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A Nation Engaged: Median incomes up in LA, but housing costs remain prohibitive




UCLA researchers say if we want cheaper housing, we’ll have to accept living a little closer to our neighbors.
UCLA researchers say if we want cheaper housing, we’ll have to accept living a little closer to our neighbors.
John Williams PHD/Flickr

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Los Angeles is one of the poorest cities in the country, according to the latest data from the US Census Bureau. 

While median household income is up about 3 percent to around $62,000 a year, but the city still lags when it comes to wage growth.

For a deeper look at the state of the economy in Los Angeles, Take Two spoke to two experts.

Guests

(Questions and answers have been edited for brevity and clarity.)

What does it mean to be middle class here in LA? 

Ross DeVol: We have very high housing costs here in Los Angeles, so being middle class here is a bit different than looking nationally and even other major metropolitan areas. 

The median family income is somewhere around $58,000. And so, typically, you'd say that's in the middle of the middle class. I'd say, in Los Angeles, the middle class really begins there. When you are below the median income level for a family, you have a very difficult time affording your rent. Most renters in Los Angeles pay more than 40 percent of their income for rental housing. 

I was doing some calculations, and in order to afford a two-bedroom apartment in Los Angeles, a person would have to be able to make $145,000 a year [to] only spend 30 percent of their income on rental housing.

LA Curbed keeps track of rent prices and shows you what you can get for your money. For $1100 you can choose between a studio apartment in Echo Park, a studio in East Hollywood,  and a studio in Koreatown.  Give me a brief history lesson — when did rent prices start to creep up so high?

Richard Green: It was about 40 years ago. In the mid-1970s, Southern California was affordable. And by that, I don't mean that it had cheaper than average rents or prices — it never has. But at that time, incomes were sufficiently high relative to the country. People could spend less of their income on housing than in most places and part of it was the composition of the jobs. 

We had, for example, the defense industry and the aerospace industry, which had lots and lots and lots of really good paying jobs. They were really important parts of the Southern California economy. 

You can think of a place like Burbank where you had somebody who was working on assembling jets, making a very decent living, and then a house that was a little more expensive than what they would find in, say,  St. Louis, but not a lot more expensive — they could afford it. 

Between the 70s and about 2000, while rents went up, they didn't go up that much, but you had incomes falling. And so the affordability problem was, I'd say until 2000, largely an income problem as opposed to a rent problem. 

Let's hear a voice from a listener who says that even though she works steady hours, she's still having a tough time making ends meet.

 

We just heard from Layla there. For people like her in the city, are conditions improving at all? 

Ross DeVol: They are improving, not nearly as rapidly as we'd like to see. 

We heard Layla spends a lot of her money each month on rent. Coming up in November, voters will cast their ballots on the Affordable Housing and Development Initiative. That would require developments of 10 units or more to set aside a percentage of them for low-income residents. Would something like this help people struggling in the city?

Richard Green: I'm skeptical. I think it's the sort of thing that people do when they're desperate to say that they're trying to do something, but it will produce very few affordable units. For the people who get in those affordable units, it will be great, but developers don't do things for free. And so they'll spread the cost of having those affordable units over the remaining units they built, and it will make the remainder more expensive. I think you need something far more comprehensive than a referendum like that to get at the problem. 

Looking ahead to the election, what else might have a significant influence on the economy here in Southern California? 

Ross DeVol: Well, we have to be concerned with what happens with the Trans-Pacific Partnership Trade Agreement. Hillary Clinton was in favor of it, but in the primary, when Bernie Sanders was surging, she basically said she doesn't support it any longer. And we know that Donald Trump has made clear statements that he does not support it. With Los Angeles-Long Beach, the largest port in the nation, it's not only exports that matter to our economy, but imports because a lot comes in from Asia, and there's a whole logistics infrastructure that supports that here. 

Press the blue play button above to hear the full interview. 

Series: A Nation Engaged

Much of the anger and anxiety in the 2016 election are fueled by the sense that economic opportunity is slipping away for many Americans. As part of our collaborative project with NPR called "A Nation Engaged," this week we're asking: What can be done to create economic opportunity for more Americans?

Read more in this series and let us know your thoughts in the comments section below or on Facebook.