One of the most challenging tasks for city dwellers, as the desire for urban living continues to grow, is to find affordable housing. For low-income to even moderate income workers, this has proved to be a daunting task. A recent report Out of Reach: The High Cost of Housing 2017, co-released by Housing Action Illinois in partnership with the Illinois National Low Income Housing Coalition, reveals that the housing wage for Chicago is $23.69, and for the rest of Illinois, more than $20.00.
The report provides the Housing Wage and other housing affordability data for every state, metropolitan area, combined non-metropolitan area, and county in the country.
Defined as the hourly wage a full-time worker has to earn to afford a modest rental home without spending more than 30% of their income on housing costs, this housing wage, startling as it may seem, faces another dilemma from the budget proposals, presented by the Trump administration. These would undercut much of the existing help in the form of housing subsidies, limited year to year increases, and the like, that could easily force some to homelessness.
As the report states: “to afford a one-bedroom home, a worker earning Illinois’ minimum wage ($8.25 per hour) must hold down more than two full-time jobs and work 85 hours per week. To afford a modest two-bedroom unit, a family with two minimum wage earners must work the equivalent of 2.5 full-time jobs, or 101 hours per week, between them.”
Perhaps the most disturbing aspect is that the authors found that “despite the cost of rental housing being out of reach for low-income households, President Trump’s federal budget proposal for next year includes deep cuts to rental assistance and programs that create affordable housing. Overall, the proposed budget allocates just $40.7 billion for HUD programs in Fiscal Year 2018—$7.4 billion (15 percent) below what was recently approved for Fiscal Year 2017.”
As if that were not enough, “the Center on Budget and Policy Priorities estimates that President Trump’s budget proposal would cut 10,734 housing vouchers, slash more than $107 million from our state’s public housing funding, and eliminate approximately $149 million in Community Development Block Grant (CDBG) funds and $40.5 million in HOME funds. Nationally, the proposal would also cut $133 million from homeless assistance grants and eliminate the National Housing Trust Fund.”
“The federal budget proposed by President Trump will increase the shortage of rental housing affordable to people with the lowest incomes,” says Bob Palmer, Policy Director for Housing Action Illinois. “People who can’t find an affordable home in the private market rely on federal funding for housing choice vouchers, public housing and other programs that make rent affordable. Parents with stable housing are in a much better position to make sure their children thrive in school and in life compared to parents who are struggling with homelessness."
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| Bob Palmer |
In a phone interview with Palmer, he expanded on this, and other aspects of the report findings, noting that “low wage workers, whether they are teens, or students, will not be able to afford current rents, until there is higher employment, and it will especially be hard with rents that are 30 percent higher than their income, unless there is an increase in the number of affordable places to rent, and [correspondingly] higher wages.”
According to Out of Reach 2017, the average cost of rent and utilities for a two-bedroom apartment in Illinois is $1,085 per month. In order to afford this without paying more than the standard of no more than 30% of income on housing, “a household must earn at least $43,406 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into a Housing Wage of $20.87.”
As he emphasized, “while the housing stock available depends on where it is located, some neighborhoods, like Logan Square and the South Loop have quickly rising housing costs, and after the foreclosure crisis, there has been a decrease in the housing supply. Now, there are, on the South and West sides, softer markets, but the area has also faced decreased incomes, that are 50 percent of resident income, that generally have lower rents compared to north side communities, there is a shortage of affordable rental housing for extremely low-income households.”
“Out of Reach finds that in no state, even those where the minimum wage has been set above the federal standard, can a minimum wage renter working a 40-hour work week afford a one-bedroom rental unit at the average Fair Market Rent.”
The change in the minimum wage, last week to $15.00 an hour, offers much needed relief to low wage workers, and effects over 2 million working Illinoisans (more than 40 percent of the state workforce are paid less than $15) and awaits the governor's signature. But, unless there is enough housing stock to meet the demand for affordable housing, as the housing wage figures show, it won’t be enough, says Palmer.
A recent story in the Chicago Reader detailed the history behind the absence, indeed the illegality of rent control in Chicago. It was created decades ago, to preserve profit margins, often labelling them counterproductive to American economic standards. The bill, titled “The Rent Control Preemption Act,” was passed in 1997. I asked Palmer how much an effect this might also have, since many housing subsidies designed to help low income people, might be labelled as such. He acknowledged that while “rent control is illegal in Illinois, passed many years ago, and has a negative effect on affordability, and the lack of an adequate supply, then more affordable units have to be built. There has to be a public role in creating enough housing.”
Support on the federal level has come from Rep. Keith Ellison, who notes in his preface that, “Rents are soaring in every state and community at that same time when most Americans haven’t seen enough of an increase in their paychecks. The result: more than 7 million extremely low income families do not have an affordable place to call home and half a million people are living on the street, in shelters, or in their cars on any given night. The human toll this places on families – through stress and job loss – are extraordinary and well documented.”
Continuing, he says that,”Despite the clear need, Congress has failed to address the affordable housing crisis in this country. Because of chronic underfunding, three out of every four families go without the housing assistance they need. Families wait for years on waiting lists before they see any assistance whatsoever. This is unacceptable. We can and must do better as a nation.”
As Palmer notes there is the much needed role of political will to move the needle on an issue that threatens the social fabric of the country. State Rep. Will Guzzardi (D-Chicago) has rallied a new bill to rescind the old law. While this represents a start, the effort still needs more of a push to change the situation, yet as the figures from the proposed Trump budget, show this will be a long haul.
Ellison concurs, but, also, states that “The most shameful part is the fact that we already have the resources and solutions needed to effectively end homelessness and housing poverty for millions of families. We just need the political will to do what is right. Each year, Congress spends about $200 billion to help house American families. A full three-fourths of these resources go to help subsidize the homes of the richest families through the mortgage interest deduction and other homeownership tax benefits. This means that we provide more housing assistance to help the richest 7 million households – who earn more than $200,000 a year – than to help the 55 million households that earn less than $50,000 each year, even though these families are far more likely to struggle to keep a roof over their head.”
To that effect, he has “put forward a plan to rebalance scarce housing resources to increase investment in proven solutions for those who need it most. The Common Sense Housing Investment Act (H.R. 948) reforms the mortgage interest deduction so that it better serves low- and moderate-income homeowners and reinvests the savings to help more families struggling to pay their rent. In fact, under my plan, 15 million more homeowners who currently do not benefit from the mortgage interest deduction will see a much-needed tax break. More than $241 billion will be reinvested to make rental homes affordable to people with the greatest needs.”
Ellison is part of the Progressive Congressional Caucus a group that also includes Illinois Reps. Luis Gutierrez, Danny Davis and Jan Schakowsky; and they have created a budget proposal, far different than the one by Trump, titled The People's Budget: A Roadmap for the Resistance FY 2018, and as Democrats, take a sharp turn away from the president’s proposal and issues a call to “Fully funds programs to make housing affordable and accessible for all Americans,” and “Invests $12.8 billion to end family homelessness.”
As just about everyone knows, by now, the state of Illinois has gone without a formal budget for two years, and now, while the House and Senate have passed their own versions, with the House not yet voting on the Senate version, there remains a discrepancy that affects affordable housing that the Coalition describes on its website: “The Senate Democrats did demonstrate a positive way forward by passing a budget that protects existing resources and generates new revenue. However, one budget line item in that proposal is particularly representative of the choices faced by our elected officials. In the Senate Democrat’s budget proposal for the upcoming year, FY 18, which passed on May 23, the Supportive Housing Services line item was funded at $13.4 million in General Revenue Funds (GRF). This is same amount of funding that was available in the last fiscal year with a full budget, FY 15."
"A version of the FY 18 budget—a compromise between Democrats and Republicans—that passed the Senate just a week earlier, May 17, provided only $3.8 million in GRF for the Supportive Housing Services line item. Such a huge cut would mean that thousands of people who need services to help maintain their housing would not receive those services and be at risk of homelessness," they state.
Working for an improvement in basic human needs, is not a privilege, to be granted, but a necessity for a just society; and the Out of Reach report is a first step in achieving that goal.
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