Guest Blog: How Utah advocates used Out of Reach data to support legislation for raising the state minimum wage

Guest post by Barbara Stallone, Director of Policy and Public Relations, Utah Housing Coalition

The Republican heavy legislature of Utah is not usually an arena that would be considered friendly to a conversation about the need for a living wage. However, during the recently ended 2014 legislative session, HB 73 Living Wage Amendments were sponsored by Representative Lynn Hemingway. The bill would have increased minimum wage from $7.25 to $10.25 in Utah and mandated additional increases every two years tied to the Consumer Price Index. Representative Hemingway defined a living wage as one that “pulls people out of poverty.” While the last several bills regarding minimum wage increases have failed, this bill had a robust debate and has been returned to the Health and Human Services committee for additional study during interim.

The Utah Housing Coalition (UHC) was able to use Out of Reach data in several ways to further this conversation. First, when the sponsor introduced the bill, UHC approached him and asked if he was interested in numbers that would support the need for an increased wage. He was thrilled to have the numbers readily available to support his contention that Utah needs to adjust wages to make housing more attainable for a greater number of people. We handed him the Utah specific page of the Out of Reach report. He used the data from that page to craft his initial testimony on the bill.

Secondly, to add emphasis to his initial testimony, UHC prepared individualized reports for each committee member with regard to the numbers specific to their respective district. This data helped to drive home the point that there are those living on the edge of housing stability in their own districts. Tara Rollins, Executive Director of Utah Housing Coalition, explained, “The importance of pay in relation to the ability to maintain housing cannot be understated. We need wages that will allow people to pay for their housing and we need rents at a level that people can pay.”

With this session safely behind us, the Utah Housing Coalition will continue to share the Out of Reach data with legislators, and will be meeting with local and county elected officials to reinforce the data throughout the summer.

State-specific Out of Reach 2014 data can be found online at www.nlihc.org/oor/2014.

Twenty-five years after Out of Reach was first published, the housing crisis continues…

A week ago, NLIHC released its annual report, Out of Reach. Out of Reach 2014 provides extensive data on housing costs and wages for every state, county, and metropolitan area in the United States. Over the years, NLIHC has expanded and improved the Out of Reach report; however, the methodology remains the same. Here’s a review of some key definitions and figures used by Out of Reach:

AFFORDABILITY
What it means: The federally accepted standard of “affordable” housing is that which requires no more than 30% of the household income be spent on rent and utilities. Out of Reach uses this standard of affordability to determine the wages renters must earn to afford their local rent.

How to explain it:
Many Americans spend more than 30% of their income on housing costs. For some, this may be considered a short-term situation. However, for millions of low income Americans, spending more than 30% of their income on housing costs means serious housing instability as these households often live paycheck to paycheck.

When a household has to spend more than 30% of their income on rent and utilities, they are considered cost burdened. When a household has to spend more than 50% of their income on rent and utilities, they are considered severely cost burdened. Three out of every four extremely low income families are severely cost burdened, forcing them to make tough decisions on how to spend the little leftover income they have on food, transportation, medical costs, child care, and other important expenses.

FAIR MARKET RENT (FMR)
What it means: Simply put, Fair Market Rents (FMRs) are a standard measure of current housing costs across the country, using a consistent methodology. HUD estimates FMRs annually. They represent HUD’s best estimate of what a household seeking a modest rental unit in a short amount of time can expect to pay for rent and utilities in the current market. When calculating what incomes renters need to earn to afford rent, Out of Reach uses the Fair Market Rents.

HOUSING WAGE
What it means: How much must an individual earn hourly in order to afford a rental unit at FMR. The standard Housing Wage refers to a two-bedroom rental unit; however, Out of Reach also provides the Housing Wage for efficiencies up to 4-bedroom units in the state excel files. This figure is an average, available at the national level, state level, county level, and metropolitan area level.

How to use it: The 2014 two-bedroom national Housing Wage is $18.92. This figure varies considerably at state and local levels, so it is most effective to look up your county, metropolitan area, or state Housing Wage. You can compare this piece of data with what the average renter in that area actually earns, and what minimum wage workers earn.

While the Housing Wage can help your elected official understand the disparity between what renters in your community need to earn to afford rent and what they actually make, it is important to note that raising wages is an insufficient response to the problem. In every state, the Housing Wage is higher than the proposed raised federal minimum wage of $10.10. This disparity points to the extreme shortage of rental housing that is both affordable and available to low income renters. The strongest solution to the affordable housing crisis is an increased federal investment in affordable housing, which can be best achieved through the National Housing Trust Fund.

RENTER WAGE
What it means: How much does the average renter earn on an hourly basis. This wage is a mean calculation.

How to use it: Compare your state or local renter wage with your Housing Wage to demonstrate that the average renter cannot afford rent. It is important to note that because the renter wage is an average, many families face an even greater wage disparity.

HOURS AT MINIMUM WAGE NEEDED TO AFFORD RENT
ImageWhat it means: This one is pretty self-explanatory, which is why it has become one of the most popular data points from Out of Reach. This analysis is most widely recognized in its map form, which provides how many hours a minimum wage worker must work every week to afford a two-bedroom rental unit at Fair Market Rent. The calculations use the prevailing minimum wage (whichever is higher between the federal or state minimum wage).

How to use it: This Out of Reach analysis has been used by many to argue for increasing the federal minimum wage. In every state, this figure is greater than 40 hours per week, even when using the prevailing state minimum wage. This reveals that nowhere in America, can a full-time minimum wage worker afford a two-bedroom rental unit.

Learn more, and read the full Out of Reach 2014 report, at www.nlihc.org/oor/2014. Use the “View State Data” dropdown to access your state’s Out of Reach page. Click on the attached State Report (PDF) and State Data (Excel) to view and compare these and other data.

NEXT POST:
Barbara Stallone, Director of Policy and Public Relations for the Utah Housing Coalition, guest blog posts on how our state partner used Out of Reach data to advocate for an increased state minimum wage.

News Round-Up: Working Hardest for the Least Return

Low-wage work is often what’s available to many Americans. What happens when it doesn’t pay the bills?

In Hawaii, Governor Neil Abercrombie wants to increase the state’s minimum wage from $7.25 an hour to $8.75. According to Hawaii News Now, the governor introduced the proposal in his state of the state address, saying, “‘Minimum wage earners provide immediate infusion of dollars into the economy. Everyone is worthy of their labor. Industry and corporations do not lack for support in these halls. Neither should those who work the hardest for the least return.'” The article notes that Hawaii’s $31.68-per-hour housing wage means decent housing is out of reach for many workers in Hawaii’s service-driven economy. Many Hawaii residents interviewed for the article discuss the difficulty of getting by in their state, with one noting that having two or three jobs is the norm for many Hawaiians.

The situation can be particularly dire for the elderly. An article in The Nation profiles elderly homeless women in San Francisco and the inadequate social supports available to them. Skyrocketing rents, cuts to services and an aging population mean an increasing number of seniors spending their golden years in homeless shelters and on the streets.

 

News Round-Up: Sacred Cows

In housing news this week, we found encouraging signs that the conventional wisdom about housing policy might be changing, and continued concern that not enough is being done to end poverty and suffering in our nation.

CQ covers a new wrinkle in the tax debate raging in Washington: Willingness to let go of sacred cows. Both an NLIHC poll and a Pew poll indicate public support for modifying the mortgage interest deduction, and even the home builders are said to be open to a mortgage interest credit that would be helpful for first-time home buyers. NLIHC proposes converting the mortgage interest deduction into a 15% to 20% credit and capping it at interest on mortgages up to $500,000, and using the savings to fund the building and rehabilitation of affordable rental housing.

The Nation celebrated an anti-poverty Thanksgiving last week with reflections on the holiday from advocacy leaders and low income people. In her reflection, NLIHC President & CEO Sheila Crowley said, ” I will know that change has come when people are not sleeping outside on concrete in November two blocks from the White House.”

Finally, a column in Yes! Weekly explores the social cost of an economic and political system that requires minimum-wage workers to work 75 hours or more per week to be able to afford decent housing and other household expenses. The author suggests that other social ills could be the result if Americans cease to believe in the promise of the American dream.

News Round-Up: Closed

Waiting lists for housing assistance and restrictions against occupancy by those with bad rental records or criminal backgrounds make roadside motels one of the few housing options accessible to some extremely low income people. The closure of one such motel in Spokane, Wash. means about 50 such residents will be displaced. It’s not just these residents who are hurting. According to an NLIHC report cited in the article, over half of Spokane County residents pay more than 30% of their income for rent.

The closure of a nonprofit-run apartment complex in Durham, N.C. will result in homelessness for about 200 low income, elderly or disabled individuals, including children. Most of the residents are considered “working poor,” and the rents those households can afford to pay are simply not enough to cover the costs of operating and maintaining housing. Federal, state and local subsidies can fill the gap, but as advocates quoted in the article note, there are too few of those to go around.

In the Gaylord (Mich.) Herald-Times, an article notes that while the foreclosure crisis and tough economic conditions have made renting more appealing for many Americans, the truth in many communities is that renting is still out of reach for those making minimum wage. Services and funding for affordable housing development are scarce, but advocates quoted in the article urge those in need to come forward for help regardless.

It’s not just private or nonprofit housing that’s at risk of closing; public housing can disappear, too. In a report on the causes of homelessness experienced by women with children, Truthout notes that 10,000 units of U.S. public housing are lost to demolition or disposition each year. This means about 165,000 units of housing were lost between 1995 and 2010.

According to an opinion piece in the New York Times there are roughly the same number of assisted housing units now as there were in 2000, though the number of people living in poverty has grown by 14 million. The column’s authors, Yonah Freemark and Lawrence J. Vale, advocate NLIHC’s proposal to modify the mortgage interest deduction and use the savings from reform to fund the National Housing Trust Fund, as a fair and sensible solution to this problem.