U.S. Senate Republicans torpedoed President Barack Obama’s proposal to raise the federal minimum wage this week. It was a disappointing 52-42 rejection of another Obama priority, but one consistent with the Republican strategy to oppose any of the president’s initiatives.
The president wanted to increase the current $7.25 per hour federal minimum rate to $10.10 per hour over the next 2.5 years. Obama argued that the gradual increase would lift millions of low-income families out of poverty. Republicans countered that business owners would layoff workers.
But how can America’s consumer-based economy prosper if a large sector of people spends most of its income on housing?
Even at Washington state’s minimum wage of $9.32 – the highest of all 50 states – a person in Olympia needs to work 58 hours per week to afford a decent studio apartment, according to a report produced by the National Low Income Housing coalition and Washington Low Income Housing Alliance.
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The report calculates metropolitan Thurston County’s housing wage at $14.81, or $5.49 above the state’s minimum wage. They call a housing wage what someone must earn to spend no more than 30 percent of their income on rent and utilities in a safe, modest home.
According to Thurston Thrives, there are 37,618 households in our county who are paying more than 50 percent of their income on housing, and another 53,943 households paying between 30 percent and 49 percent of their income on housing.
That means these households have little to spend on basic necessities, and – perhaps most significant – education.
Students used to be able to pay for their higher education by working low-wage, part-time jobs. But because of state cuts to higher education and rising tuition costs, that’s no longer possible.
This year, 32,000 low income students who were eligible for state financial assistance won’t get it, because the state can’t adequately fund it.
Thus, low wages and rising housing costs trap people in poverty and closes off avenues of upward mobility. In turn, that deepens the divide between rich and poor and keeps people from ever getting a foothold into the middle class.
Addressing the minimum wage issue requires unraveling a complex web of economic factors, including the shortage of affordable housing.
Fortunately, Washington is one of nine states with a Housing Trust Fund, established by previous Legislatures to fund the building of affordable rental homes.
Unfortunately, for the first time since 1996, the 2014 state Legislature didn’t pass a capital budget and made no investment in the Housing Trust Fund.
State lawmakers have a financial mountain to climb in the 2015 session to meet K-12 commitments, increase financial aid for people who need post-secondary education, pass a transportation revenue package and stop shifting costs to cities and counties, which are teetering on the brink of disaster.
In the absence of a significant increase in the minimum wage, funding the construction of affordable housing should be a high priority. Doing so will both stimulate job creation and sales tax revenue, and reduce the housing cost burden that keeps families trapped in poverty and frustration.