Surveys Show Mixed Portrait Of San Francisco Rental Market

Date: May 21, 2015

Some Renters Happy, But Minimum Wage Workers Unable To Afford Costs

Two surveys out this week paint a mixed portrait of the housing market in the San Francisco Bay area. A report from San Francisco-based Apartment List finds that renters in San Francisco, New York City, and Washington DC are more satisfied despite having higher rent costs than in more-affordable cities like Detroit, Albuquerque, and Milwaukee. Apartment List’s vice president of data science Andrew Tam said the survey of 18,000 renters indicates that, while San Francisco rents are higher, “It’s this combination of having excellent job opportunities and an amazing lifestyle,” the AP notes. Renters in San Francisco and larger cities expressed greater feelings of safety and greater satisfaction with their opportunities for “recreation and nightlife.” The report notes that average monthly rent for a two-bedroom apartment in San Francisco is $4,250.

A second report, by the National Low Income Housing Coalition, indicates minimum wage earners are struggling to afford rent for two-bedroom apartments across the US. For example, the Houston Chronicle notes the data indicates an average wage of $26.65 per hour is needed to afford a two-bedroom apartment in California. In San Francisco, the necessary wage is $39.65 per hour for a two-bedroom apartment at current market rent, the Wall Street Journal reports. The US average is $19.35 per hour, about $4 above the estimated average for US worker wages.

McClatchy reported the authors concluded that 30 percent of the wages of a full-time worker earning minimum wage, or the “so-called ‘housing wage’ is 2.7 times greater than the federal minimum wage of $7.25 per hour and $4 more than the nationwide average renter’s wage of $15.16 an hour.” They said “there’s no state where a full-time minimum wage worker can afford a one-bedroom apartment at the fair market value.”

What This Means For Small Businesses

Small businesses continue to face tough choices when determining where to locate. On the one hand, San Francisco and its peer cities offer abundant opportunities to reach consumers. However, if employees (or owners) can’t afford to live in the area, small businesses will find growing difficulty in hiring needed workers.

Additional Reading

NFIB recently described troubles some independent businesses in San Francisco are having filling entry-level positions.

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