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A report out today from the Urban Institute finds that while the higher minimum wage that’s begun to take effect in the District will mean a boost in wages for more than 40,000 residents, many of those residents will see only a negligible rise in income, in many cases less than $500 a year. Meanwhile, the Coalition for Nonprofit Housing and Economic Development has published a different analysis that looks at housing costs rather than incomes but reaches essentially the same conclusion: The wage increase will help, but not enough to substantially boost the standard of living for many Washingtonians.
CNHED’s numbers come from the National Low Income Housing Coalition, which prior to the first wage increase on July 1 calculated the number of hours a minimum-wage worker would need to work each week, for 52 weeks a year, to afford a two-bedroom apartment at fair market rent without spending more than 30 percent of his or her income. In D.C., the answer was 137, a near impossibility in a 168-hour week and higher than any state’s figure except Maryland’s 138. (Maryland has a lower minimum wage than the District, the federal minimum of $7.25, but a lower cost of living, as well.)
On July 1, however, D.C.’s minimum rose from $8.25 to $9.50, the first step in a gradual increase to $11.50 in July 2016, at which point wage changes will be tied to inflation. So how does that affect a minimum-wage earner’s ability to afford a typical two-bedroom apartment in the District? Not much, NLIHC found: A resident earning $9.50 an hour would still have to work 119 hours a week. Alternatively, the household could have three members working a standard 40 hours a week, without any time off.
Mayor Vince Gray just released a statement responding to the Urban Institute study:
We commissioned the study to better understand the impact on District workers, families, and employment. We are gratified that the study concluded raising the minimum wage will provide at least a modest benefit to low-income workers and have a negligible impact on employment. However, with unemployment still intolerably high we must remain committed to growing our economy to create well-paying jobs for District residents and investing in affordable housing so all workers can afford to live in the city.
Clearly, more affordable housing and more high-wage jobs would help address the imbalance between high rents and low incomes in the District. But there might be more direct approaches. An expansion of the Earned Income Tax Credit, for instance, would likely do much more to boost poor families’ incomes than a minimum wage hike, since under the current benefits system, higher earnings can mean the loss of these tax credits. It doesn’t have quite the ring of a higher minimum wage, but it could actually go a lot further in achieving the purported goals of the wage increase. In its absence, the rising minimum wage is certainly helping a number of families, but for many of them it’s not enough to get them over the substantial financial hurdles that exist in the increasingly populated, increasingly wealthy District.
Photo by Darrow Montgomery