Friday, August 7, 2015

Rent – Not the Musical

The reflections of economic polarization across our country are staggering. The impact is far greater in the higher-cost urban areas, where the jobs usually congregate. Sure, you can make a fat wage in some of the fracking, oil/mineral extraction sites in the hinterlands… and oil prices will return to their prior levels to sustain those wages. But for the average American, the signs of unaffordability are everywhere. The average pick-up truck has seen price increases that average 30% (about $42K now) above prices just six years ago, housing prices are so expensive in too many cities and their suburbs that fewer and fewer Americans will ever own a home. Student loans are postponing all kinds of major life purchases… even marriages.
But the real killer, even among the employed and even with those who have come to terms with never owning their own home, is the accelerating increase in rents. My local Hollywood Patch (July 27th) tells us: “A study shows California workers must make $26.65 an hour to afford rent in the state, while the average renter's wage is $18.96.” OK, that’s California with the pricey Silicon Valley, San Francisco and Los Angeles.
Yet the problem rages all across the United States, with really hard and difficult numbers in Boston, NYC, DC, etc., etc. and the above California venues. “While the economy has improved and the unemployment rate has dropped in most states across the country, many people are still struggling to pay the bills, especially when it comes to rental housing, a National Low Income Housing Coalition study shows.
“The problem is that while jobs have increased, wages have not, forcing roughly 21 million working Americans to scrape by on a near minimum wage salary, according to the Pew Research Center. At the same time, rents keep rising because the demand for rental units has increased across the country as the home ownership rate has dropped to its lowest point since 1989. The result is that people are being priced out of the rental market, and it’s worse in California than most parts of the country, according to The Atlantic’s City Lab. In fact, only Hawaii and Washington, D.C. are tougher on renters.” Hollywood Patch.
Lots of folks are struggling with wages. With unions representing less than 7% of the private sector workers, it’s pretty much up to the government to protect wages. Republicans, where they can, won’t touch giving folks at the bottom of the ladder a wage hike because, according the mythology du jour, millions will lose their jobs. The above chart (from a July 23rd Pew report) can give you a pretty good example of exactly how meaningless our federal minimum wage rate is and how hard it has to be for so many workers to find a place to live. Here’s what they’re facing (according to that Pew report):
Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 (in 2014 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation. The Economist recently estimated that, given how rich the U.S. is and the pattern among other advanced economies in the Organization for Economic Cooperation and Development, ‘one would expect America…to pay a minimum wage around $12 an hour.’” Australia pegs its minimum wage at $18/hour.
Want to see what the rent picture is across the nation, and how those minimum wage folks (so many are forced to have lots of roommates or live with their parents) are faring… even folks making a whole lot more? Try this breakout of what the average worker has to earn to pay the average local rent (from the Hollywood Patch):

The highest wage needed for two bedroom rentals are all in the San Francisco Bay Area: Marin County $39.65, San Francisco County $39.65, San Mateo County $39.65, Santa Clara County $34.79 and Santa Cruz County $33.77. And a country where so many people cannot even rent an average apartment is a country where anger, frustration and hopelessness breed… and where the seeds of the fall of the United States are being sown in rich and fertile soil.
As increasing numbers of middle class families lose that status and fall down that economic ladder, as the bulk of America dwells in that nether region of “lower than middle class,” those at the top of the economic chain should probably do some serious reading on the lessons of history and proliferation of guns in an NRA-dominated society. Income inequality is a much, much, much bigger problem that most politicians are willing to tell you. But the consequences of letting this problem continue to spiral out of control are beyond dire for the long-term survivability of the United States of America… remaining united.
I’m Peter Dekom, and those who ignore all that is spinning obviously around them will get slammed by the lessons that history will enforce against them… sooner or later.

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