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Report Reveals Disturbing Gap Between Cost of Living and Actual Wages in L.A.
By Jennifer Bihm
Published October 18, 2018

A recent report by researchers at the USC Price Center for Social Innovation revealed that the city’s job market may not be sustainable under an ever-increasing affordable housing. (AP file photo)

The city’s fastest growing industries, including healthcare, food service and technical services are hurting, said researchers, because workers cannot afford to live in the L.A. area. High living costs are forcing longer commutes, making it harder to recruit and retain workers.

USC researchers partnered with the Los Angeles Business Council Institute for the report titled, “The Affordable Housing Crisis in Los Angeles: Impacts to LA’s Fastest Growing Companies.”

“Housing affordability is a significant concern for the Los Angeles workforce,” said Dr. Gary Painter, director of the USC Sol Price Center for Social Innovation and the newly created Homelessness Policy Research Institute.

“Commute times are increasing for homeowners who are unable to afford housing in the L.A. region, and housing costs are outpacing wage growth for renters. These conditions are especially burdensome for the region’s entry-level and low-wage workers.”

In July, the National Low Income Housing Coalition released a report that revealed Californians need to make a little over $30.00 an hour to afford to live in a two bedroom rental here. Those making minimum wage would have to work over 100 hours per week to afford that same rental. That would equal three minimum wage jobs, in order to not have to pay 30 percent of income on rent.

Key findings from the USC report showed that:

  • Between 2005 and 2015 homeownership rates decreased, and commute times increased for employees across all industries surveyed. Over the same time period, increases in housing costs far outpaced increases in renter wages, forcing households to face difficult tradeoffs in affording other necessities, such as food and healthcare. The burden is greatest for low-income employees, who increasingly face longer commutes and soaring housing costs, factors that can significantly impact one’s quality of life.

 

  • Firms in the Professional, Scientific and Technical Services industry were more successful attracting and retaining employees, while businesses in the Health Care and Social Assistance and Accommodation and Food industries report a wide consensus that the cost of living and housing harm their opportunities for employee attraction and retention. A possible explanation for the PSTS industry’s success with employee attraction and retention as compared to the other industries is that PSTS firms generally offer higher paying jobs to a skilled workforce and factor the cost of living into their hiring packages

 

  • Although most employers acknowledged that housing affordability affects employee recruitment, retention, and quality of life, the majority of employers surveyed had not taken any steps to directly assist employees with housing. More than half (61 percent) of all business respondents did not implement any programs to assist employees in reducing their financial burdens. Where employers did provide such programs, these included: homebuyer education, relocation reimbursement, mortgage assistance, and financial education.

(Courtesy photo)

The city’s booming tourism industry was used as an example in the report, showing that sector accounting for more than 525,000 local jobs, yet 69 percent of workers in this sector earn less than $25,000 annually. A similar situation exists in the field of home health aides they said, where the median annual wage is $22,600, forcing a large portion of these workers to live in poverty.

“This trend is extremely worrisome because there will be a breaking point for employees forced to choose between sky-high rents, substandard conditions or long commutes – and they are likely to pick getting out of L.A.,” said Mary Leslie, president of LABC.

“As a business community, we need to acknowledge that housing is not a siloed issue – it has a domino effect far beyond the housing market. To ensure continued success, employers should factor the cost of housing into their overall business strategy, in tandem with wages and traditional benefits,” added Erin Rank, president and CEO at Habitat for Humanity of Greater Los Angeles, “Frequently, employers are surprised to find that their employees have qualified to purchase a home through Habitat for Humanity. They are unaware their own employees and coworkers are struggling to find adequate and affordable housing. Through this report, we are encouraging businesses to have a conversation with their employees about the state of housing they experience in an effort to understand the basic needs of their workers and develop a plan of action.”

Some of the researchers’ and government recommendations included looking at housing as an overall business strategy, organizing business leaders to support and advocate for housing on all income levels and developing a coordinated approach to creating affordable housing with unconventional partnerships.

More than 18 employers representing over 84,000 employees participated in the study.

The report will officially be released on October 19 at the Los Angeles Business Council’s 17th Annual Mayoral Housing, Transportation and Jobs Summit, held at UCLA.

Categories: Economy | Local | News | News (Business) | Real Estate
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