The 'Affordable Housing' Bait and Switch, California Style
Redefining language to arrive at anti-market solutions to government-exacerbated problems
Scott Timberg, a journalist whose work I enjoy, has a much-discussed piece out in Los Angeles magazine about coming to the realization that prices and economic realities are squeezing him out of his beloved L.A. It's a personal essay about status-backsliding, so it may seem unsporting to use it as a jumping-off point to talk about related policy concerns, but there are important government failures contributing to Timberg's ennui that really deserve more attention than they typically receive from Southern California's political class.
The first has to do with one of the most abused phrases in the political lexicon, affordable housing. Sample from Timberg's essay:
For many of us in Los Angeles—a metropolitan area that 57 percent of Angelenos can't afford to live in, according to a recent study—this is a city from which we are constantly on the brink of slipping away. Average rent in L.A. is $2,550 for a two-bedroom apartment. In fact, the disparity between wages and market prices here is the worst in the country, nastier than in New York City or the Bay Area, and it's become the toughest American city in which to buy a house.
Bolding mine, to highlight what has become an absurd anti-tautology. Which is to say, on some basic level, if you live in a city, you can by definition afford to live in a city, because you are successfully, um, living in the city (that is, if you are still making rent or mortgage payments, and not sliding into bankruptcy or extreme indebtedness….Timberg's status on those fronts is vague aside from his ominous statement that "I lost my house in 2011"). You might be paying a disproportionate amount of your income on housing compared to people in other cities, and that's an important consideration (on which more below), but the word "affordable" in this case is a value judgment affixed by agenda-wielding outsiders to the individual choices of participants on the ground.
The source of that 57 percent "unaffordable" number is the Economic Policy Institute (EPI), whose lengthy presentation of the underlying data includes this verbiage:
Over the past several years, as congressional inaction has led to continued erosion in the purchasing power of the federal minimum wage, a substantial number of states and cities have enacted higher minimum-wage laws. These increases, while not eliminating the need for a higher national wage floor, do help to ensure that regular employment provides the means to achieve a decent quality of life. Cities, in particular, that have raised local minimums have often done so in explicit recognition that higher costs of living in those areas require higher wage standards so that workers there can still meet their basic needs.
This explicit advocacy does not mean EPI's data is suspect, but there's an agenda here, and a whole lot of assumptions and choices built into the research. For instance, while the group boasts of adjusting its EPI Family Budget Calculator to reflect the cost-of-living disparities "in over 600 specific U.S. communities," using the actual tool shows exactly one such community within L.A. County, the "Los Angeles-Long Beach CA HUD Metro FMR Area." Given that L.A. County has 88 municipalities and 10 million residents, and an immense geographical spread in average home listing prices—between $9,175,930 for Bel Air and $126,307 for Palmdale, with more than 100 different zip codes currently clocking in at under a half-million dollars—standardizing affordability conclusions across those 10 million individuals strikes me as less than fully sound.
You can get more tailored geographical income/housing data at the L.A. Times and Harvard's Joint Center for Housing Studies, both of which come to pretty grim conclusions about Southern California's priceyness. For instance,
Just about half (49.8 percent) of all households in metro LA spend more than the recommended 30 percent of income on rent or mortgage payments and more than a quarter (25.9 percent) are spending at least half their income
Bolding in original. That's certainly a big number, and part of the reason that Southern California's population is no longer growing, after more than a century of constant boom. But do those facts really merit headlines such as "Every Single Part of LA is Unaffordable at $13.25 an Hour," or (my favorite) "A full-time minimum-wage job won't get you a 1-bedroom apartment anywhere in America"? No, it doesn't. A full time minimum wage job in California nets you $1,440 a month; I just found a one-bedroom in Los Angeles on Apartments.com for $350, and I hear there are cheaper cities in the state. Also, the word "affordable" does not equal "costing less than the recommended 30 percent of income," no matter how many times people repeat that claim.
For instance, according to the authors of those headlines and studies, I could not "afford" to live in Los Angeles between 1998 and 2005, even with rents that never eclipsed $1,400. And yet, somehow, I did. At different stages of your life, you are willing to bet on spending higher percentages of your income for the privilege of living in an advantageous area, just as sometimes you will accept a low wage in exchange for near-term upside. A crucial part of those bets is the belief that more lucrative income opportunities lie just around the corner. Maybe, for example, you have heard of a little thing called the California Dream?
In my experience, the people most likely to expand the definition of "unaffordable housing" are maddeningly unable to tell you how many affordable units there are out there. They tend to, without any noticeable sense of self-awareness, have the most political clout precisely in polities that are the most expensive to live in. They are also the most likely to push for three specific proposals to address the situation: raising the minimum wage, stabilizing or controlling rents, and requiring real estate developers to build lower-income units in new buildings. Each of these are attempts to advance social policy by restricting the behavior of businesses, rather than removing governmental constraints on the private-sector supply of housing.
There are other policy failures contributing to the predicaments identified and lamented by Timberg. For example:
It's no surprise that when you have kids, making the pieces fit is especially difficult, as novelist Katharine Noel puts it. She wrote in a corner of her Los Feliz living room while her husband, Eric Puchner, also a writer, toiled in a corner of the bedroom. They spent four to six hours a week commuting to their teaching jobs in Claremont, concluding that they would not ever be able to buy in a decent school district for their two kids.
Bolding mine. The lack of quality Los Angeles Unified School District schools in neighborhoods more affordable than Los Feliz (where my wife and I, too, both worked at home in a small apartment) is an ongoing public-policy outrage, largely perpetuated by the existing political class (with some notable exceptions). Though it's also true that the type of people attracted to Los Feliz generally wouldn't be caught dead buying a house in the presumably better-schooled (and considerably more affordable) Claremont. At any rate, bad schools are a brake particularly on the lives of the children sentenced to them, and should inflame the passions of good citizens above and beyond their own neighborhood anxieties.
Underlying everything in both Timberg's piece and the wage/housing disparity he describes, is the economy:
Los Angeles and California were hit especially hard by the Great Recession, and the damage lingered longer than almost anywhere else. L.A. County's unemployment rate was up around 12 and 13 percent for years, and along the way hundreds of thousands dropped out of the labor force entirely.
Huh. And what, exactly, made California so different?
I wish Scott Timberg the best, and recommend his writing to future employers. And I hope California adopts policies that will make housing more affordable by explicitly rejecting the wishlist of its "affordable housing" advocates.