Today the Los Angeles City Council voted to raise the city's minimum wage from $9 an hour to $10.50, then to $12, then to $13.25, then to $14.25, and finally to $15 in the year 2020, over the loud protests of business owners who insisted that it would be difficult for them to turn a profit without exploiting their workers. (Musso & Frank's CFO offered the confusing explanation that "These guys are my family" as the reason he did not want to be compelled to pay his employees a living wage.) This is a good thing—higher minimum wages will bring a lot of working people out of poverty, where they never should have been in the first place, and make it easier for them to continue living in Los Angeles. But it won't make it easy. Technically, it won't even make it possible.
Assuming a person earning $15 an hour is also working 40 a week, which is rare for a minimum wage employee, and that they're not taking any days off (the City Council considered bundling paid days off with the wage hike, but scrapped the idea), they'd be earning $31,200 a year. An Economic Policy Institute study released in March found that a single, childless person living in Los Angeles has to make $34,324 a year just to live in decent conditions (and that was using data from 2013). A household with one parent and one kid would need to be bringing in $60,600, and it just goes up from there. A childless couple is the exception here: they only need to make $46,750 combined, which would be possible in our imaginary minimum wage scenario.
But let's look at just housing alone and where a person making $15 an hour might be able to live in Los Angeles. We first performed this wildly imprecise thought experiment last fall, when the city was considering raising the minimum wage to $13.25 (it'll get there on July 1, 2018, actually)—assuming full-time employment and no vacations, and using the LA Times's income/housing cost mapping tool, we found it was pretty much impossible to rent, let alone buy, on that kind of money.
Now we're looking at how an Angeleno might do on $15. We're going to have to suspend a fair amount of disbelief here: we're looking at housing prices and median incomes from 2014 and 2015, while the $15 wages won't go into effect until 2020. (Where will housing prices be then? Up, probably?) We're also making all those assumptions about hours and vacation days. Finally, the LA Times map considers rents on two-bedroom apartments, so a person without a family would have an easier time. In most cases, we've assumed a down payment of $97,000, which is 20 percent of the April median home price of $485,000.
↑ As you can see here, there is not a single place in the city of Los Angeles that is affordable on $31,200 a year for a person paying only the recommended third of their income toward housing costs.
↑ If a person making our fantasy version of the minimum wage paid a full half of their income toward rent, they'd be able to afford to rent in some outlying areas of LA.
↑ Renting just outside the city would not be unreasonable for two people both making the fantasy minimum wage. It might even be possible to buy in some small pockets.
↑ This map shows what's affordable for a household earning the median income of $49,497 and paying the recommended 30 percent toward housing. Los Angeles proper is unaffordable; in a few surrounding areas, it's possible to rent.
↑ Here's affordability for a person earning the median income but paying the 43 percent of their income that buyers actually have to devote in Los Angeles.
↑ Ok, and this is for the people who are doing well, making twice the median household income and with enough savings to lay down $200k for a down payment. They should blow it on a boat, probably, because it's still mostly cheaper to rent in Los Angeles, in the places where it's affordable to live at all.
Los Angeles has the largest disconnect in the US between wages (which have been going down) and housing prices (going up); the city has finally started to address the wage part of that equation, and lately the mayor has even been making noise about a construction push to deal with the second part. Come 2020, maybe these maps will look ridiculously dire. Maybe they'll look too rosy. Or maybe Los Angeles will be a post-apocalyptic wasteland where the formerly rich and poor are all equals in the battle for the few precious resources left. Who knows!
· Every Single Part of LA is Unaffordable on $13.25 an Hour [Curbed LA]
· 57 Percent of People Living in Los Angeles Can't Afford to Live in Los Angeles [Curbed LA]
· Los Angeles Has the Biggest Disconnect in the US Between Wages and Rents [Curbed LA]
· How Much Does Los Angeles Have to Build to Get Out of Its Housing Crisis? [Curbed LA]
· Los Angeles's Big Plan For Pulling Out of Its Housing Crisis [Curbed LA]
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