Life today is harder for the average American family than it was 35 years ago. Despite increases in productivity, falling poverty rates and higher levels of education, families are working more hours, earning less and paying more to simply keep a roof over their heads. Families that used to be poor are now homeless.
10:5:4 This is not a bible citation, a hidden message on a Dr. Pepper bottle or a bicycle lock combination. This ratio tells the simple story of what's wrong with the American economy.
10 The number of times the cost of a new home in the United States increased from 1970 to 2005.
5 The number of times U.S. household income grew in the same time period.
4 The number of times the U.S. minimum wage increased in these 35 years.
In 1970, the median priced new home cost $23,400; the median income was $8,734; and minimum wage was $1.45 per hour.
In 2005, a new home cost $237,300; the estimated median income was $45,836; and the minimum wage was $5.25 per hour.
So, while incomes have gone up, they haven't kept pace with the cost of housing. This means a family must spend a greater percentage of its paycheck in order to put a roof over its head. As a consequence, they have far less money for other necessities.
Of course, in places like Los Angeles, New York, San Francisco, Chicago, or Seattle, where housing costs are two or more times the national average, the situation is far more extreme.
In Los Angeles County, the median priced home costs more than $500,000, an astonishing 20 times the price of a California home in 1970. In the infamous 90210 ZIP code, it's $1.8 million. Even in poor communities, buying a house is out of reach for most middle class families. In Compton, the median single family home costs $390,000; in Boyle Heights it's $388,000.
Meanwhile, Los Angeles' estimated median household income grew by a smaller amount than the nation's.
So, if families can't afford to buy a home, they rent an apartment. However, Los Angeles renters face a median month rent that hovers above $1,500. Hold this rent up against the salaries of working Angelenos. Look at the men and women who we entrust with our lives and our children's well being, such as childcare workers ($1,756 a month); and paramedics ($2,313 a month). Put yourself in the shoes of the people who keep Los Angeles a vibrant, livable and good-looking community waiters who earn $1,450 a month, housekeepers who earn $1,653 a month, or hair stylists who earn $1,907 a month. These workers barely manage to hang on to an apartment and pray that they don't get sick, face an emergency or lose their jobs.
Any way you look at it, life is simply more expensive for most American families, with Los Angeles households particularly hard hit. Is it any surprise that U.S. households are saving less and less money? Savings rates have reached record lows, unmatched since 1933. And today, credit card and other consumer debt amounts to over $7,000 for every man, women and child in the United States.
For poor people, it's far worse. Minimum wage grew at a slower rate than median income. A minimum wage salary that allowed a person to scrape by three decades ago no longer suffices to keep a family or single individual in housing. And although California has adopted a higher minimum wage ($6.75 an hour) than the nation, a full time minimum wage worker in Los Angeles still only earns just over $1,100 per month, before withholding.
This all means that in Los Angeles, the "simple ratio" is 20:5:5.
Thirty-five years ago, families struggled to escape slum housing. Today they struggle to get into it. Is it any wonder that widespread homelessness is now common in most American cities and that Los Angeles has been tragically dubbed the homeless capital of the United States?
Falling poverty rates, increased productivity, trumpeted job creation and other sunny economic statistics simply don't pass the "smell" test for the average American household. Most Americans know they're paying more for housing and have less money in their pocket.
Paul Tepper is executive director of the Weingart Development Corp. in Los
Angeles, which develops affordable housing. He is the former director of the Institute for the Study of Homelessness and Poverty.
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