New report says minimum wage workers cannot afford modest housing

With all of the joyous news that greeted the May Jobs Report, from the Bureau of Labor and Statistics, and the much heard, phrase, of “this is a tight job market”, the issue of wages, or more accurately, wage stagnation, was often politely shoved aside to preach the good news of job growth.

There was only a slight increase in wage growth from the prior month, a gain to some eyes, from the previous moribund reports, it seemed a gainsay, for many economists, bankers and other spokespeople for the American financial industry. But, 2.7 percent wage growth seemed tepid, and with job growth coming in strong with lower skilled jobs, that require little more than a high school education, the economic base seems constructed on a new paradigm.

“This is the last shoe to drop in the labor market,” said Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years,” he told The New York Times.

Another facet  was that many of these jobs are entry level and many paying minimum wages, and despite liberal voices asking and, in some cases, demanding a guaranteed minimum hourly wage of $15 dollars, being able to find affordable housing, on that income has become a challenge.

In Illinois, the challenge has become even greater, than in previous years as “renters in Illinois must earn more than $20 per hour to afford a two-bedroom apartment,” stated a new report from Housing Action Illinois, the state chapter of a nationwide organization, the National Low Income Housing Coalition.

Starting July 1, there will be an increase in the new Chicago minimum wage to $12 per hour; and that's a 45 percent increase since 2015, according to Mayor Rahm Emanuel's office.

Currently, that wage is $11 per hour. According to the local ABC affiliate, “the increase is part of a plan to raise minimum wage in Chicago to $13 per hour by 2019.The mayor's office said about 367,000 workers will get a raise by July 1, 2019, as part of this plan.”

While many have lauded the good news from CIty Hall, the challenge to housing in Chicago is greater than ever and the report notes, that “In order to afford a modest, two-bedroom apartment in Illinois, renters need to earn $20.34 per hour. This is Illinois’ 2018 Housing Wage, revealed in Out of Reach 2018: The High Cost of Housing, a national report jointly released in Illinois by Chicago-based Housing Action Illinois and DC-based National Low Income Housing Coalition. This means that to afford a two-bedroom home without paying more than 30% of their income on housing costs, a person earning Illinois’ minimum wage ($8.25 per hour) must work 99 hours per week just to make ends meet,” they said in a statement heralding the bad news.

Looking even more closely, “a household must earn $3,525 monthly or $42,304 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into an hourly Housing Wage,” of the aforementioned, $20.34.the calculated cost for a modest two-bedroom apartment, it became obvious that the wage challenge proves to be nearly impossible to meet for minimum wage workers.

Going even further, we see that two-and-a-half of full-time jobs at minimum wage “are needed to afford a 2 -Bedroom Rental Home at Full Market Rate.”

“In Illinois, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,058. In order to afford this level of rent and utilities — without paying more than 30% of income on housing — For a modest one-bedroom apartment, at $8.25 an hour the prevailing state wage, it would take a worker 83 hours to meet the cost.”’ their research showed.

With the upcoming national mid-term elections getting closer and closer, both the  statewide and local elections, and especially, for mayoral and gubernatorial campaigns. The report authors make this point::

“Every legislator should be talking about the fact that nowhere in Illinois can a full-time minimum wage worker afford rent,” says Sharon Legenza, Executive Director of Housing Action Illinois. “And every candidate seeking an elected office should have a plan for how to change this. Housing should be a source of stability, not insecurity. Voters deserve to know how our elected officials intend to make sure that every one of their constituents has a good, affordable place to call home.”

“Out of Reach 2018 finds that average cost of rent and utilities for a two-bedroom apartment in Illinois is $1,058 per month. In order to afford this, a household must earn at least $42,304 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into a Housing Wage of $20.34,” they also noted..

With varying statewide rents, “there is no place in Illinois where a minimum wage worker can afford a two-bedroom apartment. Rental housing is the most expensive in Kendall County, where the Housing Wage is $23.56, followed by the Chicago metropolitan area, where the Housing Wage is $22.69. The lowest that the Housing Wage gets for an average two-bedroom apartment in Illinois is $12.88, which is still more than 1.5 times the minimum wage.”

The Chicago Metropolitan Area, with its glut of low-wage workers, often laboring in fast food restaurants, hotels and sanitation crews are the most inevitable workers that try to meet the challenge, And, in our interviews, most of them are trying for this Herculean task, by working two and even three jobs.

To say that this is a crisis, is an understatement, and statewide there 1,635,043 renters, reperesting 34 percent of the state as renters.

In October of last year, Sen. Dick Durbin’s office released some good news: “U.S. Senators Dick Durbin (D-IL) and Tammy Duckworth (D-IL) today announced that Northern Illinois communities will receive $3,880,550 in federal grant funding through three programs administered by the U.S. Department of Housing and Urban Development (HUD).  In total, Northern Illinois communities were awarded $2,957,019 through the Community Development Block Grants (CDBG) program, $182,521 through the Emergency Shelter Grants (ESG) program, and $741,010 through the HOME Investment Partnerships program.”

What is needed, is a targeted program to marry money with deliberate development to address the needs of minimum wage workers.
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Also helping to identify local and national lawmakers to press in this area, especially during the challenges of the Trump administration, and identifying and helping educate them on the issue would be of prime importance.

Increasing the vouchers and subsidies are essential , but how much could even the most modest bump help those workers in targeted areas across Chicago and Illinois, would be a necessary adjunct.

Pessimists suggest that the slim boost, in wages, about one percentage point above that of April suggest that this may be a no-win situation, for the present time.

Lastly, what efforts, if any, can those that are most affected by the need, do to let local and national lawmakers that they need to do more?

These and other questions were addressed to Housing Action Illinois, but by press time, there was no response, or from the office of Sen. Durbin.

For the full report go to: http://nlihc.org/sites/default/files/oor/OOR_2018.pdf