Chances are that a majority of Business Journal readers aren’t struggling to pay their rent each month. But let us be clear. Every member of the L.A. business community should be greatly concerned about the lack of affordable homes in Los Angeles. If you’re not, then you’re ignoring a major hindrance to your ability to be competitive in a global marketplace.
In Los Angeles, the nation’s second largest city, more than 60 percent of our residents – roughly 2.4 million people – are renters. Over the past 20 years, the amount this group has paid in rent each month has increased 30 percent. The same group’s income increased only slightly, if at all, over that period.
This imbalance isn’t just an issue affecting single-parent households or people who have lost their jobs. It affects a vast majority of our friends, neighbors and employees. It impacts educated, employed residents working in the city’s biggest industries: banking and finance, manufacturing, construction, entertainment, fashion and education.
According to RentJungle.com, the average rent in March in Los Angeles was about $1,550 a month. If affordability is defined as costing no more than 30 percent of your monthly pretax income, this rent level is affordable to a family earning $62,000 per year, or roughly $30 an hour with a 40-hour workweek.
Who does this work for? Well, according to the Bureau of Labor Statistics, this rent level is fine for computer programmers, architects, lawyers, finance types, senior managers and doctors. Who does it not work for? Health care support, food preparers, office and administrative support, building and grounds maintenance staff, retail sales clerks, and many teachers, police officers and manufacturing technicians. In short, this is a problem for much of the supportive backbone of our economy and broader communities.
Housing is a key necessity that allows the region to continue to grow and thrive. When it’s not affordable, it prevents families from taking full advantage of the opportunities our region offers, thereby placing stress on workers and employers alike. If employers cannot attract a skilled workforce, then our city cannot continue on a path of steady economic growth. One only needs to drive two hours north on the 101 to see how this crisis can unfold. According to the Department of Housing and Urban Development, between 2000 and 2011, Santa Barbara saw an average of about 750 more people move out than move in each year. High housing prices played a big role in this.