DC Rents Way Out of Reach for Low-Income Households

We’ll learn next week what Mayor Gray plans to do about the affordable housing shortage in the District of Columbia.

We know he’s promised a one-time $100 million investment, but we’ll need his budget proposals to learn where the money would go — and if that’s all he’ll commit to.

The latest annual rental housing (un)affordability report from the National Low Income Housing Coalition provides a useful set of figures indicating needs in the District, as well as in each state and the nation as a whole.

If they don’t create a sense of urgency, I don’t know what will.

As I explained last year, NLIHC uses several set of figures — most of them drawn from federal sources — to arrive at what it calls a housing wage. This is the amount a renter would have to earn to afford a modest two-bedroom apartment, plus basic utilities in each jurisdiction.

The cost of the apartment is the U.S. Housing and Urban Development’s fair market rent estimate. The standard for affordability is the usual 30% of gross income.

NLIHC also does some calculations based on the applicable minimum wage — $8.25 in the District — and the average wage of renters in each jurisdiction.

Not surprisingly, the two-bedroom apartment is way out of reach for low-wage workers in the District — considerably further out of reach than for low-wage workers nationwide.

The same is apparently true for many other D.C. renters, since their average wage falls shorter as well.

Here first are the big picture numbers.

• A household would have to have earnings totaling $4,707 a month — $56,480 a year — to afford the two-bedroom apartment in the District.
• Assuming full-time, year round work, this translates into a housing wage of $27.15 an hour — a higher housing wage than for any state except Hawaii, though somewhat lower than for any of the top 10 metro areas, according to dcist .
• The average renter wage here is $102 less per month than what would make the apartment affordable — an annual shortfall of $1,224.

And now the truly bad news figures for low-income District residents.

• The two-bedroom apartment costs $607 a month more than would be affordable for an extremely low-income household, i.e., one whose income is at or below 30% of the median for the area.*
• The apartment costs $983 a month more than a full-time minimum wage worker can afford.
• So s/he would have to work 132 hours a week, every week to afford it — or live with three other full-time minimum wage workers and another working part-time.
• This is 28 hours a week more than what NLIHC calculates for minimum wage workers nationwide, though it uses the lower federal minimum for them.
• For residents who depend on Supplemental Security Income, the apartment costs a mind-blowing $1,199 more than would be affordable.

The story in the District is in many ways like the story NLIHC tells for the nation as a whole. The number of renter households has increased. Vacant apartments are scarce, creating the usual supply-demand pressure on costs.

But the supply side is also affected by the upscaling of once-affordable rental housing — and the fact that most new construction is also for fairly well-off households that, at least for now, prefer renting to owning.

This is how the free market works. It’s why we need public investments to create and preserve housing that’s affordable for low-income households.

And why we need vouchers that will enable others to live in market-rate units without spending more than half their income for rent, as nearly two-thirds of extremely low-income households in the District do.

The District has the revenues to make living in this high-cost city affordable for residents who haven’t shared in the prosperity those revenues indicate — that’s in fact made rents even less affordable for them.

It will have to choose to make ongoing commitments — and to target a very significant portion to its lowest-income residents who are homeless now or at high risk because they really can’t afford the rent they’re paying.

The Mayor says he’s worried that his One City will become “a city of only ‘haves’.” Let’s see what he does to make it more genuinely “inclusive” of the have-nots.

* According to the estimate NLIHC uses, this would be a maximum of $32,190.

DC Fails Homelessness Test

Speak for We blogger Michael Dahl recaps a bit of his experience as a long-time advocate for better homelessness and affordable housing policies in Minnesota.

Over the years, he says, homelessness advocates have given top priority to diverse strategies — prevention, supportive housing, rapid re-housing, etc.

He sees a consistent thread in three elements. They aren’t actually common elements in the strategies, however. They’re questions that policymakers and other stakeholders should ask when they decide what their community needs by way of a homelessness system.

They’re painfully apt here in the District of Columbia as the DC Council considers the Mayor’s proposed Fiscal Year 2013 budget.

So here they are (with some minor edits):

• Do we have enough affordable housing?
• Do we have jobs in the community that pay for housing here?
• Do the supports that we rely on when we fall on hard times, e.g., a job loss, poor health, work for our lowest income residents?

These components, Dahl says, “provide stability and a pretty sturdy safety net.” If they’re all in place, the number of homeless people will be small, and the time they spend homeless will usually be short.

If they’re not in place, then “you need a homeless system to pick up the slack.”

Well, the District surely doesn’t have enough affordable housing.

The DC Fiscal Policy Institute took a close look at the situation two years ago. It found that the market had lost 23,700 low-cost rental units between 2000 and 2007 — more than a third of the stock.

Two in every five households were spending more for housing than they could afford, based on the standard 30% of income. Nearly three in five of poor and near-poor households paid at least half their income for a roof over their heads.

We’ve good reasons to believe that the situation has gotten worse. Rental costs have risen. More affordable units have been converted to upscale rentals or condos. More may have fallen into such disrepair as to be uninhabitable — victims of a combination of forces, including the recession.

The Housing Production Trust Fund — the District’s main tool for supporting affordable housing development and preservation — suffered losses when property sales slowed and prices dropped.

Then the Fund was raided to shore up the Local Rent Supplement Program — the District’s locally-funded voucher program. And now the Mayor proposes another raid, leaving the Fund with enough to support only 170 new units next year.

This second fund shift to LRSP would cover the projected costs of all existing vouchers, but no additional vouchers for people who are homeless — or may become homeless in months to come.

Whether the District will be able to renew all federally-funded vouchers is anybody’s guess.

The District does have jobs that pay for local housing, but not nearly all residents have them.

The local unemployment rate seems stuck at 9.8% — and that’s only residents who are actively looking for work. The latest rates for Wards 7 and 8 are 16.3% and 24.3%.

The average income of the poorest fifth of D.C. households was just $9,100 in 2010 — about $4,770 less than the annual rental cost of a modest efficiency unit then.

Even if the District prepares more residents for living wage jobs — and cracks down on enforcement of its living wage law — housing will remain unaffordable for a substantial number of workers.

At the current living wage rate, they’d have to pay more than half their income for rent on that efficiency, assuming they work full-time, year round.

Our safety net is far from sturdy for our lowest income residents.

They can get health care through Medicaid or the DC HealthCare Alliance, though those in the latter might lose essential services if the Council goes along with the Mayor’s savings plan.

Unemployment benefits are available for some, though far from all residents who lose their jobs. But they’ll be cut off sooner due to changes in federal law.

For families with children, we have the Temporary Assistance for Needy Families Program. But cash benefits are way too low to cover the cost of unsubsidized housing. The maximum cash benefit for a family of three — currently $428 a month — is less than 37% of what the efficiency unit costs.

This is true, however, only for a family that’s been in the program for less than 60 months. For a family that’s been in longer, the benefit is only $257 a month. And the Mayor’s proposed budget would reinstate further cuts that the Council wisely deferred last year.

So it would seem that we truly do need a robust homeless services program. Under the Mayor’s budget, it would have $7 million less than last year.

And it already lacks funds to provide homeless families with shelter or other housing now that the winter season is officially over.

In short, the District fails Dahl’s test on both counts. Not enough stability or safety net support. Not enough in homeless services to pick up the slack either.

Why Homeless People Aren’t Working … Or Working And Homeless Anyway

The tool I use to produce this blog provides some interesting stats — among them, my most-viewed posts. I note, with interest, that an old post makes the top-viewed list almost every week.

It’s entitled “Why Don’t Homeless People Just Get a Job?” Are people actually asking this, I wonder.

At the time I wrote, the recession was in full swing. Now it’s officially 29 months behind us. Yet we’re facing a big jobs crisis.

Not Enough Jobs

The unemployment rate is higher — stuck at about 9%. The number of jobless people actively looking has increased from 13.2 million to nearly 13.9 million.

And the economy has shed about 1.3 million more jobs. It would need to create more than 11 million to bring the unemployment rate back down to when the recession set in.

So one reason homeless people don’t get jobs is the same as the reason millions of housed people don’t. There just aren’t enough jobs out there.

But, of course, it’s not that simple.

Challenges to Getting the Jobs Out There

The very fact of homelessness makes work searches more challenging. Blogger Steve Samra — the source for my original post — speaks from first-hand experience about these.

But, as with the current job shortage, the biggest challenges, I think, aren’t unique to homeless people. They have to do with the reason people are homeless to begin with, i.e., not enough income to pay for a roof over their heads.

For some, there are barriers to gaining — and maintaining — employment of any kind. These include mental and physical health problems, substance abuse and other severe disabilities.

For those not too disabled to work, finding a job and then going to it may cost more than they can pay.

There are up-front and ongoing transportation costs. For some, also formidable child care costs and/or the also formidable costs of home care services for disabled family members who can’t get them through Medicaid.

And then there’s the big issue of job requirements.

Many communities have passed laws to clear homeless people off the streets — possibly away altogether. So homeless job seekers may have criminal records for loitering, storing belongings on public property, etc.

The National Employment Law Project reports that many employers are running criminal background checks to screen out applicants — even for entry-level jobs that involve negligible security risks. Others post job announcements that pre-screen.

And now applicants are being screened out because of bad credit records — an ironic Catch-22 for people who are trying to get work that will enable them to pay their bills.

Last but certainly not least is the issue of education credentials.

The monthly Bureau of Labor Statistics reports consistently show the highest unemployment rates for adult job seekers with less than a high school diploma or GED. Rates drop at each education level — down to a current 4.4% for those with a bachelors degree or higher.

We read that college graduates are accepting jobs as wait staff, truck drivers, sales clerks and the like. That’s tough competition for those who traditionally fill these jobs.

Working, But Still Homeless

Yet some fraction of homeless people are working. No national figure. So a little back-of-the-envelope from my hometown.

According to last January’s homeless count, 38% of homeless adults in families and 20% of single adults in the Washington, D.C. metro area were working.

No way of knowing how many of them were working full time or at what. We do know, however, that a full-time minimum wage job in the District, where the hourly rate is $1 higher than the federal minimum, would yield an annual take-home income of a little under $16,440.*

Rent on a modest one-bedroom apartment, including basic utilities would leave the worker with about $44.00 per month for all other expenses — less than the costs of bus fare to and home from a five-day a week job.

In short, we’ve got a complex of policy issues here — jobs, income supports, anti-homelessness laws, hiring practices, education, affordable housing and a minimum wage that’s worth less than it was 40 years ago.

There, Googlers. Aren’t you glad you asked? I am.

* This reflects deductions for Social Security and Medicare payroll taxes at the current reduced rate, but not what might be withheld for income taxes.

DC Rental Costs Far Out Of Reach For Low-Income Households

Seems this is affordable housing month for my blog. Because I could hardly pass up the National Low Income Housing Coalition’s new figures. These show, in detail, how far out of reach affordable rental housing is for low-income households in the District and nationwide.

NLIHC slices and dices figures in various ways — all based on the U.S. Department of Housing and Urban Development’s annual fair market rents, i.e., the average costs of modest rental units, with basic utilities in every metropolitan area in the country.

The affordable standard also comes from HUD — 30% of gross household income. As you probably know, this is the standard commonly used by policymakers, analysts and advocates.

HUD is the prime source for the estimated area median income as well, though NLIHC had to do some calculations of its own to come up with current averages.

Both the FMRs and the AMI are somewhat crude tools for the District because it’s part of a metropolitan area that also includes nearby parts of Maryland and Virginia. This skews the AMI — and thus affordability estimates — upward.

That said, here are some of the key NLIHC (un)affordability indicators for low and not-so-low-income District renters.

• A household would have to have an income of $58,440 a year to afford a two-bedroom apartment at the FMR rate.
• This translates into a wage income of $28.10 an hour, assuming full-time, year-round employment — $4.68 more per hour than the estimated average hourly wage in the area.
• The cost of the apartment is 153% of what a household earning the estimated average income for area renters could afford.
• It’s unaffordable for 68% of D.C. renter households. That’s more than 93,600 renter households with excess rental burdens — well over a third of all households in the District.
• A full-time minimum wage worker would have to put in 136 hours per week to afford the apartment — or share the apartment with another full-time minimum wage worker and a third working part-time.
• The monthly rent on the apartment is $678 more per month than a household with an income at 30% of the AMI could afford.
• Even a household with an income at 50% of AMI would be short $157 a month.
• For someone dependent on Supplemental Security Income, even a studio apartment at the FMR rate is well out of reach — about one and two-thirds times the total SSI stipend.

One of the reasons to welcome these dismal figures is that they’re the latest in an annual series. They thus provide a barometer for the worsening housing affordability crisis that’s afflicting the District — and a large majority of other communities nationwide.

On the other hand, we’ve had more than enough figures to tell us that rental costs are threatening the well-being of low-income households — and from a number of sources too.

It’s lack of political will, not ignorance that’s allowing this problem to fester.