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.

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