For low-wage earners, rent money still out of reach
Workers caught in the maw of this year's layoff frenzy have one set of problems. Those clinging to jobs that barely cover the rising costs of living have another.
Blame the tenacity of the real estate market. During the 1990s boom, firefighters, police officers, and teachers were among those priced out of the communities they served.
Today, the focus has shifted to those even further down the economic ladder. Soaring national housing costs and a tight "affordable housing" rental market have conspired to create serious challenges for low-wage laborers.
A report released in October by the Washington-based National Low Income Housing Coalition (NLIHC) revealed that nowhere in the US can minimum-wage workers afford what the Department of Housing and Urban Development estimates to be fair-market rental costs for a modest two-bedroom housing unit in their communities.
The report, "Out of Reach," found that in order to afford the median fair-market rent for a two-bedroom rental unit, a worker would have to earn a "housing wage" of $13.87 - or 269 percent of the federal minimum wage.
The housing wage represents what a full-time worker would have to earn per hour to afford the fair-market rent for a housing unit while paying no more than 30 percent of his or her income.
In 64 percent of states, 63 percent of metropolitan areas, and 33 percent of counties, the housing wage was found to be at least twice the prevailing minimum wage. In 2000, roughly 2.7 million Americans earned minimum wage, which, on a federal level, has remained at $5.15 since 1997.
According to the report, California, New Jersey, Massachusetts, New York, Colorado, and Illinois have the distinction of being in the Top 10 of the nation's least-affordable states.
"The reality is that there's a persistent and extensive gap between earnings at the low end of the wage scale and basic housing costs," says Sheila Crowley, president of NLIHC. "And rental rates aren't going to go down in the near future, because there's still a severe shortage of housing [along with] high demand."
Ultimately, says Ms. Crowley, many low-wage workers fall out of housing and into homelessness, particularly during an economic recession.
Recognizing this, President Bush and Housing and Urban Development Secretary Mel Martinez late last month announced more than $1 billion in grants to provide housing and support services to help hundreds of thousands of Americans find emergency shelter and transitional housing.
Low-wage workers, experts point out, are among the least likely to have personal investments or new career options. And they now face widespread layoffs.
Tom Snyder, the assistant to President of the Hotel Employees and Restaurant Employees International Union (HERE) estimates that 40 to 50 percent of its members have been laid off in Washington, D.C., and just under 40 percent were laid off in New York City.
In response to the situation, HERE has set up food drives and established "one-stop" relief centers to distribute supplies and to assist unemployed union members with obtaining unemployment and emergency housing assistance.
The one-stop centers have been established in cities including Las Vegas and Los Angeles, where the majority of union members are immigrants, according to Mr. Snyder.
HERE and other unions have stressed the need for an increase in the minimum wage - and an expansion of unemployment insurance benefits - to ensure that workers are able to afford housing and support their families.
Yet Ron Bird, chief economist of the Employment Policy Foundation in Washington, contends that a focus on those aspects of the labor market is short-sighted and inadequate.
"[T]he important thing is to focus on training and education, so that people have the skills to find and keep jobs, and to have the level of productivity that makes the concept of minimum wage irrelevant.
"My concern with focusing on easy-sounding solutions like raising the minimum wage," Dr. Bird says, "is that it could actually create very negative, unintended consequences of making life harder for people just trying to get in and get [job] experience."
But Barbara Ehrenreich, the author of "Nickel and Dimed: On (Not) Getting By in Boom-Time America," bristles at the notion that minimum and low-wage workers are all unskilled, or are people out to gain experience.
Ms. Ehrenreich went undercover in 1998, posing as a divorced homemaker to explore the survival issues of low-wage workers. After finding work in Key West, Fla., she quickly learned she needed another job to afford her $500-a-month, one-bedroom apartment.
As she moved around the country, Ehrenreich was forced by economic necessity to live in residential motels, paying up to $250 per week.
"I was completely unprepared for how hard that would be," says Ehrenreich. "People get trapped into this kind of housing because they cannot get together the ... move-in costs of a monthly apartment rental. And then it's just a downward spiral."
In Washington State, with the nation's highest unemployment rate at 6.6 percent, the problem is acute. Because of the accompanying increase in homelessness, the Seattle City Council agreed in October to a $2.75 million plan to house homeless people, with 200 more units if voters approve a tax levy next year.
Other cities have taken an even more proactive approach, passing "living wage" ordinances that typically apply to firms doing business with city government.
In May, Santa Monica, Calif., became the first city to pass an across-the-board ordinance. Businesses with revenues above $5 million operating within a specified district will be required to pay workers $10.50 an hour beginning July 2002. (The state's minimum wage is $6.25.)
"This is not an intractable problem," emphasizes Crowley of the NLIHC, whose organization is pushing Congress to establish a $5 billion National Housing Trust Fund to help states and nonprofit agencies create affordable housing for low and moderate-income families.
"If the expectation is that people are going to achieve some sort of self-sufficiency, there is explicit in that the notion that they have the ability to provide for their basic needs," she says. "And housing is key among them."