When it comes to Atlanta’s housing woes, should we mind the wage gap?
by Darin Givens | October 20, 2017
Atlanta leads the nation in a couple of unfortunate ways: income inequality and rent-burdened households. But it’s also booming with high-income tech jobs. Could increased wages even things out?
Atlanta’s gap in wages and wealth is real, it’s quantifiable and it’s distinct. For a sense of how distinct, consider San Francisco. We read a lot about that city’s housing affordability problems, but California has a minimum wage of $10.50 per hour, higher than the federal minimum of $7.25 that Georgia uses. So the formula for what’s affordable or what’s a cost burden is going to be very different between SF and Atlanta.
It’s difficult to make an apples-to-apples comparisons between cities and their efforts to combat housing insecurity, cost burdens, and displacement.
And yet it’s worth considering that, like San Francisco, Atlanta is building a big supply of high-tech jobs. We’re even a top contender for the Amazon HQ2 according to news reports. Those tech jobs come with big salaries and the people who draw those salaries expect luxury-level intown housing, contrasting sharply with the incomes of Atlantans on the lowest end of the job spectrum. This is part of what creates two Atlantas, separated by economy and geography.
What role does the wage gap play in housing?
Atlanta is dealing with a San Francisco job market in a state that has a base-level minimum wage. There may be no other city in the US with that type of disparity between haves and have nots, both seeking intown housing. Could raising the state’s minimum wage help? I asked Wesley Tharpe, Research Director at the Georgia Budget and Policy Institute.
“Boosting Georgia’s minimum wage can definitely help reduce inequality, both in Atlanta and statewide,” says Tharpe. “In the short term a higher wage standard puts more money in workers’ pockets, so families are better able to afford the basics like a decent place to live or a reliable car or transit pass to get to work. Higher wages also help reduce inequality over the long run, because some workers will use additional pay for things that smooth their families’ path to the middle class like job training or moving to a neighborhood with better schools.”
That prognosis looks good in terms of what higher wages on the bottom end could do. Yes, it’s true that we should keep in mind that higher minimum wage would not eliminate the need for housing subsidies and local fixes for affordability. But at least one study found that it could play an important role in reducing the number of cost-burdened households. Another study found that “wages grew more for low-wage workers in states that raised their minimum wage in 2015,” which sounds encouraging when it comes to narrowing the gap. And yet a third study found that a full-time, minimum-wage worker can afford a one-bedroom rental home in only 12 counties in the US, all of which are states that have a minimum wage higher than the federal level.
With the gravity of the problem, we need to know the best ways to address the housing-cost burden
Given all that research pointing to positive results, if there’s a chance that improving wages could help with the housing problems, should we take it? Things seem pretty dire. A Brookings report released this year found that Atlanta leads the nation in income inequality, with top household incomes in that city nearly 20 times those near the bottom.
And while Atlanta is attracting jobs and growing its population — positive economic signs — it’s also losing affordable housing units and gaining rent-burdened households. From 2000–2014, Atlanta experienced one of the highest increases in “rent burdened” households (those paying more than 30 percent of their incomes for rent) in the US, according to census data. During that same period, the overall supply of low-cost rental housing units in Atlanta declined by a total of 4,826.
With so much at stake, do we need to push for higher wages quickly? Dan Immergluck at GSU’s Andrew Young School of Policy Studies warns that there could be economic repercussions, and that other policies might be more fruitful in terms of alleviating the housing-cost burden that weighs on so many Atlantans.
“Raising the state minimum wage over the federal, as some states do, would help with housing cost burden to some extent,” said Immergluck when I asked him about it recently. “However, housing costs react to income increases. As incomes grow, owners are able to raise rents (which increases residential land values creating a spiral). This is one reason why some argue that a guaranteed income wouldn’t solve (but might lessen) the housing cost problem in desirable places. And then there is viability. [You’ve got a] better chance of getting state support for affordable housing here than raising minimum wage.”
Putting some skin in the game
It looks clear that we need to experiment with a wide range of tools when it comes to housing burdens. And it has to include more than just requiring developers to produce affordable housing through Inclusionary Zoning mandates like the one that’s currently being proposed (which requires developers to include a certain number of affordable units in new multifamily projects), and more than the anti-displacement fund that’s using private money to offset property-tax increases.
The city may need to put some skin in the game when it comes to funding initiatives that alleviate the cost-burden gap with housing, rather than relying entirely on private donors and developers. We can devote millions of dollars of public money to build a gleaming-tapeworm of a pedestrian bridge at Mercedes-Benz stadium, so isn’t it strange that we leave it to the Beltline and the market and private donors when it comes to providing affordable housing?
Subsidized housing, accessory dwelling units, inclusionary zoning, structurally affordable housing, market rate housing that is also affordable, Invest Atlanta funding for affordable housing — all of these and more can be employed in our efforts. Looking to the state for help with wages and affordable housing could be a useful thing within that range of tools.
