Housing Complex

Minimum Wage Hike Does Little to Make D.C. Housing Affordable

The loss of affordable housing at buildings like M Street NW's Mount Vernon Plaza makes it harder for minimum-wage earners to meet D.C.'s rising rents.

The loss of affordable housing at buildings like M Street NW's Mount Vernon Plaza makes it harder for minimum-wage earners to pay D.C.'s rising rents.

A report out today from the Urban Institute finds that while the higher minimum wage that's begun to take effect in the District will mean a boost in wages for more than 40,000 residents, many of those residents will see only a negligible rise in income, in many cases less than $500 a year. Meanwhile, the Coalition for Nonprofit Housing and Economic Development has published a different analysis that looks at housing costs rather than incomes but reaches essentially the same conclusion: The wage increase will help, but not enough to substantially boost the standard of living for many Washingtonians.

CNHED's numbers come from the National Low Income Housing Coalition, which prior to the first wage increase on July 1 calculated the number of hours a minimum-wage worker would need to work each week, for 52 weeks a year, to afford a two-bedroom apartment at fair market rent without spending more than 30 percent of his or her income. In D.C., the answer was 137, a near impossibility in a 168-hour week and higher than any state's figure except Maryland's 138. (Maryland has a lower minimum wage than the District, the federal minimum of $7.25, but a lower cost of living, as well.)

On July 1, however, D.C.'s minimum rose from $8.25 to $9.50, the first step in a gradual increase to $11.50 in July 2016, at which point wage changes will be tied to inflation. So how does that affect a minimum-wage earner's ability to afford a typical two-bedroom apartment in the District? Not much, NLIHC found: A resident earning $9.50 an hour would still have to work 119 hours a week. Alternatively, the household could have three members working a standard 40 hours a week, without any time off.

Mayor Vince Gray just released a statement responding to the Urban Institute study:

We commissioned the study to better understand the impact on District workers, families, and employment. We are gratified that the study concluded raising the minimum wage will provide at least a modest benefit to low-income workers and have a negligible impact on employment. However, with unemployment still intolerably high we must remain committed to growing our economy to create well-paying jobs for District residents and investing in affordable housing so all workers can afford to live in the city.

Clearly, more affordable housing and more high-wage jobs would help address the imbalance between high rents and low incomes in the District. But there might be more direct approaches. An expansion of the Earned Income Tax Credit, for instance, would likely do much more to boost poor families' incomes than a minimum wage hike, since under the current benefits system, higher earnings can mean the loss of these tax credits. It doesn't have quite the ring of a higher minimum wage, but it could actually go a lot further in achieving the purported goals of the wage increase. In its absence, the rising minimum wage is certainly helping a number of families, but for many of them it's not enough to get them over the substantial financial hurdles that exist in the increasingly populated, increasingly wealthy District.

Photo by Darrow Montgomery

  • mathwhiz

    Min wage workers don't need to be able to afford a "typical 2 BR" they need to be able to afford one of the cheapest (but decent) 2 BRs. Assuming they have a kid and only one income.

  • Commuter

    There are relatively affordable apartments in Virginia along Columbia Pike, south closer to Bailey's Crossroads. They are near jobs in Northern Virginia, and the 16-line buses also allow for bus commuting into the District.

    A Metro regional bus pass currently costs $17/week, which is $68 a month. I know this because this is how I, as a salaried civil servant, commute into the District. While I receive a federal transit subsidy, I would still pay the $68 out-of-pocket because it's cheaper than gas+parking at my job.

    I wonder if any "solutions" to the affordable housing "crisis" has been for low-earning households to move to areas with lower costs-of-living.

  • Commuter

    But as a Virginia resident, I have no objection to the District effectively paying its lower-earning residents to stay within the city.

  • mathwhiz

    actually its not "typical" its a HUD standard used for computing Section 8 payments. So that makes more sense, but my still err a tad high.

    Commuter

    Yes, that is the solution that the market is driving. Some issues with it

    A. It would result in less diverse District of Columbia, with all the poor living outside - thats a problem for some people - who value mixed income communities for a variety of reasons
    B. Moving the poor can mean breaking up social supports that matter - relatives or neighbors who can provide child care for a single mom, for example. Whether that is offset by a better environment in (at least some) suburbs is debatable
    C. Arlington is not immune to gentrification itself. ArlCo is losing affordable units, high rents for desirable market rate units push near-Yuppies down the value ladder. Its even happening on Columbia Pike though for now mostly on inner Columbia Pike. As the RB corridor builds out its like that gentrification will move further out though, whether or not the trolley is built. Additionally affordable units are going to be lost in West Alexandria. The best both jurisdictions can do is try to maintain the stock of affordable units, by tradind density for guarantees of affordable units. But there is not room for a major influx of additional low income folks. What is more likely to happen is poor folks moving a good bit further out, to FFX, MoCo, etc. The transportation problems, in terms of money and time for those who work in DC become more significant though.

  • SCBrown

    Isn't the EITC gotten at tax time? Not too many people can afford to wait 'til then. Plus, people look forward to the lump sum "award" and don't set it aside for daily living needs.

    Commuting has its drawbacks--namely a two-three hour time suck that when factored with the costs of the commute may not be all that.

    There have been numerous articles written about vacant lots, abandominiums and the like in EOTR & near EOTR. Solutions aren't comprehensive without addressing land use imho.

  • Typical DC BS

    Sorry, there is no right to live somewhere that you can't afford. If you believe otherwise, you need to realize Santa isn't real and your folks are the tooth fairy.

  • Brett

    I thought one of the tax provisions in the bill that passed last month was a doubling of DC's EITC?
    I'm not sure if people would value getting an additional amount at tax time versus spread out over the year (I think one time amounts have more psychological impact), but the EITC increase does seem like a logical correlate to increasing the minimum wage so that people making more won't have to end up paying more in taxes.
    In the end though, DC has got to build more housing if it hopes to meet the demand.

  • http://quitelikelyblog.wordpress.com Quite Likely

    People need to stop hyping the EITC. It is essentially a way for the government to subsidize businesses that pay their workers poverty wages, by having the government make up the additional amount a worker needs to get by. I'm fine with government redistribution of wealth, but why link it to employment? If people are going to be paid for work, the one paying them needs to be their employer.

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