MAKING SEN$E - Housing Shortage and Wages

"Why a severe housing shortage means reduced wages for workers" PBS NewsHour 6/23/2016

Excerpt

SUMMARY:  According to a new report, more than 40 million American households are spending a third of their income on rent, and housing shortages in major cities such as New York and San Francisco may ultimately lead to billions of dollars in lost economic productivity.  Special correspondent Duarte Geraldino reports on the origins of the problem and why it has progressed to such a drastic level.

HARI SREENIVASAN (NewsHour):  The cost of buying or renting a home in key American cities keeps on rising.  A new study out finds more than 40 million households are spending a third of their income on rent.

And the housing shortage in cities like New York, Washington and San Francisco may be costing more than 100 million American workers thousands of dollars in lost wages.

Special correspondent Duarte Geraldino explains why as part of our weekly series on Making Sen$e of financial news.

DUARTE GERALDINO (NewsHour):  You can hear so much in this old building, every sort of step.

BRIAN HANLON:  Yes, it's like every creak.

DUARTE GERALDINO:  Brian Hanlon has multiple graduate degrees, a steady job and a middle-class income.

BRIAN HANLON:  This is it right here.  It probably hasn't been renovated since the Eisenhower administration.

DUARTE GERALDINO:  Yet, at 34 years old, he's the subtenant of a woman lucky enough to have a rent-controlled apartment.  But Hanlon's time is running out.

BRIAN HANLON:  I have been in this room for about four-and-a-half years.

DUARTE GERALDINO:  Four-and-a-half years?

He worries the owner of his apartment house will offer the actual leaseholder a lot of money to move, meaning Hanlon will have to pay a lot more to live in this Mission District neighborhood.

BRIAN HANLON:  Well, so market rate for this place, I'm guessing, is probably — it would probably be about $5,000 a month.

DUARTE GERALDINO:  Five thousand dollars a month?

BRIAN HANLON:  A three-bedroom in the Mission?  Sure.

DUARTE GERALDINO:  The situation is forcing a growing number of people low-, medium-, and high-income workers into ever tighter living conditions; and some, with no income, out of their homes altogether.