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Paying the Rent:
Ranks of Working Poor Swell as Nationwide Wage-Rent Gap Widens

by Silja J. A. Talvi
01.15.02

CHICAGO—Thirteen years ago, Kristina Oskierko came to the United States from Poland with a husband and a hope for a better future.

Along the way, Oskierko has weathered tough times.

The realization that she had to leave her abusive spouse meant that Oskierko needed to figure out how to support herself and her young daughter.

Finally, for the last three-and-a-half years, things seemed to be looking up, when Oskierko landed a steady job based at a catering company out of O'Hare International Airport. The unionized job provided medical insurance and enough of an income to pay rent for a modest apartment.

Then, September 11th changed everything. Two weeks after the terrorist attacks, Oskierko found herself among roughly 600 people laid off by the company. Now, unemployment benefits are not adequate to cover medical insurance for herself or her 13-year-old daughter.

Oskierko has sought out other jobs, but nothing has come through. And paying the rent has become the biggest challenge of all. "It's hard," she says ruefully. "I don't know what to do."

Oskierko's situation is common across the country, as the nation's low-wage service and tourism workers are finding themselves the first to be let go in the contracting post-9.11 economy.

Housing Challenges

Even for those workers fortunate enough to be holding onto their jobs amidst large-scale layoffs, soaring national housing costs and a tight affordable housing rental market have conspired to create serious challenges for low-wage laborers.

A comprehensive report released in September by the Washington, D.C.-based National Low Income Housing Coalition (NLIHC) revealed that nowhere in the U.S. can a minimum wage worker afford what the Department of Housing and Urban Development estimates to be fair market rental costs for a modest and sanitary two-bedroom housing unit in their communities.

The report, "Out of Reach," found that in order to afford the median fair market rent for a two-bedroom rental unit, a worker would have to earn a housing wage of $13.87, or 269 percent of the federal minimum wage. (The housing wage represents what a full-time worker would have to earn, per hour, in order to afford the fair market rent for a housing unit, paying no more than 30% of their income.)

In 33% of counties, 63% of metropolitan areas, and 64% of states, the housing wage was found to be at least twice the prevailing minimum wage. In 2000, roughly 2.7 million Americans earned minimum wage which, on a federal level, has remained at $5.15  since 1997.

According to the report, California, New Jersey, Massachusetts, New York, Colorado and Illinois have the distinction of being in the top ten of the nation's least affordable states. The states that have seen the largest growth in housing wage from 2000-2001 include Colorado (with a 23% increase in the housing wage), Minnesota (21%), California (20%), Georgia (19%) and Illinois (17%).

"The reality is that there's a persistent and extensive gap between earnings at the low end of the wage scale and basic housing costs," says Sheila Crowley, President of the National Low Income Housing Coalition. "And rental rates aren't going to go down in the near future because there's still a severe shortage of housing [along with] high demand for housing."

Ultimately, says Crowley, many low-wage workers fall out of housing and into homelessness, particularly during an economic recession. As of December 2001, U.S. unemployment rate jumped up to 5.8%, for a total of 8.3 million jobless men and women. Unemployment continues to be most pronounced among African Americans (10.2%) and Latinos (7.9%).

Service Workers Hit Hard

A Fiscal Policy Institute (FPI) report released in November concluded 60% of laid-off post-9.11 workers in New York City had an average wage of $11 an hour, or just under $23,000 per year in earnings. More than half of the layoffs resulting from the attack were concentrated in the retail, hotel, air transport and building services industries.

Tom Snyder, the assistant to President of the Hotel Employees and Restaurant Employees International Union (HERE) estimates that 40-50% of HERE union members have been laid off in Washington, D.C., with just under 40% of the union member base laid off in New York City. In the three weeks following the terrorist attacks, the Bureau of Labor Statistics (BLS) reported that 1,013 mass layoffs occurred involving almost 118,000 workers.

The severity of the situation for lower-wage workers has hardly been limited to New York City and D.C., says Snyder. "It's a very sobering situation."

In response to the situation, HERE has set up food drives and established  "one-stop" relief centers to distribute supplies and to assist unemployed union members with obtaining unemployment and emergency housing assistance. The one-stop centers have been established in cities including Las Vegas and Los Angeles, where the majority of union members are immigrants.

Yet immigrant laborers are hardly the only ones struggling in the downturn of the American economy: An October 2001 Gallup Poll found that 55% of Americans believed that U.S. economic conditions are getting worse.

HERE and other unions have stressed the need for an increase in the minimum wage—and an expansion of unemployment insurance benefits—to ensure that workers are able to afford housing and support their families.

"No union is set up to perpetually take care of the financial needs of thousands of laid off workers," adds Snyder. "At this point, the government absolutely has an obligation to step in, and they ought to do so now. It didn't take them long to give $15 billion to the airline industry to bail them out. It's time they did the same for America's workers."

Could Low-Rent Bailout Provide Relief?

Barbara Ehrenreich, the author of Nickel and Dimed: On (Not) Getting By in Boom-Time America, is also a proponent of economic strategies to provide direct assistance and relief to the working poor. "What's all this flag-waving and spirit of solidarity and unity if the fatcats are going to take advantage of this crisis to yet again fill their pockets?" she asks.

In 1998, Ehrenreich went undercover for her book—posing as a divorced homemaker—to explore the survival issues of low-wage workers.

As she moved around the country, Ehrenreich found she was forced out of economic necessity into residential motels, paying up to $250 per week. Ehrenreich quickly found that she needed to take a second job in Key West in order afford her $500-a-month one-bedroom apartment.

"I was completely unprepared for how hard that would be," says Ehrenreich. "People get trapped into this kind of housing because they cannot get together the move-in costs of a monthly apartment rental. And then it's just a downward spiral."

"This is not an intractable problem," emphasizes Crowley of the NLIHC, whose organization is pushing for the creation of a $5 billion National Housing Trust Fund designed to enable states and non-profit agencies to create affordable housing for low and moderate-income families.

"If the expectation is that people are going to achieve some sort of self-sufficiency, there is explicit in that the notion that they have the ability to provide for their basic needs," Crowley explains. "And housing is key among them."

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