Millennials Can’t Afford Rent in These California Cities Due to Renter Wage Gap

Sarah Abdeshahian, 22, a recent UC Berkeley graduate, in her one-bedroom apartment in San Francisco. (Gary Coronado/Los Angeles Times)

Los Angeles, San Diego, San Francisco and three other California cities have some of the largest salary gaps for millennial renters in the country — the gap being the difference between what the typical worker can afford and average rental costs.

Among California cities, LA has the largest rent wage gap for millennials, followed by San Diego in third place, San Francisco in fifth, San Jose in seventh, Riverside in eighth, and Sacramento in 12th. according to a Filterbuy analysis using data from the US Census Bureau’s 2020 American Community Survey Public Use Microdata Sample.

In Los Angeles, the millennial wage gap was minus 49.5% in 2020, with millennial renters earning a median salary of $36,649, according to the analysis. However, tenants needed an average salary of $72,560 to pay for a one-bedroom rental. The median one-bedroom rent was about $1,814; about 35.6% of millennials in the city were renters.

San Diego also had a high wage gap among millennial renters, at minus 39.9%. The average salary millennials would have to earn to afford a bedroom was $69,720, even though the median renter salary was $41,885. In San Diego, 34.2% of millennials were renters.

Meanwhile, the wage gap for Millennial renters in Riverside was minus 34.5%, with Millennials needing to earn an average of $47,960 to pay for a bedroom. In fact, they earned a median salary of $31,414.

Researchers calculated the pay gap for millennial renters by finding the percentage difference between the median salary required to afford a one-bedroom unit without spending more than 30% of salary on rent and the actual median salary millennial tenants in the area. Millennials were defined as those aged 24 to 39 in 2020.

As rental prices fell sharply at the height of the pandemic, California rents rose in a hot housing market, forcing some cities to implement rent control protections to prevent people from being evicted. of their homes.

Some California landlords were allowed to increase their rent starting August 1 by up to 10%, the maximum annual increase under Assembly Bill 1482, a statewide law passed there three years ago. But the 10% cap only applies to complexes built before 2007 and those not subject to rent control restrictions, meaning other landlords can raise their rents even further.

Rent control protections and AB 1482 also don’t prevent California landlords from raising rental prices once a former tenant moves out. Under the Costa-Hawkins Rental Housing Act of 1995, rent control was banned for condos, single-family homes, and buildings built after 1995. It also bans “vacancy control,” allowing landlords to increase market rent each time a new tenant moves out. in.

Consumer Price Index data from the Bureau of Labor Statistics for the Los Angeles area showed that in July, housing costs rose 5.3% from a year earlier and tenants spent 4.3% more on their main residence compared to July 2021.

Rents increased overall in the United States According to the consumer price index for urban customers, the rent index increased by 0.7% in July in 75 American urban areas. The CPI was calculated using monthly prices for 6,000 dwellings and 22,000 retail businesses.

After prices fell during the pandemic, the housing market has warmed up in 2021, causing the vacancy rate to drop to 5.8%, the lowest since the 1980s, according to a report by the Joint Center for Housing. Harvard Studies earlier this year.

The report also found that low-income renters, especially those of color, were the hardest hit by income losses during the pandemic and soaring rents. About a quarter of black renters and 19% of Latino renters were behind on rent in the third quarter of 2021, compared to 9% of white renter households.

In California, rental housing is dominated by single-family zoning, preventing more multi-family housing from being built and tenants from residing in many neighborhoods. The number of affordable homes has also declined, with the number of homes costing less than $600 a month falling by 3.9 million between 2011 and 2019, according to the Harvard report.

At the same time, wages have not risen enough for millennials to earn enough for rent.

The federal minimum wage has not been raised in more than a decade, since rising to $7.25 an hour in 2009. Democrats backed the Wage Increase Act, which would raise the federal minimum wage at $15, though the legislation has stalled in Congress since its introduction in 2021.

Union advocates, however, argue that $15 an hour is not enough to meet rising overall costs.

Shanti Singh, spokesperson for the statewide tenant advocacy group Tenants Together, also pointed to Proposition 13, which has strictly limited property tax hikes since 1978, as another reason tenants millennials have been disproportionately affected as tenants.

“We have a weird system of taxing property and transferring wealth through homeownership that millennials are excluded from because of Proposition 13,” she said. “We have laws like Costa-Hawkins and the removal of vacancy control that put targets on our backs because landlords are trying to get us out. And then there’s the difference in generational stability versus baby- boomers, that’s true for all of America.”

Nearly 17 million Californians, or about 44% of the state’s population, are renters, but Singh said renters are underreported to the government.

“We have a massive constituency that has zero representation,” she said. “Millennials are disproportionately renters, the same way people of color or single parents are disproportionately renters. I think it has to do with how we prioritize landlord interests on both sides and we don’t make decisions for tenants.

This story originally appeared in the Los Angeles Times.

Bernard P. Love