New report says raising minimum wage won’t make housing in CA metro areas more affordable

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CALIFORNIA — The California Legislative Analyst’s Office (LAO) released a report, March 11, on California’s low-wage workers and minimum wage. They found that raising the minimum wage won’t make housing in CA metro areas more affordable.

Minimum wage has doubled

According to the report, over the last decade California’s minimum wage has doubled from $8 per hour to $16 per hour. The research analysts say these dollars-per-hour comparisons make California’s minimum wage seem high, but they are not necessarily meaningful.

The analyst used three benchmarks that they feel are more closely connected to minimum wage — a Policy to Address Poverty, a Policy to Address Inequality and Minimum Wage as Employment Policy.

They found that in the most basic sense, the statewide minimum wage is much higher than a “poverty wage.”

At the same time, the state’s high housing costs make it extremely difficult for many low-wage workers to make ends meet. 

Two worker, one child household face excessive housing costs

Based on state and federal laws, the analysts define housing as affordable if the rent falls below 30 percent of the household’s gross income. 

As shown in Figure 2, housing in California’s major metro areas and much of the Central Coast is unaffordable for minimum-wage workers in all seven types of households. 

For minimum-wage working households with two workers without children, housing in many rural counties and some mid-size metro areas is affordable. 

However, in eight coastal counties, a household of two minimum-wage workers and one child faces housing costs that exceed half of their gross income.

Chronic undersupply of housing

The report found that housing in California’s major metro areas is unaffordable even for workers with wages well above the minimum wage. 

“Without major changes in policies or market conditions that reverse California’s chronic undersupply of housing, raising the minimum wage would not make housing in these areas affordable for low-wage workers,” states the LAO report.

To read the full report visit: https://lao.ca.gov/Publications/Report/4878

RELATED: CA state officials report $58 billion revenue shortage over next two years

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