2019 #4: Share of Spokane Renters Severely Burdened Shows Little Improvement

by Dr. Patrick Jones

Fundamental to a thriving life is adequate shelter. Fundamental also is our ability to afford that shelter. For several thousand Spokanites, housing may be available but very challenging to pay for. Statistically, these are residents who pay 50% of more of their income on shelter costs (rent and utilities). Housing experts refer to them as “severely burdened.”

As Indicator 6.2.3 reveals, nearly 18,000 Spokane County renters fell into this category in 2018. This estimate represents a slight decline from the peak year of 2015, but not by very much, about 1,000. This category made up nearly a quarter (24%) of all renters in the county in 2018. Compared to a decade ago, little has improved. Then (2009) about 27% of all renters faced this budget challenge, statistically no different than now.

It is true that incomes of the “middle” have risen since 2009. Median household income (MHI) in the county climbed 34% cumulatively over the decade, as Indicator 2.1.1 shows. Over the same period, median rent for all apartments in the county went up by a lower amount - 25% - according to the U.S. Census. So for those renters in the middle income range, the rent burden has gotten a bit less.

The plight of those severely burdened by shelter costs, however, isn’t informed by values for middle incomes. Severely burdened renters likely find themselves in the lowest decile of the income distribution. Just because the median rose doesn’t mean that incomes of the lowest decile rose at the same rate. Unfortunately, we do not have values of MHI by decile to report. But for the trend in Indicator 6.2.3 to make sense, incomes in the lowest decile rose since 2015 by a little higher percentage than rents went up. As a consequence, the 2018 estimate of those facing these challenges went down slightly.

How might a community respond to those with shelter costs taking up at least half of their income? There are two general approaches: helping them increase incomes or assisting in lowering their shelter costs.

Let’s take up incomes first. For this demographic, wages undoubtedly make up their incomes. Wage income rises if either the unemployed find jobs or if those with jobs earn more per hour. As Indicator 2.4.6 shows, the county has added over 14,000 jobs between 2015 and 2018. Whether much of this job creation was enjoyed by the lowest decile of income earners remains an open question, however. Typically, unemployment is concentrated in those with lower levels of income and education, as the Bureau of Labor Statistics has documented. Consequently, a policy of worker training or re-training might help our community’s lowest earners become more employable.

The same policy remedy applies to boosting hourly earnings as well:  provide greater program opportunities for skills acquisition. These open a door but don’t guarantee that a person will move to higher-paying work. Of course, a higher minimum wage will help. Between 2015 and 2018, Washington state’s minimum wage rose from $9.47/hr to $11.50/hr. It is now $12/hr and scheduled to climb to $13.50 in 2020.

These strategies assume that the majority who currently are in the lowest decile of income are employable. It may well be the case that due to age or disability, they are not. In 2018, Census estimated that nearly 42,000, or 14% of the working age (18-64) population in the county was, in some form, disabled. Pamela Tietz, executive director of Spokane Housing Authority, reported, “Roughly 60% of the people we serve are disabled or elderly. That has held pretty steady.” Some of the disabled may find work but many may not, especially those with ambulatory, vision or hearing disabilities. And the participation in the labor force for senior has been rising lately, but remains a small percentage. Consequently, it is likely that there will be a segment of our renting population where employment is not an option.

The other large policy arena, more affordable housing, becomes all the more important for this demographic. But it also is critical for those who can work. Market rate rental housing is likely out of reach for those with incomes in the lowest 10% of the population, leaving subsidized units as the one remaining opportunity to lower the burden of shelter.

According to Census, about 8,000 apartment units were constructed between 2014 and 2018. At the end of last year, the estimated rental unit inventory stood at 63,600. Of this total, Census doesn’t report how many were market rate or subsidized. One estimate, by Affordable Housing Online, puts the current subsidized count at approximately 7,800 in the county. But for the share of the severely burdened renters to decline, more affordable units will need to be built.

Thankfully, more units are on their way. Summing up the efforts of all county organizations working in affordable housing, Tietz estimates that at least 450 units should come online in the next 3-4 years. It is doubtful, however, that these will meet the need. Tietz further commented, “We’re way behind (in Spokane). The need far outweighs the units in the pipeline.”

In the end, we as a community will need to decide whether a 25% share of renters who are severely burdened by shelter costs is acceptable. As Indicator 6.2.3 shows, our experience isn’t that different than throughout the U.S. But wouldn’t it be refreshing for Spokane to be above average by this measure?