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Expanding the Supply of Affordable Housing for Low-Wage Workers

Updated: Feb 1

August 10, 2020

“The lack of affordable housing stands in the way of economic productivity and undermines the fundamental premise that full-time workers should be able to achieve a decent standard of living fr themselves and their families.” Bruce Katz and Margery Austin Turner,

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Rising income inequality, combined with high housing costs, and a shortage of affordable rental housing across the nation and particularly in large metropolitan regions, has been creating a significant financial burden for growing numbers of working families, especially those of low-income workers.2 And the COVID-19 pandemic and related shutdowns and layoffs have exacerbated this problem. Lower-wage workers in particular are the most likely to have incurred a loss of income due to the pandemic.3 And as a disproportionate segment of low-income households rent their homes (see Figure 1), many are facing housing insecurity and evictions, as they lack the financial resources to compensate for missed paychecks and as moratoria on evictions and foreclosures are set to expire soon.4 Most importantly, these same families were already struggling before the onset of the pandemic due to a severe shortage of affordable housing throughout the nation.5 In the face of what most likely will be double-digit unemployment lasting through 2021,6 creating jobs by expanding affordable housing would be a smart long-term investment.

The lack of affordable housing is a matter of public policy because overspending on housing reduces the financial resources available to families for purchasing health care, investing in their children’s futures, saving for retirement, and addressing the severe hardships associated with a pandemic, other natural disasters, and sudden economic downturns such as the current one.

The U.S. Census Bureau’s data indicate that income inequality is at its highest level in more than five decades, even though the nation was experiencing its longest economic expansion before the pandemic.7 Despite some recent economic gains by low-income workers, incomes have continued to rise more slowly for workers at the bottom brackets of the wage spectrum than for those employed in high-skill, high-wage jobs.8 In 2017, 46 percent of renter households spent more than 30 percent of their income to meet housing costs. As Figure 1 shows, being a renter is more common among low-income households than among those with higher incomes. The rental affordability problem is exacerbated by the shortage of affordable rental housing, as the supply of low-cost housing has dropped and new construction has been intended largely for the higher end of the market. The Joint Center for Housing Studies at Harvard University indicates that between 2011 and 2017, the number of housing units renting for less than $600 a month fell by 3.1 million.9 This report finds that affordable rental units are in short supply, especially in areas that were experiencing job growth before the pandemic.

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