If a politician wants applause, saying Americans deserve a “living wage” will deliver. It’s a versatile political phrase, empty in meaning and depth, yet rarely questioned.
Rather than a “living wage,” which implies a higher minimum wage and more government benefits, politicians could have an impact by discussing the cost of living and how to make America affordable again.
Fixed costs, after all, have been impacting the wallets of Americans, not overspending on luxuries.
“The problem was the fixed costs, the things that are difficult to cut back on. Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s,” Helaine Olen wrote for Slate.
That trend won’t reverse soon, either. Health care spending has declined in recent years, but housing costs have climbed at a blistering pace.
Zoning laws, housing restrictions, regulations on how property can be used, and the recession that made many homeowners into renters have pushed up rental costs that border on crisis in some high-cost coastal cities.
“A decent two-bedroom rental today will cost you on average more than you could afford working full time on the local minimum wage everywhere in America,” according to The Washington Post.
Though very few workers earn the minimum wage, the increasing difficulty highlights the pain that the working poor and the middle class face in housing. City councils and state legislators have chosen to favor well-off older residents, keeping housing prices high and forcing millennials to flee to cheaper locales. In the short run, that wins re-elections, but in the long run, it harms anyone who wants to move or has to get by on a small paycheck.
The trouble is, lowering housing costs isn’t a policy with a magic fix that politicians can show off as a success. A minimum wage increase can get politicians votes from Republicans and Democrats, even if it causes layoffs or increases prices. Instituting rent control can preserve low prices for some, but leads to dramatic reductions in new housing units with wait times that can exceed 10 years. Regardless, politicians propose rent control or “rent freezes” as a tool to make housing affordable. Favored policies, such as vouchers and “build more affordable public housing,” have disappointing results in reality.
To lower housing costs, politicians will have to do what they hate — embrace change. Allow denser developments. Refuse to give in to neighbors who want to prevent more housing in their neighborhood because of naked self-interest, rather than legitimate citywide concerns. Repeal unnecessary regulations to make cities more attractive to developers. Lift restrictions on businesses that favor existing firms over new startups.
“The biggest constraint to adequate housing is land,” Babar Mumtaz noted.
Government rules that limited how landlords could rent, what sort of buildings developers could build, and the necessary permits and requirements in certain neighborhoods have exacerbated those cost issues.
In the short term, policies that result in lowering housing costs will be unpopular. The quickest fix for Americans struggling to pay rent will be to move to a cheaper city. Washington DC and Boston are much more expensive than Columbus, Ohio and San Antonio. Given the reluctance of politicians to embrace market principles, voting by moving could be the only way that prompts political change.
If cities want to remain vibrant and affordable in the long run, however, it’s a necessary change, and one that benefits those on the economic and political margins.
