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 biggest rent wage gap for millennialsfollowed by San Diego in third place, San Francisco in fifth, San Jose in seventh, Riverside in eighth and Sacramento in 12th, according to an analysis by air filter company Filterbuy 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 rent for a one-bedroom unit 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 need to earn to afford a one-bedroom home 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 one-bedroom unit. 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 people aged 24 to 39 in 2020.

While rental prices fell sharply during the height of the pandemic, California rents have gone up amid a booming real estate market, forcing some cities to enact rent control protections to prevent people from being evicted from their homes.

Some California landlords were allowed to increase their rent starting Aug. 1 by up to 10%, the maximum annual increase under Assembly Bill 1482, a statewide law. law passed 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 and AB 1482 protections also don’t prevent California landlords from raising rent prices once a previous tenant moves out. Under the Costa-Hawkins Rental Housing Act of 1995rent control was banned for condos, single-family homes, and apartment buildings built after 1995. It also banned “vacancy control,” allowing landlords to raise market rent whenever a new tenant moves in.

Data from the Bureau of Labor Statistics’ consumer price index for the Los Angeles area showed that in July housing costs rose 5.3% from a year earlier and renters were spending 4.3% more on their primary residence compared to July 2021.

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

After falling prices during the pandemic, the housing market warmed up in 2021, causing the vacancy rate to drop to 5.8%, the lowest since the 1980s, according to a report from Harvard University’s Joint Center for Housing 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 housing units has also declined, with the number of units costing less than $600 per month falling by 3.9 million from 2011 to 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 compared to [baby] 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 Los Angeles Times.


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