But raising the minimum wage alone won't solve the problems facing low-income workers in Los Angeles. At the heart of the city's affordability crisis is the double-whammy of low-wages and high costs — and at the heart of the cost problem is the exorbitant expense of housing. Los Angeles is the least affordable rental market in the country, according to Harvard University's Joint Center for Housing Studies, and it's been ranked the second-least affordable region for middle-class people seeking to buy a home. One UCLA economist recently warned that if L.A. continues to ignore the housing market, raising the minimum wage may just encourage landlords to raise rents commensurately.
Garcetti and the City Council must make housing affordability a higher priority in 2015, in tandem with raising the minimum wage. That means increasing the supply of both market-rate and subsidized units, for rent and for sale. It means making it easier to build housing, but also requiring developers to set aside units for low-income residents in exchange for permission to build bigger, taller projects. It means preserving the number of affordable apartments by adopting a "no net loss" policy that ensures subsidized units don't disappear when buildings are demolished and replaced.
Addressing affordability also means trying to answer the larger and trickier questions that will inevitably arise if the city attempts to produce enough housing to meet demand, such as: How dense should L.A. become? Can it preserve neighborhood character, including ethnic and income diversity, while growing and adding more housing? Should the city exert more control over development or leave it to the marketplace?
These are difficult questions, but the problem is too severe to avoid them. Housing prices in Los Angeles have grown four times faster than incomes since 2000. Not only is Los Angeles the least affordable of the nation's 381 metropolitan areas, as the Harvard study showed, but half of all households in the region are considered "cost burdened," meaning that families spend at least 30% of their income on rent or mortgage payments. One in four households spends at least half its income on housing. And it's not just poor families that are struggling. Roughly half of middle-income households were rent burdened in 2011, compared with just 11% in 2000, according to a UCLA analysis. One in three households earning $50,000 to $75,000 spend more than a third of their income on rent.
Families facing such heavy monthly housing costs may not have enough money left over for food, healthcare, transportation and other necessities. They may be forced to make trade-offs or compromises that have broader societal or economic impacts. A parent may have to work two full-time jobs to afford a decent home, leaving little time to spend with his or her children. Workers may move to the Antelope Valley or Inland Empire in search of cheaper housing but spend hours commuting to jobs in L.A., clogging freeways and polluting the air. People may move into converted garages or other illegal and unsafe units. Families may double up or triple up to afford homes — one reason L.A. County has seven of the 10 ZIP Codes with the worst housing overcrowding in the nation. Businesses may choose to locate in regions with lower housing costs in order to attract workers.
Despite the severity of the problem, there has been little talk and even less action from City Hall on housing affordability in recent years. Perhaps city leaders felt powerless to act in the face of decisions made in Sacramento and Washington that have dramatically reduced the amount of money available to subsidize affordable housing construction — which has been the traditional way L.A. has tried to address the issue. When Gov. Jerry Brown did away with California's redevelopment agencies in 2011, the city lost millions of dollars in tax revenue that had been specifically set aside for affordable housing. Federal funds were slashed too. They also had been used to bolster the city's affordable housing trust fund, which has now dwindled to $19 million from a peak of $108 million in 2008. There is a void the city must fill, if not with dollars, then with policies that spur the creation of more moderately priced and low-income homes.
There is an opportunity to turn this crisis around. Los Angeles is in the midst of a major, publicly funded mass transportation expansion, with five rail lines under construction. Those projects will dramatically change the urban landscape and are expected to spur a real estate boom along the transit routes. With the right planning, the region can create policies that will incentivize or require developers to build more affordable housing as a return on taxpayers' investment — smart, environmentally advantageous housing that will be convenient as well. This is also the time to fix the city's broken land-use development process, which slows the construction of new homes and buildings, gives communities and developers little certainty of what to expect in the neighborhood and leaves all sides frustrated.
Los Angeles officials should not miss this opportunity to address one of the fundamental challenges facing the city. Sure, raise the minimum wage, but get to work on housing affordability too.