur, yes.
Given, Grenoble is nothing of not a small town compared to Paris. But those apartments were also in the very heart of the city, one was directly at the river with a panorama view of the alps.
edit
since these details matter here: two apartments in question. One was a 1R without, the other a Studio with amazing view.
Both were very pleasant, central, and I could have found cheaper had I been willing to not have them that central.
/edit
So yeah there are much cheaper places than the US. German rents tend to be cheaper still, with higher wages.
That all being said, calling out the people at the very bottom for their lavish lifestyles / demands seems a bit disconnected from the economic realities at the moment...
I'm sorry if my position didn't come across clearly. My position is that a 1R is by no means lavish. It should be a matter of common decency that someone working full time should feel entitled to be able to afford one, at least for rent.
But what is the average price for a 1BR in Grenoble? Because that’s what the study is looking at, not a cheap price for a studio. In Huntsville you can find a nice studio downtown for $500 or so.
I'm not opposed to your general points, but there are a few flaws in your data.
Those earning minimum wage aren't going to be able to afford "an average" apartment. They will likely only be able to afford a starter apartment which is more likely to cost much less than average and are more likely to live with family members or commute from a more affordable geographic locale.
Income in US is not directly comparable to most other OECD countries for multiple reasons. Labor laws (paid vs. unpaid sick days, vacation days, ma/paternity time off, union dues), taxation policies (local, state, federal, employer), health care costs (no nationwide price negotiation), health insurance costs (lots of problems here), school tuition costs (because the demographic highly overlaps with school-aged young adults), lack of public transportation in most geographic regions, etc all add up to costs which are obscured by using the simple "gross income after housing and maintenance" figure.
> Is minimum wage workers affording an average 1-2 bedroom apartment with no other householders a goal we have set?
Well, it's one of three possible goals:
1. Any worker can afford a roof over his/her head with their wage.
2. Universal public housing.
3. Millions of homeless people.
I actually think (2.) is just as important as (1.), but the US isn't very keen on economic activity for public benefit. Then again, it often seems like it's leaning towards (3.) ...
A one bedroom is around 600€ a month in all the major French cities. The country is very homogeneous with salaries tightly coupled to the minimum wage.
Paris might be around 1200€ I think for a similar 1 bedroom but I am not very familiar with Paris. Maybe 1000-1500 depending on commute and location.
I think it's generally doable and done, except in Paris where you couldn't afford any sort of accommodation at all.
There is little left at the end of the money. You're not going to holidays or restaurants any time soon. Hope the car doesn't break or you're in serious troubles. Assuming you were handed a car by your parents because you certainly can't acquire one by yourself (3000 or 4000 upfront!).
The promise of the free market economy is that the standard of living keeps improving over time, and that includes housing. For probably a majority of the population of the US, that has not been the case for a number of decades.
The median new home is double the size of what it was in 1973. In today's new houses, each person has about as much space as the entire solidly middle class 3BR house my four-person family lived in growing up.
Oh you have to be kidding. I grew up in the 50's, and things are so much more difficult for young people today. If they are in the upper quarter of society they have to compete so much harder, and if they are below that they are so much less likely to have a good job, like the secure, union factory jobs that were so common. And besides that education has gotten vastly more expensive, and so has housing in much of the country, and also health care. And then there was the great recession of 2007. There are so many young people today who are doing worse than there parents.
One thing always missed in these articles is that 2.7% of the work force makes minimum wage, and that population is not stable (people quickly move out of this baseline).
Due to how much it cost and also a glut of Federally insured mortgages, housing became a defacto investment for baby boomers.
Housing should be a liability, owning land should be a liability. Neither of these should be investments. That's the true solution to spiraling prices.
No. Housing should be an asset. If all housing and land were liabilities, then they would all be owned by the government (we tried that, most people didn't like it). The fact that homes are assets are not stopping people from owning homes (and why the f would someone want to own one if they were a liability in the first place?!?!).
the median income in the US is about 60k and median home price is about 200k. you only need 3.5% to qualify for a FHA loan. I managed to save that when I was making less than half of the median income.
We dont have a problem of people investing in homes, we have a problem of people not having good financial health (do to their own bad financial decisions).
in 2013, home prices were falling and interest rates were at a then all time low of 3.25%. I told people 'go buy a home, any home!' people were like 'but home prices are going down' 'interest rates may drop further'. or people were proud and smug that they didnt own a home, as if they achieved something because of the 'losers' that bought homes had their home values go down. but they didnt buy, now those same people are complaining that prices are too high, yet they dont have 7k saved for a down payment.
You're using averages from a statistically highly invariant sample range.
If a mean average is taken of everyone in society and all of the places in society, some fit that might sound reasonable is very likely.
However like the article what matters are prices within actual places that people want to live. Like a city they grew up in, a city that actually has jobs, a place with a functional educational system for their children.
I assume you and everyone else would like to have service workers inside of big cities? Where should they live? Where should everyone else that isn't in the top 10% of income earners live?
How can owning a home close to a job, and actually being able to put down roots and build a community be incentivized? In my mind that is logically divorced from renting and serfdom, and thus housing should be a liability rather than an asset.
Minimum wage workers shouldn't be able to afford rent unless you think every job should automatically align with the ability to be able to rent an apartment minimum.
That would necessitate the fact that a medium wage worker would have the ability to rent multiple places.
We'd need to build infrastructure and housing so that those medium range workers would and could rent multiple places.
Because right now the idea is if you have a medium income you can afford to rent and maybe own a place. Theres not much waste in terms of each medium wage person be allowed a home.
The capitalist strategy is generally to have so much wealth sloshing around that nobody is paid the minimum wage anyway. Fixating on the situation of minimum wage workers is ok and we don't want anyone to be structurally suffering - but a far better strategy than "affordable rental housing and emergency rental assistance" is to work on increasing the economic prosperity of workers so that the legal minimum wage is just a theoretical thing for underpaid children. If only 2% of people are paid the minimum wage it doesn't matter that only 5% of the housing is available to them.
It has been something like 50 years since workers say a real improvement in their wage position. The system keeps encouraging people to play shell games with debt and that really hurts over the long term.
Less mortgages. More savings. Cheaper houses. Shorter slogans.
More accurate: “Minimum wage workers can’t rent a two bedroom and have 70% of their income left over.” Ok; rent a one-bedroom, have a roommate, whatever. Having your own apartment with a guest room isn’t a reasonable thing to expect on the lowest tier of work available.
The lowest-value labor in the market being able to support a middle-class lifestyle isn’t a sane thing to expect, by definition. It’s tautologically impossible, unless you collapse middle-class and low-class lifestyle into the same thing.
This is not true. There is no law of physics guaranteeing some standard income distribution over a society. There at least hypothetically exists societies with very minimal or no income inequality although in practice this is extremely unlikely.
The idea however that the bottom n% of some society have to skew with x deviation from the mean or median is not exactly correct. And the idea that some segment of society will always not be able to afford some amount nominally denominated in that society's currency is explicitly wrong.
A power law distribution is the expected organic distribution of income and wealth, due to the nature of scale free networks. Only in the presence of massive distortion is that distribution likely to collapse at current technology levels.
I’ve got a better idea than worrying about the minimum wage. At least for people who are working - get rid of food stamps, get rid of housing subsidies and don’t raise the minimum wage to make it a “Livable wage”. What a livable wage is to my teenage son staying at home is not a livable wage for a single mother of two.
It’s no more should be the private sectors responsible to provide a wage that is far beyond market value than it should be the private sector’s responsibility to provide health insurance.
Just like we should have universal healthcare to take that responsibility out of the hands of private industry, we should also expand the Earned Income Tax Credit to provide a “livable wage” because it already makes a distinction between my son staying at home and the single mother of two. If we just gave people cash through the EITC and expanded it to encompass food stamps and housing subsidies, it would both ease the administrative burdens on the government and get rid of the nanny state that tells recipients who can live with them and what type of food they should buy.
Of course business taxes would have to be raised to support it - maybe. It might be the case where demand side economics would make the entire pie bigger.
The imprecision in the title here is insane. This is is a fully formed sentence which makes an unambiguous claim which is obviously not true, the implicit assumption apparently being that all readers in all cases will be able to properly read between the lines to reparse the title into not being a lie.
Minimum wage workers cannot afford some qualified subjective standard rent in any US state.
I don't understand how people don't have a major problem with a large news source making blatantly untrue claims.
Just doing some napkin calculations, the cheapest apartment I can find right now online in my city is $900 per month. This is including studios. The minimum wage in my state is $11.25 per hour. So working full time at minimum wage, that apartment would be over 46% of your gross income.
I feel like a lot of the debates going on in the comments here are missing the forest for the trees here:
Those with much money have too much of it, and those with little have too little. The issue here isn't "the poor need more handouts," but rather, "the richer need fewer."
And on that note, I have heard the arguments "hard work will take you far" and "startup CEOs are the hardest working people I know" too many times to count, almost always from people in tech. Single parents working two or more minimum wage (or potentially less if you happen to be undocumented) jobs to feed their children work as hard or harder than any CEO just to get by with the bare minimum. I don't disagree that those who work harder should be rewarded more than those who choose not to, but in what world is the system we all exist in an actual meritocracy?
The title for this post is misleading and should be changed. Minimum wage works can afford rent, just not at the (quite high) standards set in this study:
- no more than 30% of income on rent
- 40th percentile for rental prices in the location (a mere 10% away from the lake wobegon standard of making everyone above average)
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[ 3.5 ms ] story [ 211 ms ] threadhttps://web.archive.org/web/20200303232829/https://slatestar...
"Out of Reach is consistent with federal housing policy in the assumption that no more than 30% of a household’s gross income should be consumed by gross housing costs. Spending more than 30% of income on housing is considered “unaffordable."[1]
[1] https://reports.nlihc.org/sites/default/files/oor/OOR_BOOK_2...
It smells like the 40th-%tile is the number that the data exists for. I would welcome graphs showing this data at other %-tiles, and whether that changes the outlook significantly.
But the report puts ~50% of the workforce below the national housing wage for a 1-bed. 50% of the workforce cannot all obtain better than 40th %-tile rents.
> The report, released Tuesday, defines “affordable” as spending no more than 30% of monthly income on rent, in line with what most budgeting experts recommend.
The second caveat is this is rent for a 2 bedroom apartment; though they do say that it's also ~95% of 1 bedroom apartments. No comment is made on studio apartments or having roommates.
EDIT: The full report this article is based upon: https://reports.nlihc.org/sites/default/files/oor/OOR_BOOK_2...
To me this is the most telling part. When you are poor you need to have one or more roommates to afford housing and this is not new. What is wrong with roommates?
I do think the US could use more small/studio apartment options for those who have a bit more money and prefer to live alone. I lived in a small studio once and enjoyed it, though I usually had roommates.
Single people on the minimum wage would do very well. Maybe save?
What is wrong with that?
Perhaps it's just a reasonable limitation placed on the analysis because without it the data isn't as valuable to make conclusions from.
I'm not sure that statement here is necessarily a cultural desire (although I do know people who didn't want roommates, even as young single adults).
Of course, the consequences go well beyond pandemics. People are forced to accept illegal labour practices, have minimal savings if they face a loss of income for personal reasons, and cannot plan for retirement even under normal circumstances.
As for the second caveat, note that the article mentions that the average minimum wage worker has to work 97 hours per week to meet that threshold. That is effectively a two income household where at least one person is working more than 40 hours per week. That is very difficult to keep up for people with children.
Until we resolve that problem, we're going to keep getting headlines like the original one. We've regulated ourselves into ultra-high costs. Liberalization can improve matters.
And fwiw, it shows just how difficult it would be for a single parent to get by in this society.
I'm most interested in what percentage of those with dependents are working minimum wage jobs and what percentage of those that started out with minimum wage jobs have been unable to increase their earnings. MY guess is that these numbers are also terrible, but this is the thing to get down.
We need to remove minimum wage laws and instead focus on making sure those with dependents and a need to live by themselves have wage growth through their lifetimes. It is no scandal if a young person makes little money at a time in their life when it is okay to live with family or with roommates.
Because you say so? Or do you have thoughts on specific policies that will make this true? Because currently, many people who need to support a household rely on minimum wage jobs (or close to it), and often without guaranteed full time hours and no health insurance.
https://www.bls.gov/opub/reports/minimum-wage/2018/pdf/home....
I think a better metric might be (minimum wage + (20% * minimum wage)). That snags all those people who work at "minimum wage jobs" but have stuck around for a few years and gotten a few small pay increases, but are still being paid a wage that is a function of minimum wage.
Just riffing here to be honest, but I do get a little uppity when people claim minimum wage jobs are just for teenagers or other "less important" wage earners. Part of this was from working in retail and food service when I was much younger and knowing a lot of adults, many single parents, working for close to minimum wage. Anecdotal, I know.
> I think a better metric might be (minimum wage + (20% * minimum wage)). That snags all those people who work at "minimum wage jobs" but have stuck around for a few years and gotten a few small pay increases, but are still being paid a wage that is a function of minimum wage.
Yes, there needs to be better information.
> Just riffing here to be honest, but I do get a little uppity when people claim minimum wage jobs are just for teenagers or other "less important" wage earners. Part of this was from working in retail and food service when I was much younger and knowing a lot of adults, many single parents, working for close to minimum wage. Anecdotal, I know.
This is terrible, and just goes to show my point -- we need to be tracking the important number: how many people who need to afford rent for a separate unit (usually those with dependents but not always) cannot afford to do so.
EDIT: Here are some stats on low-wage workers by age. It does show a good distribution, but I think we need to make the tails thinner: https://www.statista.com/statistics/298866/percentage-of-low...
> Or do you have thoughts on specific policies that will make this true
No I don't... but I'm curious in solutions to this problem, rather than 'solutions' to minimum wage jobs.
> Because currently, many people who need to support a household rely on minimum wage jobs (or close to it), and often without guaranteed full time hours and no health insurance.
Yes... i know. We need to formulate policies that make this not true, so that the group I said should make up the majority of min wage workers actually comprises the majority.
To meet with the comment head-on: You assert that nobody is supporting a family on minimum wage, so there's no reason to increase the minimum wage or have social welfare programs that help people on minimum wage.
That's not true. A lot of people are stuck at minimum wage and supporting themselves and supporting families on it.
You can go off the rails here and assert that "Any competent adult should be able to ..", and maybe it's true. But that argument is a VERY slippery slope. Personally, I think that anyone posting on this site SHOULD be able to go out and snag a job that pays well over 400k a year if they work hard and pull themselves up by their bootstraps. Actually I think that most of the people here should be able to start a valuable startup and become millionaires. I'm not going to roll in and take a dump on someone if they can't pull it off, though.
> To meet with the comment head-on: You assert that nobody is supporting a family on minimum wage, so there's no reason to increase the minimum wage or have social welfare programs that help people on minimum wage.
That's not at all what I'm trying to insinuate. I even said that:
> I'm most interested in what percentage of those with dependents are working minimum wage jobs and what percentage of those that started out with minimum wage jobs have been unable to increase their earnings. MY guess is that these numbers are also terrible, but this is the thing to get down.
I literally said that I bet the numbers that I'm interested in will likely show that there are too many people with dependents working minimum wage jobs. That doesn't mean we shouldn't track the data. That is what shows us what will help.
Please respond in good faith.....
Curious what you think about that idea.
But I'm mainly interested in non-minimum wage solutions. There are even good reasons for adults to work for less than minimum wage. Think of non-volunteer tasks that a stay at home parent may be interested in working in part-time but still would like to make a modest income for.
"...a special minimum wage of $4.25 per hour applies to employees under the age of 20 during their first 90 consecutive calendar days of employment with an employer"
"Other programs that allow for payment of less than the full Federal minimum wage apply to workers with disabilities, full-time students, and student-learners employed pursuant to sub-minimum wage certificates. These programs are not limited to the employment of young workers."
https://webapps.dol.gov/elaws/faq/esa/flsa/003.htm?_ga=2.219...
Unfortunately, that is not how things work in the real world. Many people simply have been unable to find better paying jobs. And the old way of working your way through college doesn't work. Both because college is so expensive, and because it no longer guarantees a high paying career.
Plus there are people who have just had life screw up everything for them. Whether because they made bad choices or just suffered the consequences of someone elses bad choices.
So what can we change? I'd argue that raising the minimum wage will do little to help. I remember someone, who overall supported that idea, reporting that their research showed the long term effect would be negligible since the cost of goods would just go up until the buying power of the minimum wage was back where it started.
I also think the focus on the minimum wage is because it is a simple idea and politicians can use it to gain votes.
I think the real solution is going to be complicated, and take decades. It would include strengthening peoples support structures.
As in when you need help, you have a family or group of friends who help you. I think current American culture encourages broken families and the idea that your friends should go to the government first. Not to you.
Also, as a Christian, I firmly believe the Church in America should be a LOT more active in this area. We do good work a lot of the time, but we can do a lot better.
Then there's education and choosing a career. Currently everyone goes to college. End result is that a degree doesn't mean anything any more, and people who choose to forgo college can be looked down upon. A cultural change that addresses that is need. (See MikeRoweWorks for some ideas.)
And we need a restructuring of our current welfare systems. I remember seeing data showing that the government spends something like $60,000 a year on each recipient. Then I see the private non-profits that get people into life long careers on budgets much smaller than that. What's that definition of insanity? ;)
Anyway, just a few thoughts. I don't believe I have all the answers, just that it is a very complicated problem, and we shouldn't let politicians and activists buy our votes with overly simplified ideas like "raise the minimum wage."
I don’t think these abstract targets are very helpful. According to the OECD, the US has some of the most affordable housing in the world: https://read.oecd-ilibrary.org/economics/the-average-oecd-ho... (showing percentage of disposable income left after housing costs).
Also, the demand for a “federal affordable housing policy” is pretty breathtaking. Look at the list of states that have the least affordable housing: New York, Massachusetts, etc. A federal program would basically mean bureaucrats from these states would be imposing housing policy on the whole country. That sounds like a great idea!
Is working 40 hours per week but not being able to afford a 1 or 2 bedroom apartment a goal we want to set? If so, we have achieved it!
I think most of us like the idea that if you put in 40 hours of work every week, regardless of the specific job, you are able to afford a basic standard of living.
According to the study, that standard would require a $30-40 minimum wage in places like New York. Is that something any country has done?
If America changes too much, all that legal education goes to waste. It’s biologically motivated self selection.
“Keep the laws and norms from changing, or my influence!”
Also, while I have you: could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
You ask "when did we decide that?". That implies that there is some discrete point in time in the past when societal decisions are made. But that's not how societies work, not how politics work. The way it works is that we are continuously "deciding" things like this, through conversations like the one here, and articles like the one we're talking about. It doesn't make sense to say, "this article is reaching for abstract targets that we haven't decided on", because there is no decision point in the past like that, we're discussing what we want right now, in this moment, and the article is part of that discussion.
You claim that ideas "we like" are not what is pertinent. But that's also not the way societies and politics work. If we as a society decide that this is a good thing to strive for, that "we like" the idea, we can do that. We can decide we want to do that and discuss it and brainstorm ways to achieve it. Looking at what other countries have done is definitely an interesting input in that discussion, but it certainly isn't the only thing that is pertinent.
I think you should just say "I am unconvinced that this should be a goal we have as a society". You seem to be trying to appeal to some larger power, some discrete ledger of things we have decided on, but really I think what you're saying is that you are personally skeptical of this, and perhaps that you believe many others in the society are skeptical of it. Which is cool (I may even agree with that, I'm not sure yet), but it would be more clear to just say that.
You're right that articles and studies often use terms like "housing crisis" that don't have objective definitions in a way that fits their subjective definition without doing any throat-clearing to call that out. But I don't think there is any real way around that, it seems like you just have to read things with that in mind. Maybe I'm wrong though. Should every article say things like, "there is no objective definition of a housing crisis, but the NLIHC believes this should be considered one". Perhaps they should!
Thanks for sharing it.
https://www.brookings.edu/wp-content/uploads/2016/02/Boswort...
Of course, we understand this is a pretty useless way of looking at things.
From a consequentialist standpoint, the incentives work out the best when we use the heuristic of assigning responsibility for low labor value to the person performing the labor, so that's the approximation I choose to use. You could choose to think that e.g. being very stupid is no one's fault, so a very stupid person should get paid as much as a brilliant doctor, but the net social consequences of this are pretty well explored and pretty bad.
Even if you only do half thats a crazy stat. 600 million units and having to hit that right on the head in terms of the distribution of humans at all time.
Funny way to put "providing housing for its own citizens".
Look what happens when politicians responsibly build post offices and the numerous other programs that made money until political meddling.
Look at what happened to workers when taxes were way higher! Omg those stupid politicians!!
Is the profiteering of a minority of the species a goal we have set?
Is your ideology the goal we should have set? Or is it just automated energy sucking deflection away from ideas that rustle your jimmies wrapped around your limbic system?
We share one physics, one planet. Just because you can imagine and emit alternate sounds to someone else doesn’t mean the ideas are feasible or real?
Reality comes with some pretty tight constraints. Progressivism away from grandpas political talking points is one of them.
Are we less free in some real way given the time wasting mess of our “free market”? Or would it be that your brain is just not used to processing the idea?
Are you measuring the impact to society and reality or just chomping at the bit to react?
Bureaucrats aren’t going away and already control your life in very intimate ways! Human society has yet to create that magical completely free system or completely gridlock itself to death.
Kind of wonder if you’re just shouting at a mirage. It’s just people.
Start with the assumption that people need to be able to afford a place to live, and that a full time job should be able to achieve that. Do you agree?
Now, if we both agree that a housing subsidy program is an administrative nightmare, what's left? Simple: Regulating prices on the housing market.
A subsidy is a nightmare to administer; is subject to corruption, mis-targeting, abuse, and extreme wait lists; and drains public resources. So why do we do it? Simple: Because the real estate industry has lobbied the government to pursue this as a means to address housing inequality. Rather than being told that the earnings of their investment properties will be capped by regulation, the government is writing a check to make up the difference.
So now, after years of waiting, a single mother of two might get a 3/4 of her rent paid by a subsidy. The apartment needs to pass ridiculous inspections which are conducted historically by specialized contractors who benefit from failing due to re-inspection fees, and they will fail an inspection because a screw is missing from a light switch cover, blowing up a lease deal and elongating the timeline for a subsidized move-in by months. It sucks for the residents, and it sucks for the landlord from a administrative/management perspective (mainly dealt with by hired management), but at the end of the day, they have a government-guaranteed rent payment for a greatly inflated rent market. Coronavirus cut your tenant's hours?! No problem! At least 3/4 the rent will be paid, and the margins are still profitable.
And we wonder why wealth inequality is growing in the US! This literally inflates the rental market by creating more demand for overpriced housing than exists, by creating a class of people who can afford it only through a majority subsidy. It also encourages investment property purchases by doing so, in turn creating more competition in the buyers market and causing price inflation there as well. This also has the effect of keeping more people renting instead of being able to buy.
In conclusion, PEOPLE NEED HOUSING! Real estate industry doesn't need subsidies. Yes,that includes private landlords with investment properties. Someone else's housing or health care shouldn't be an unregulated investment opportunity if we care about the well being of the people.
For me, it’s the definition of a minimum place to live. When I was young, I had roommates. I don’t think every working person should be able to afford a 1 bedroom apartment.
There are multi family dwellings, studios, boarding rooms, etc. If I’m by myself and making minimum wage then I think it’s ok to not be able to get my own one to two bedroom in the city of my choosing. I’m ok with having to live in the burbs and train or drive in. It sucks, but there’s no reason why minimum wage is a permanent condition.
Not everyone working minimum wage is doing it "when they were young." Do you really think it's a good objective for a 55 year old cook for a non-profit organization to be living with room mates? Would you want that?
The solution is there if you are willing to reduce the wealth generated by investment properties for an already much wealthier investment class. How do you justify your priorities ethically?
This, like many others, does not sound like a job that warrants minimum wage so no.
If the recommended rent is 30% of your income... well, the most you could afford on twice minimum wage is $768.
Where I'm at the cheapest rentals are 900 or so (rural utah).
Seems to me it takes almost 3x minimum wage just to really be able to live comfortably, and many will never get to that level, because they already work 2-3 jobs just to keep a roof over the heads of their children.
There's a reason that $75k is the 'happiness level', it really is the lowest of the low wages that will make someone feel like they're not poor and 'needy' and over-worked, etc... That should be our goal, to get us to that level for everyone over 25 who isn't in school. (Or able to reach that w/ a full-time job (even at McDonalds) + GBI/UBI)
Do you think the world works according to ethical priorities or market forces? Imagine if engineers could use similar logic as political theorists. We could will our airplanes to fly by setting the right priorities!
You make a quip about engineers and political theorists, but fail to explain why a market cannot be regulated in order to benefit society in general. We do it all the time.
The difference between those two views of the world is the difference between political theorists and engineers. A political theorist asks questions like "how do you justify your priorities?" An engineer asks "how much do I have to give up on this one priority in order to achieve this other priority?" Engineers deal with a world where achieving every priority means giving up some other priority.
Applying this logic to your statement exposes the flow: "The solution is there if you are willing to reduce the wealth generated by investment properties for an already much wealthier investment class."
Sure, things like price control prioritize affordability at the expense of "wealth generated by investment properties." If that was it nobody would argue against price control. So why do so many people oppose price controls? (The answer is not, I'm sorry to say, that many people simply want owners of investment properties to be rich.) See: https://www.brookings.edu/research/what-does-economic-eviden...
> Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive.
Of course 55 year old me doesn’t want roommates, but if I have to do it for a few years then I will.
I knew people who moved from Stockholm to Berlin and kept on paying their rent in Stockholm, just so they don't lose their apartment. That's how hard it is to get one.
Berlin also had a rent cap, so instead of competing on price, you had to compete on intangibles like: letters of recommendation from previous landlords, proof of income and good conduct, having a high-profile job, nationality, etc.
Since supply is low, demand is sky-high and prices are capped, you had 30-40 people applying for the same apartment. Add the fact that once a landlord takes you in, there is almost no way that they can kick you out and you will end up with a very complicated and long vetting process that doesn't exactly favor the working class folks.
Also, you can end up with other costly requirements like: the landlord will only choose a tenant who buys all the furniture in the house. That's one example of an unregulated cost increase that is not affected by the rent cap.
However, it doesn't justify the runaway inflation of the entire housing market. Also, I'd point out that generally speaking, the population of an area will be limited by the jobs available in that area, so there is an external limit on the demand for housing to at least some extent. There are jobs and money to be made in development of additional housing to meet the demand. Supply issues are not insurmountable, and should be addressed as such.
I'll also note that in the USA, all of the "intangibles" you listed are already typically collected by the landlord along with the leasing application itself. This isn't a result of rent caps, just high demand and standard tenant screening practices.
To solve problems, you may actually have to try. Obstacles don't justify problems, they just need to be addressed.
In the US, cities frequently have "zoning requirements" so it's very difficult to get a new high-density structure built in a neighborhood of 1-floor single family homes. Also, NIMBY groups usually have a veto vote of sorts, which makes it more expensive for a real estate developer to come into a pre-existing neighborhood and make more units (because it's a gamble and usually they have to spend more to acquiesce to the NIMBY if they are able to build at all).
Even when there is a rental price cap, that tends to only work in the short term and exacerbates supply/demand problems long term. San Francisco, for example, implemented a rent control system in ~1980. Since then, only 40% of rental units are eligible for rent control and lots of potential rentals stay off the rental market. There are loopholes which allow conversion of a rent-controlled unit to a market-priced rental and no new built units are rent controlled, so there is a bifurcation of the market. Rent controlled units are very affordable, but increasingly scarce. Market priced units are growing (slowly) in numbers, but cost 2x - 5x what a comparable rent-controlled unit does.
True, there are real supply issues in some very hot markets, but few markets are like San Francisco.
So--why do you say that the price cap is what exacerbates the supply/demand problems long term, when you clearly understand the issue is that there are loopholes being utilized to reclassify units to get the back to market price? Those loop holes aren't accidents--the NIMBY groups put them there intentionally. But they aren't just NIMBY--they are also private investors who do not even live there.
I'm all for building additional housing to meet demand in general. However, it does need to be done carefully. By that I mean, upgrading train stations, roads, grocery options, etc. in order to deal with the increase in population. You can't just add 15,000 people to a neighborhood and not add parking or public transit capacity.
I'll admit that the assumptions I make about rent control assume that the policy is far from well crafted and probably assume that it gets worse over time because US policy makers tend to get worse at upkeeping existing systems the longer they last.
These assumptions probably shouldn't be attributed to a perfect rent control policy.
That's exactly why suburbs in Silicon Valley are stressing the large cities and the cities are suing each other to ensure they alleviate traffic congestion as they grow the residential units.
Those who live in the burbs and commute into the cities don't want city dwellers to be able to make the reverse commute to come to their neighborhoods. In the 1960s, the Bay Area Rapid Transit (a light rail system) was designed to be a loop between San Francisco, Oakland and the South Bay. The NIMBYs rejected plans to close the loop in the South Bay, so it became much less valuable at reducing street traffic as it otherwise could have.
As if there isn't enough money in San Francisco to build roads and trains! The city governments certainly don't have it, but it's there.
In Stockholm, decades of rent regulation has created a massive undersupply of housing. That means there is a 9-year wait list for apartments. The way rent regulation usually works is it caps rent increases for a given tenant. Tenants thus never leave their apartments, so the prices for the few openings (and newly built apartments) is astronomical.
> Another legacy of Sweden's post-war efforts to develop a more equal society — known as "Folkhemmet" or "the people's home" — is rent regulation, which applies to both municipal and privately owned properties. While millions of Swedes have benefited from the highly affordable rent levels set since the 1960s, the caps have had a damaging effect on the provision of new housing.
> Historically, the low returns from rents for private landlords have made the investment case for building new rental properties difficult to justify, the Swedish bank analyst said.
> The love for rent-capped municipal properties among the Swedish people is strong. Almost 500,000 people were on Stockholm's waiting list for public housing, according to figures released in 2015, double the number from seven years prior. In 2014, the average waiting time to get an apartment in Stockholm was 9 years. Once a person is given an apartment, they often stay there for life. "People are sitting in 300 square-meter apartments because they are so cheap that they can't leave them," said Pelles.
The government made sure that there was enough supply of apartments. This was removed 30 years ago or so. The "Market" took over instead.
So you always have rent covered, regardless of your paycheck. They could maybe double that, and have it cover food stamps too, to cut out some of the administrative costs to manage both programs.
This works for married couples too, because you'd get double that, which is closer to what a mortgage would be, and would esp, help lower income families.
I think we could look into a VAT if needed for supplmental tax to cover it, but there's plenty of governmental spending we could also cut like maybe 1/3rd of the defense budget for one.
Those days are long gone and aren't coming back. So there needs to be some other contract that can guarantee a home for everybody.
Seems to me the problem is a supply issue, and we just need a bigger supply. That's an easy solve.
This site shows $1700 for a 2br in brooklyn.
https://www.apartments.com/brooklyn-ny/2-bedrooms/?so=2
There's a very good chance there are people whose quality of life would be drastically diminished if they had to share an apartment. Off the top of my head, those with embarrassing or inconvenient medical issues, single parents, people who always feel some level of stress around other people (there are a lot of us).
When setting floors by policy, we should think of the people who don't fit the norm. If they don't get help from somewhere else, they're screwed.
Historically, the EITC has been supported by both Republican and Democratic administrations.
It's not a goal we set but it's one we mostly achieved none the less, depending on your specific area and minimum wage. A blue collar (minimum - low wage) worker used to be able buy a house and raise a family on a single income. People are poorer than they were decades ago, at least where it counts.
In a multivariable equation, you can't only look at one variable and call it a day.
How much has demand changed?
How much has the population of the USA grown?
How many immigrants has the US taken in?
How much more efficient is each marginal employee in a blue collar job now compared to then?
How well do USA exports compete with other countries?
How well does the USD exchange rate compete with the currencies of those other exporting countries?
How much have the average work benefits changed over the same period of time?
How much has the US cost of living grown?
What is the US labor participation rate?
If anything, the article suggests the opposite. It notes that the average minimum wage earner would need to work 97 hours for a two bedroom, and 79 hours for a one bedroom. That reflects two full time minimum wage incomes: a working couple for a one bedroom, and a working couple with children for a two bedroom.
It is also worth noting that this is a very privileged position in many cases. If you are a committed couple, are rooming with a close friend or family member, or fit a limited number of other circumstances - this may be acceptable. Otherwise, it is effectively saying that it is okay to expose minimum wage earners at greater risk because, well, they are minimum wage earners.
edit since these details matter here: two apartments in question. One was a 1R without, the other a Studio with amazing view. Both were very pleasant, central, and I could have found cheaper had I been willing to not have them that central. /edit
So yeah there are much cheaper places than the US. German rents tend to be cheaper still, with higher wages.
That all being said, calling out the people at the very bottom for their lavish lifestyles / demands seems a bit disconnected from the economic realities at the moment...
A room of one's own is a lavish demand? Yes.
A one bedroom is about 600€ a month.
Those earning minimum wage aren't going to be able to afford "an average" apartment. They will likely only be able to afford a starter apartment which is more likely to cost much less than average and are more likely to live with family members or commute from a more affordable geographic locale.
Income in US is not directly comparable to most other OECD countries for multiple reasons. Labor laws (paid vs. unpaid sick days, vacation days, ma/paternity time off, union dues), taxation policies (local, state, federal, employer), health care costs (no nationwide price negotiation), health insurance costs (lots of problems here), school tuition costs (because the demographic highly overlaps with school-aged young adults), lack of public transportation in most geographic regions, etc all add up to costs which are obscured by using the simple "gross income after housing and maintenance" figure.
Well, it's one of three possible goals:
1. Any worker can afford a roof over his/her head with their wage.
2. Universal public housing.
3. Millions of homeless people.
I actually think (2.) is just as important as (1.), but the US isn't very keen on economic activity for public benefit. Then again, it often seems like it's leaning towards (3.) ...
Paris might be around 1200€ I think for a similar 1 bedroom but I am not very familiar with Paris. Maybe 1000-1500 depending on commute and location.
There is little left at the end of the money. You're not going to holidays or restaurants any time soon. Hope the car doesn't break or you're in serious troubles. Assuming you were handed a car by your parents because you certainly can't acquire one by yourself (3000 or 4000 upfront!).
The median new home is double the size of what it was in 1973. In today's new houses, each person has about as much space as the entire solidly middle class 3BR house my four-person family lived in growing up.
https://www.bls.gov/opub/reports/minimum-wage/2016/home.htm
https://old.reddit.com/r/Economics/wiki/faq_minwage
Housing should be a liability, owning land should be a liability. Neither of these should be investments. That's the true solution to spiraling prices.
the median income in the US is about 60k and median home price is about 200k. you only need 3.5% to qualify for a FHA loan. I managed to save that when I was making less than half of the median income.
We dont have a problem of people investing in homes, we have a problem of people not having good financial health (do to their own bad financial decisions).
in 2013, home prices were falling and interest rates were at a then all time low of 3.25%. I told people 'go buy a home, any home!' people were like 'but home prices are going down' 'interest rates may drop further'. or people were proud and smug that they didnt own a home, as if they achieved something because of the 'losers' that bought homes had their home values go down. but they didnt buy, now those same people are complaining that prices are too high, yet they dont have 7k saved for a down payment.
If a mean average is taken of everyone in society and all of the places in society, some fit that might sound reasonable is very likely.
However like the article what matters are prices within actual places that people want to live. Like a city they grew up in, a city that actually has jobs, a place with a functional educational system for their children.
I assume you and everyone else would like to have service workers inside of big cities? Where should they live? Where should everyone else that isn't in the top 10% of income earners live?
How can owning a home close to a job, and actually being able to put down roots and build a community be incentivized? In my mind that is logically divorced from renting and serfdom, and thus housing should be a liability rather than an asset.
That would necessitate the fact that a medium wage worker would have the ability to rent multiple places.
We'd need to build infrastructure and housing so that those medium range workers would and could rent multiple places.
Because right now the idea is if you have a medium income you can afford to rent and maybe own a place. Theres not much waste in terms of each medium wage person be allowed a home.
It has been something like 50 years since workers say a real improvement in their wage position. The system keeps encouraging people to play shell games with debt and that really hurts over the long term.
Less mortgages. More savings. Cheaper houses. Shorter slogans.
The lowest-value labor in the market being able to support a middle-class lifestyle isn’t a sane thing to expect, by definition. It’s tautologically impossible, unless you collapse middle-class and low-class lifestyle into the same thing.
The idea however that the bottom n% of some society have to skew with x deviation from the mean or median is not exactly correct. And the idea that some segment of society will always not be able to afford some amount nominally denominated in that society's currency is explicitly wrong.
It’s no more should be the private sectors responsible to provide a wage that is far beyond market value than it should be the private sector’s responsibility to provide health insurance.
Just like we should have universal healthcare to take that responsibility out of the hands of private industry, we should also expand the Earned Income Tax Credit to provide a “livable wage” because it already makes a distinction between my son staying at home and the single mother of two. If we just gave people cash through the EITC and expanded it to encompass food stamps and housing subsidies, it would both ease the administrative burdens on the government and get rid of the nanny state that tells recipients who can live with them and what type of food they should buy.
Of course business taxes would have to be raised to support it - maybe. It might be the case where demand side economics would make the entire pie bigger.
1. They live in areas with below average rents.
2. They allocate more than 30% of income to rent.
3. They find other workers to share rent with.
4. They live in studio apartments instead of 1-2 bedroom.
5. They live in rooms instead of whole apartments.
6. They live with family.
7. They live in an inherited home.
Minimum wage workers cannot afford some qualified subjective standard rent in any US state.
I don't understand how people don't have a major problem with a large news source making blatantly untrue claims.
Those with much money have too much of it, and those with little have too little. The issue here isn't "the poor need more handouts," but rather, "the richer need fewer."
And on that note, I have heard the arguments "hard work will take you far" and "startup CEOs are the hardest working people I know" too many times to count, almost always from people in tech. Single parents working two or more minimum wage (or potentially less if you happen to be undocumented) jobs to feed their children work as hard or harder than any CEO just to get by with the bare minimum. I don't disagree that those who work harder should be rewarded more than those who choose not to, but in what world is the system we all exist in an actual meritocracy?
- no more than 30% of income on rent
- 40th percentile for rental prices in the location (a mere 10% away from the lake wobegon standard of making everyone above average)