Affordable Housing Part 2
Last week I shared with you news of Googles plans to spend 1 billion dollars on affordable housing initiatives. This initiative is more needed than ever as according to a report by the National Low Income Housing Coalition a person earning the federal minimum wage of $7.25 an hour and working full time, cannot afford to rent a two-bedroom apartment in any state.
The Coalition arrived at this conclusion by applying the standard that rent should not be more than 30% of a person’s income. This data and much more is included in their 2019 Out of Reach 2019 Report. Also on their website is an interactive map listing the wage needed to afford a two-bedroom apartment in each state.
The report’s central statistic, the Housing Wage, is an estimate of the hourly wage a full-time worker must earn to afford a rental home at HUD’s fair market rent (FMR) without spending more than 30% of his or her income on housing costs, the
accepted standard for affordability.
THE 2019 NATIONAL HOUSING WAGE IS
$22.96 FOR A MODEST TWO-BEDROOM
RENTAL HOME AND $18.65 FOR A
MODEST ONE-BEDROOM RENTAL HOME
Let’s Do the Math
Using the coalitions standard of 30% of income for rent and the 2018 median rent for a 1 bedroom apartment of $1025, a person would have to earn approximately $3,400 a month to be within this range.
A person working 40 hours a week at $21.50 an hour would earn $3,440 a month before taxes and other deductions.
We know that millions of people work for far less than $21.50 an hour and often cannot count on 40 hours a week. Low rent dwellings and subsidized housing help people afford rent. Many end up in cheap hotels or sharing a small apartment with several people. A growing number of people are living in RV’s, campers, or other vehicles. Two solutions are for wages to be higher and for more affordable housing units to be built. Initiatives like the one started by Google will help improve the situation for many renters.
This past week Democratic presidential contenders participated in the first debates of the 2020 election. Not surprisingly, affordable health care was a hot issue. Several candidates favor single-payer health insurance or Medicare for all approach. Much like tax reform, major changes to health care insurance are unlikely to occur anytime soon. The harsh reality is that health insurance companies and the many sub-industries are making huge profits. Can you imagine doing away with all private health insurance? What would happen to all of the people working in this industry? If taxes were simplified to the point that people did not need to hire accountants or use expensive software to file, what would happen to all of the tax lawyers, accountants, tax preparers, and software companies that provide services for individuals and businesses?
The economic reality in our country is that we have created an incredibly integrated and co-dependent system in which changes have a ripple effect far greater than most people realize. When an auto manufacturing plant closes, it is not just the workers at the factory that suffer. Often times multiple smaller businesses exist in the community to support the factory or its employees. Many supply parts and supplies to the factory. Depending on the size of the town, the housing market can suffer a major decline in property values.
I am sure there are hundreds of lobbyists in Washington working to prevent changes that would affect profits for the many health insurance companies in the country. An article in the Washington Post notes that United Health Care spent 8 million dollars on lobbying efforts in 2018. The company recorded earnings of 17 Billion dollars in that same year. This is just one of the many health insurance and related industries spending millions on lobbying
Profits Before People
The point is not to advocate for a specific change, but to express frustration that the huge amounts of money being made by some health care companies will incentivize them to prevent changes that make health care more affordable for all people.
Unpredictable Hours = Instability
A recent article by Kristen Harknett featured in The Washington Post examined the negative effects of unpredictable work schedules and the resulting fluctuation in wages had on people. We have written several articles about the minimum wage and a living wage, but wages are only part of the problem. If you cannot count on the same number of hours each week, how can you manage your finances?
Many people assume that 40 hours a week is the norm, but for millions of workers, 30 hours of work weekly or less is not uncommon. Some employers routinely adjust weekly schedules based on business levels. Here is a break down of weekly earnings at various hours worked at $10 an hour: (Totals are before deductions)
- 40 hrs = $400
- 35 hrs = $350
- 30 hrs = $300
- 25 hrs = $250
- 20 hrs = $200
- 15 hrs = $150
5 Hours = $50 Less Pay
If your hours are reduced by just 5 hours, you will lose $50 and a 10-hour reduction will result in $100 dollars less per week. For a person living paycheck to paycheck, a reduction in hours for even one week can make it hard for them to pay rent or buy food. Fluctuating work hours results in an unstable existence. Data shows that many people cannot afford an unexpected expense of $400. People whose hours change weekly frequently rely on high-interest payday loans to survive. They become stuck in a circle of ever-increasing debt.
Thanks for Reading
Our organization, The One Union, wants to be part of the solutions for the problems discussed in this post. We believe that if enough people join under one umbrella and demand change, we can make the world a better place for all people. Will you help us?