Housing Less Affordable as Rent-Wage Gap Widens
The affordability gap between minimum wages and rents in Southern California and across the nation grew significantly in the last year, forcing more low-income residents into substandard housing, according to a study released Tuesday.
The average U.S. worker must earn at least $13.87 an hour--nearly three times the federal minimum wage of $5.15 an hour--to pay the rent on a standard two-bedroom apartment, according to the annual report by the Washington-based National Low Income Housing Coalition.
The study found that the problem is particularly acute in Southern California, where 500,000 workers earn the state’s minimum wage of $6.25 an hour--about $13,000 a year, according to the Department of Finance. Rents here have risen faster than the national average, forcing many families to share converted garages and one-bedroom units with other households.
In Orange County, a worker would have to earn $21.27 an hour in a 40-hour week to be able to afford a modest two-bedroom apartment, the study found. The federal government considers housing affordable when it costs 30% or less of gross income.
Last year the average rent for a two-bedroom apartment at the low end of the rental market climbed 9.2% to $1,106 in Orange County and 12.3% to $1,026 in Los Angeles County, the study found. The data were gathered by RealFacts, a Novato, Calif.-based firm that tracks 5,500 apartment complexes in the western United States. The sampling was conducted before the Sept. 11 terrorist attacks and does not reflect any changes since then.
Jose Fonseca has struggled for two years to pay his $315 rent out of a $700 monthly paycheck. He shares the one-bedroom Los Angeles apartment with his wife, Rosa, and their two children. The carpenter, 50, relies on help from his brother-in-law each month to make ends meet.
“We feed our kids beans and eggs, and we eat whatever’s left over,” Fonseca said. “I’ve never struggled like this.”
Even those who earn more than the minimum wage, such as Jose Portillo, a 46-year-old union custodian who earns $9.10 an hour, struggle to make ends meet. Portillo is paying $551 a month for his one-bedroom downtown Los Angeles apartment, which he shares with his wife, daughter and brother-in-law. A portion of his $1,152 monthly paycheck goes to support two of his children in El Salvador.
“It amazes me when people come in for help, and I see what they have available to pay the rent,” said Rod Field, executive director of the Los Angeles Housing Law Project. “They have fewer and fewer funds to meet the basic necessities of life.”
The lack of affordable housing is “the greatest challenge facing the city and the city’s growth,” said Los Angeles City Councilman Eric Garcetti, chairman of the housing and community development committee. “It affects more people on a daily basis than any other social or economic crisis we face.”
In Los Angeles County, where the population grew by 146,000 last year, only 8,654 new multifamily units were built. The average construction cost of such a unit today is $94,638, aimed at middle- to higher-income households, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.
Compounding the problem, federal subsidies on an increasing number of apartments set aside for low-income tenants will expire between now and 2006. When these subsidies expire, owners are free to exit the federal program to take advantage of much higher market rents.
The city of Los Angeles already is feeling the impact--in 1999, 90% of Section 8 participants found affordable housing, but this year, only 41% of voucher holders were successful, according to Steve Renahan, executive director of the Housing Authority of Los Angeles. Section 8 is a federal program that helps low-income families find affordable housing.
Mayor James K. Hahn and the City Council are committed to increasing the city’s housing trust fund from the current $10 million to $100 million by next year, but shrinking budget surpluses and the economic repercussions of the terrorist attacks have presented new challenges to meeting that goal.
Analysts say that resources earmarked for the housing trust fund now are competing with other urgent needs, such as increasing security at Los Angeles International Airport and the Port of Los Angeles.
“It looks pretty scary right now, when we have a crying need for affordable housing,” Kyser said. “Given the current economic situation, with the budgets under pressure, it’s going to be tough.”
Still, Garcetti is hopeful that through increased community development block grants, additional general fund money and private- and public-sector assistance, the trust fund goals will be met.
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