Sunday, February 7, 2016

Updated and Expanded Minimum Wage vs HUD Fair Market Rent Comparisons.

In my prior post HERE, I published an Excel workbook with a series of worksheets and a graph showing by county the hours of minimum wage work required per week to afford the 2016 Fair Market rents.  This used a revised two tier minimum wage proposal floated by Governor Brown.

Friday the Senate Workforce Committee passed a three tier minimum wage bill on to the Senate for consideration. For July 2016 the minimum wage would be $9.75 except for some non urban counties where it would be $9.50. (In later years, three tiers come into play but Fair Market Rents will have also changed by that time).

I have constructed a new Excel workbook HERE with several comparisons between the fair market rent and the new JULY 2016 proposed three tier minimum wage by county. 

1. A graph showing the weekly hours required to afford the 2 bedroom fair market rent in each county. 

2. A worksheet with the data used to support the graph, as well as hours per week required for different bedroom sizes. 
3. A graph showing what % of a full time minimum wage would be required to pay the 2 BR fair market rent. [This is pasted as a picture below]
4. A worksheet with the data used to support the graph, as well as the cost burdens for different bedroom sizes. 
5. A worksheet showing, by bedroom size,  the % and $$ difference between the affordable rent for a full time minimum wage worker and the fair market rent. 
6. A listing of the 18 non urban counties that make up the third tier. 
7. A link to the "Dash 13" amended bill that includes the third tier counties and the phase in schedule. 

Note in graph below that even with the proposed increased minimum wage in July 2016:

  • In all counties, the 2 BR rent cost burden exceeds 30%.
  • In 10 counties, the 2 BR rent cost burden exceeds 50%.

Originally created and posted on the Oregon Housing Blog

Tuesday, February 2, 2016

Updated/Corrected Oregon Minimum Wage VS HUD FMR Comparisons.

A significant February 2016 increase in Portland FMR's and changes in the Governor's proposed phase in of a minimum wage increase caused me to revisit my prior post comparing the minimum wage affordable rent level to the HUD FMR's for Oregon counties. While doing so I discovered an error in one of my formulas that overstated the number of hours required to afford the FMR for different bedroom sizes. I regret the error. 

To eliminate confusion I have deleted the prior post and updated it with the revised Portland FMR's and the new proposal for a uniform minimum wage of $9.75 effective in July of 2016 that will be in effect in January of 2017.  

The Excel file is HERE and is also embedded below.  The workbook now opens to a graph showing how many hours of work at the January 2017 minimum wage would be required to afford the 2 BR FMR. 

Governor Brown recently proposed a REVISED phased in boost to the the Oregon minimum wage, with (eventually) a special boost for the Portland metro area (3 counties only). That proposal includes a boost in the minimum wage in July 2016, but keeps that first boost the same for both Portland and the rest of the state until July of 2017.

While any boost is welcome, my analysis of the (uniform) proposed rate for January 2017 shows that: 
  • There isn't any county where the Jan. 2017 minimum wage will be enough to make the HUD FY 2016 2 BR FMR affordable. 
  • There are only 6 non Portland metro counties where the Jan. 2017 minimum wage is sufficient to make the FY 2016 1 BR FMR affordable. 
  • For the Portland metro area [and all counties] the rent affordable to a Jan 2017 full time minimum wage earner is $507. That's $514/50% below the Revised 2016 1 BR Portland metro FMR and $701/58% below the HUD 2 BR FMR.
  • Actual gaps in Jan 2017 will likely be larger as new HUD FMR's for 2017 will be published in the Fall of 2016.
  • For the Portland Metro area in 2017 a full time minimum wage worker would be required to work 81 hours a week to afford a 1 BR rental, and 95 hours  a week to afford a 2 BR rental. [See the second worksheet for details of the minimum wage hours required to afford FMR's].

Originally created and posted on the Oregon Housing Blog.

Portland Metro Gets Unprecedented 28% Annual Increase in HUD Fair Market Rents for 2 BR Vouchers, Thanks to Locally Paid Survey of 11,000 Households.

HUD has agreed to a unprecedented 28% increase in the FY 2016 PDX 2 BR FMR to $1,208, instead of the previously published 8.7% increase to $1,026.  The highest prior 2 BR FMR annual increase for Portland since 1983 was 8.8% in 2000. 

HUD's announcement in the Public Inspection Federal Register is HERE

At $1.523 the Seattle 2 BR FMR is still substantially higher than Portland's 2 BR FMR.

The HUD action was prompted by the submission of a contracted survey from Washington State University of some 11,000 households conducted from Oct 20-Dec 8th 2015. That survey was funded by 6 Portland metro area housing authorities and the Portland Housing Bureau. Kudos to those agencies for initiating and funding this study.

New vs Old FMR Comparisons, Impact on Payment Standards:
A comparison of the previously approved FY 2016 FMR and the newly approved FMR's are in the table pasted at the bottom of this post. Since FY 2014 the 2 year increase in the PDX 2 BR FMR is 31%/$264-- that is more than the 13 year 2 BR PDX FMR increase of 29.9% /$210 per month from 2000-2013. [PDX FMR history is in one of the worksheets in the Excel file in my prior FMR post

Minimum Payment Standard Impacts.
Now that a new FMR has been adopted by HUD, PDX area housing authorities will be reviewing their payment standards to stay within a  range of 90% to 110% of the new FMR's. 

This means that in the 7 county Portland metro area [Clackamas, Clark, Columbia, Multnomah, Skamania, Washington, and Yamhill) the lowest 2 BR payment standard will be $1,087. ( 90% of $1,208). That would be an increase of $164 from the current [FY 2016] lowest permissible payment standard of $923 ($1,087-$923=$164). Since the HUD FMR FY 2016 original publication did not occur until late December it is likely that PHA's are still using payment standards based on the FY 2015 FMR's, so the ACTUAL increase in the lowest permissable 2 BR payment standard could be as high as $238. (see last section of table pasted below)

Home Forward for Multnomah County has special MTW rent setting authority that allows them to go up to 120% of the FMR and they will be reviewing and revising their zip code level payment standards now that the new FMR has been published by HUD. I anticipate/speculate that Home Forward will revise those standards at their March board meeting.

On a unit by unit basis note that vouchers are also subject to a rent reasonableness test.

Housing Choice and Families Served Impacts

Coupled with source of income legislation from last year revised PDX payment standards have the potential to expand the choice of housing available to voucher families. However, because HUD funding is unlikely to increase to cover the increased costs that higher payment standards will require, it seems inevitable that the number of families served by the voucher program will decline. This failure to provide funding to match increased costs is one of the weaknesses of what is supposed to be a "market based" program.

Originally created and posted on the Oregon Housing Blog.

Sunday, January 31, 2016

Latest Minimum Wage Proposal vs Original Proposal from Governor Would Reduce 2023 Affordable Rents in PDX by 6.6% vs 1.9% in Rest of State.

The graph below illustrates my calculation of the difference in affordable rents for a full time minimum wage worker in June of 2023 for the 3 county Portland metro area and the rest of the state comparing the original and the latest proposed minimum wage from Governor Brown.

The chart illustrates that the PDX June 2023 affordable rent with the latest minimum wage proposal (hourly wage of $14.50 ) is 6.6% [$53 a month] below the affordable rent using the original proposed minimum wage (hourly wage of $15.53 ). 

The difference in June 2023 affordable rents at the minimum wage in the rest of the state is only 1.9%%.[$13 a month] based on an original proposed minimum wage of $13.50 vs a revised proposed June 2023 minimum wage of $13.25). 

Not shown here: I calculate that over 7 years the Rest of the State minimum wage workers would lose an average of $483 in annual wages in the revised proposal compared to the original proposal. Portland metro minimum wage workers would lose even more, an average annual loss of $1,738 in wages. 

Short version: Appears to me that PDX minimum wage workers would see a significantly greater reduction in wage income and affordable rents vs Rest of State minimum wage workers under the revised proposal. 

Either proposal would likely produce a higher 2023 minimum wage than using the current Cost of Living adjustment. IF the COLI increases by 2.5% annually from 2016 to 2023 I project that the statewide minimum wage would only be about $11 an hour in CY 2023. At that wage level an affordable rent would only be $572 monthly, far less than the affordable rent level with either of the Governors's proposals. 

Originally created and posted on the Oregon Housing Blog

Sunday, January 24, 2016

The Increase in HUD PDX 2 BR FMR's Over 10 Years is Very Close to the DOL Increase in Cost of Living, Rent Primary Residence for Portland/Salem.

My prior post with HUD FMR's for FY 2016 is HERE.

DOL's Portland/Salem cost of living rent of primary residence changes can be downloaded using the table query tool HERE, using this table number CUUSA425SEHA

I noticed that the PDX HUD 2 BR FMR for 2016 is 8.7% higher than FY 2015 [$1,026 vs. $944 ] while the 2015 Portland/Salem DOL cost of living rent, primary residence component was only 5.7%

That prompted me to compare the 10 year change in the HUD Portland 2 BR FMR to the change in the Rent, Primary Residence component of the cost of living for Portland. 

As the PDF file HERE and embedded below shows the increase in FMR's is VERY close to the increase in the Rent, primary residence component of the cost of living for Portland/Salem. [41.9% for 2 BR FMR's vs 42.2% for COL Rent, primary residence]. 

Some caveats: 

  • HUD FMR's don't follow calendar years, but fiscal years. 
  • IF Marion Counties FMR increase were factored into the comparision, the overall FMR increase would be smaller since FMR increases for Marion county have been less than for the Portland metro area. 

Originally created and posted on the Oregon Housing Blog.