Earning more yearly from the growing value of your home than a minimum wage job?

Zillow suggests the growth in home values in about half of the United States’ largest cities is higher than working a full-time minimum wage job:

The typical U.S. home appreciated 7.6 percent over the past year, from a median value of $195,400 in February 2017 to $210,200 at the end of February 2018. That $14,800 bump in value translates to a gain in home equity of $7.09 for every hour the typical U.S. homeowner was at the office last year (assuming a standard 40-hour work week),[1] a shade less than the federal minimum wage of $7.25 per hour.

Overall, owners of the median-valued home in 24 of the nation’s 50 largest cities earned more in equity per hour over the past year than their local minimum wage.[2] But homeowners in a handful of U.S. cities made out a lot better than that – in some cases much, much better.

The median U.S. household earned roughly $60,000 in 2017 ($58,978 to be exact),[3] or a little more than $28 per hour. But in six U.S. cities – New York, San Diego, San Jose, San Francisco, Seattle and Oakland – owners of the median-valued local home gained more than that in home equity alone. And if earning a six-figure annual salary represents a certain amount of privilege, homeowners in San Francisco, San Jose and Seattle all made comfortably more than that simply by virtue of owning a local home…

A home is often a person’s biggest financial investment, and according to the 2017 Zillow Group Consumer Housing Trends Report, the typical American homeowner has 40 percent of their wealth tied up in their home. A recent Zillow survey found that 70 percent of Americans[4] view their home as a positive long-term investment.

This is both an interesting and weird comparison. For the interesting part: most people understand the abstract idea of working a minimum wage job. They should know that a full year of work at that rate does not generate much money. The reader is supposed to be surprised that simply owning a home could be a more profitable activity than working.

But, there are a number of weird features of this comparison. Here are four:

First, not all that many Americans work full-time minimum wage jobs. People understand the idea but tend to overestimate how many people work just for minimum wage.

Second, roughly half the cities on this list did not experience such an increase in housing values. Without comparisons over time, it is hard to know whether this information about 24 out of 50 cities is noteworthy or not.

Third, the comparison hints that a homeowner could choose to not work and instead reap the benefits of their home’s value. This question is posed in the first paragraph: “Why work a 9-5 slog, when you can sit back and collect substantial hourly home equity “earnings” instead?” Oddly, after the data is presented, there is a disclaimer section at the end where the difference between working a job and earning money through selling a home is explained.

Fourth, to purchase a home, particularly in the hottest markets cited, someone has to start with a good amount of capital. In other words, the people who would be working full-time minimum wage jobs for a full year are not likely to be the ones who would benefit from the growth in their home’s equity. It takes a certain amount of wealth to even own a home and then even more if someone wanted to profit from just owning homes.

Overall, I would give Zillow some credit for trying to compare the growth in home values to a known entity (a minimum wage job) but the comparison falls apart pretty quickly when one gets past the headline.

Can a suburb enact a higher minimum wage if others nearby do not?

Suburbs in Cook County have the ability to opt out of a county ordinance raising the minimum wage but they have to weigh how their decision compares to communities near them:

Home-rule municipalities can opt out of the ordinance that boosts the minimum wage from $8.25 to $10 an hour starting July 1, and dozens of them have done just that since the Cook County Board passed the ordinance in October. That has left neighboring towns in a precarious state, worrying that their businesses will suffer under higher payrolls.

Evanston appeared ready to address those concerns at an emergency meeting Friday morning, after nearby Wilmette decided to opt out of the minimum wage increase…

Skokie Chamber of Commerce Executive Director Howard Meyer said the group at first had no issue with the measure. Because Skokie borders Chicago, where a heightened minimum wage is already in effect, the chamber believed its members wouldn’t be at a competitive disadvantage.

But after more municipalities opted out and Skokie businesses expressed worries about the impact, the chamber spoke out against the minimum wage plan, as well as another county ordinance to mandate paid sick leave.

Suburbs often face this pressure: if we enact a new measure, will residents and businesses respond by leaving for other suburbs? This happens with tax breaks for businesses (I’ve argued this leads to a race to the bottom) as well as tax rates, city services, and other quality of life factors. Economists and others would suggest that residents and businesses vote with their feet: if this doesn’t happen immediately, the long-term effect could be bad for a suburb if the inflow stops.

The best solution to all of this is not to allow suburbs to have separate policies on something like this. Based on the article, it sounds like numerous suburbs are fearful. But, if they all had no choice, they wouldn’t have to compete with each other (though they then would have to compete with communities in other counties). I’m guessing the ability to opt out was important to getting this passed at the county level but it could be highly negative in the long run.

Perhaps then it would be best to enact a region-wide initiative where every community is affected. Of course, this goes against many of the principles of local control and government – we should be able to decide fiscal policies within our borders – and there is not a binding governmental body that oversees the hundreds of local governments in the Chicago region. This could only happen at the state level but then there are other actors beyond the Chicago region.

In the mean time, it will be difficult to put into practice a higher minimum wage within the region if each community can opt out and act upon their fears.

Ikea is raising pay to help workers but many who need jobs can’t easily make it to their suburban locations

Jamelle Bouie points out that Ikea is doing a good thing in raising wages but their jobs aren’t easily accessible to many who need them:

With that said, it’s worth noting that there’s less than meets the eye to Ikea’s promise to hew to local and municipal minimum wage hikes. Most Ikea stores are located in suburbs, as opposed to urban centers. The Ikea near Charlotte, North Carolina, for instance, is located on the outskirts of the area, as is the Ikea near Seattle (in Renton) and the one in Dallas (near Frisco). By virtue of geography, these stores will avoid city-mandated wage hikes.

What’s more, for as much as Ikea and similar stores might be good for workers, their overwhelmingly suburban locations make them isolated from large numbers of potential workers who lack employment opportunities in their own areas and neighborhoods…

The result is that, for both groups—but low-income blacks in particular—there is a “spatial mismatch” between neighborhoods and employment opportunities.

Put simply, the greater the sprawl of jobs in an area, the less likely it is that black residents will have easy and reliable access to them. Or, as UCLA professor Michael Stoll writes in a 2005 paper for the Brookings Institution, “Blacks are more geographically isolated from jobs in high job-sprawl areas regardless of region, metropolitan area size, and their share of metropolitan population.” And this isn’t an accident: “Metropolitan areas characterized by higher job sprawl also exhibit more severe racial segregation between blacks and whites,” he writes.

All of this is exacerbated by our shoddy, car-centric transportation policy. To get to any job in a place like Virginia Beach, Virginia—where 10- to 15-mile drives are a fact of life—you need a car. Yes, there is a public transportation system, but it’s irregular (the agency had a rate of 18 missed trips per day in March), limited in scope, and unreliable for most workers who need to be on time. But cars are expensive, and black and Latino households are much less likely to own cars than their white counterparts. What comes next is predictable: Plenty of low-income people can’t find or keep jobs because they are isolated from opportunities.

All correct though the increasing number of lower-income suburban residents may be closer to some of these Ikea stores. At the same time, most suburban residents will still need cars to get to the store, vehicles that are relatively expensive parts of household budgets.

Additionally, this helps highlight some of the contradictory nature of Ikea. On one hand, it is a quirky store in the American landscape, exposing Americans to interesting designs and promoting a more DIY mentality. On the other hand, it is just another big box store with locations near major highways, big parking lots, and lots of square footage.

Sociology class project in San Jose leads to succesful vote in favor of raising the minimum wage

Following up on a previous story on this blog, voters in the city of San Jose approved a minimum wage hike to $10 that began in the sociology department of San Jose State University:

San Jose voters on Tuesday agreed to increase the city’s hourly minimum wage to $10 — $2 above the statewide floor, siding with proponents of the measure who said it was necessary in order for low-income workers to survive in an increasingly pricey tech-based economy.

With all precincts counted, nearly 59% of voters had approved the measure, making San Jose only the second municipality in California and the fifth in the nation to set its own minimum wage. The others are San Francisco, Washington D.C., and Santa Fe and Albuquerque, N.M.

The measure was the brainchild of San Jose State University sociology students and was promptly embraced by labor organizations, which spearheaded the campaign…

The San Jose Silicon Valley Chamber of Commerce and other business groups had opposed the measure, saying it would force employers to slash worker hours and cut jobs, as well as discourage new businesses from moving in. The arguments were similar to those made in San Francisco, which has phased in a similar measure passed by voters in 2003. Its hourly minimum wage stands at $10.24 and will increase to $10.55 in January.

Now it will be interesting to watch what happens in San Jose after the passage of this measure. San Jose is an important place: it is the 10th largest city in the United States with close to a million residents, has strong connections to the high-tech community, and is a “re-emerging immigrant city” with a high proportion of foreign-born residents.

Also, what do you do for an encore in a sociology class or program after helping make this happen?

When looking at the minimum wage, should we consider whether a poorly paying job is better than no job?

I ran into an argument about whether the minimum wage should be raised in the United States and it got me thinking about the reasons behind the argument for raising it. To start, here is some of the debate:

One of the harshest realities of America’s slow economic recovery — and there are many — is the fact in spite of modest job growth, pay for workers is falling. Year over year, average inflation adjusted wages have dropped by 0.6 percent for all private sector employees. They’re down a full 1 percent for non-supervisors — your retail salespeople, your shop floor factory workers, your cashiers. In other words, even as the overall employment picture has improved in fits and starts, the working poor are getting poorer.

Some believe this is a sign of the recovery’s weakness, and today the National Employment Law Project used it as a rallying point to call for a higher minimum wage. According to their analysis, which is current through the beginning of 2011, while the bulk of job losses during the recession affected medium wage earners, such as paralegals and nurses, most of the hiring post-recession has been for low-paid service work. Middle class jobs, they argue, have been replaced with poverty wage jobs…

But here’s the alarming part. All of this might simply mean that the same forces that caused wages to stagnate before the recession will make them stagnate after the recession. It’s just another sign that income inequality is here to stay, unless something radical changes that will give working class families a larger slice of the pie. Will raising the minimum wage do that? It might help on the margins, certainly for the 3.8 million workers who earn it.  (I’m not one of those who believes that a higher minimum wage actually kills jobs. This great, short Slate piece from 2004 explains why.) But the vast majority of American workers won’t see much benefit from it. Rather, fixing the wage problem means we need to think about the fundamental problems skewing income growth towards the top, from spiraling CEO pay to an inadequate education system.

Falling wages are taking us back to where we were before the recession. For many workers, that’s not a good place. And there aren’t any easy ways out of it.

Of course, arguments for raising the minimum wage often focus on the idea that it is not enough money to live on. Hence, calls for a living wage that is more closely tied to a more steady standard of living.

But I wonder if there isn’t a bigger issue at work here: the idea that low-paying jobs may not be worth having. In other words, people might be better off without a minimum wage job. The low-paying job may be helpful in securing a new job (you don’t want an unemployment gap in your resume) or moving up but too many of these low-paying jobs pay so little that employees may not be able to do the things they need to do to move up (move to a new area where jobs are more plentiful, own a reliable car to expand job prospects, enroll in classes, etc.). Additionally, a number of these jobs don’t really offer chances for advancement; if they do, it is limited to a small group of workers. So these workers can get trapped in a cycle of low-paying positions that meet some basic needs to survive but never provide the hope to do something better. This is reflected in books like Nickel and Dimed: it is hard enough to do the daily grind, let alone find some light at the end of the tunnel in terms of a better-paying job.

In this sense, making a small adjustment to the minimum wage wouldn’t seem to do much. It might offer a little more money but this is likely eroded quickly by inflation (past and future). What we then need is more jobs that provide a higher standard of living and give more employees the opportunity to move on and up to something better.

(I realize there is a lot more going on here. But I wanted to get at the idea that simply having a job isn’t a guarantee of having the chance to reach the American Dream. Being willing to work doesn’t necessarily guarantee a good outcome. This also reminds me of Katherine Newman’s book No Shame In My Game about the working poor who want to work but can’t access the jobs that would lead to success.)

What a sociology class can do: help develop a minimum wage initiative for San Jose

I’m always intrigued by sociology class projects that go beyond the classroom. Here is an example from San Jose of a class project that will be on the ballot this November:

The proposed San Jose measure would raise the hourly minimum wage in the city from the current $8 state requirement to $10 with yearly inflation adjustments. It is modeled on San Francisco’s 2003 minimum wage law, which includes annual inflation adjustments that raised the floor this year on that city’s pay rate 32 cents to $10.24 an hour.

The idea behind the San Jose ballot measure originated among students in a San Jose State sociology class taught by professor Scott Myers-Lipton.

In late March, the students, together with labor leaders and community organizers, submitted 36,225 signatures to the registrar’s office. Proponents needed at least 19,161 valid signatures of registered city voters to qualify for the November ballot, and at least 19,518 were found to be sufficient.

“The students and I are thrilled that it qualified and that we received the support of the community at large, from labor, faith and community based organizations in this effort,” Myers-Lipton said Tuesday.

I can imagine some of the public conversation about this: college students in a sociology class (already considered a liberal discipline) team up with local activists to introduce this bill? At the same time, might this be considered good experiential learning as students are learning about local politics and how they can get involved?

Here is some more information on how the class got involved:

As part of Myers-Lipton’s Sociology 164 course on Social Action, students studied President Franklin Delano Roosevelt’s proposal for an Economic Bill of Rights. As student activist Elisha St. Laurent explains, “The economic bill of rights guarantees everyone a job, a living wage, a decent home, medical care, economic protection during sicknesses or old age or unemployment.” The minimum wage campaign is a practical way of making some of these guarantees more attainable for San Jose residents. “We’re trying to link the economic bill of rights to inequality in the San Jose area,” she says.

As the mother of a five-year-old boy and someone who is working to pay for college, St. Laurent has experienced the realities of the low-wage economy directly. “Especially as a single mother,” she says, “you know I’m continually struggling. I’m always working minimum wage. Right now I make $9.25, so it would be a 75-cent increase for me. But an extra $100 or $200 in my check would make a difference. It’s making sure that I have gas in my car so that I can take my son to school, and then still being able to pay my bills.”…

As the students moved forward with the idea, they found significant partners such as Working Partnerships USA, a think tank for public policy that affects working class families, the NAACP and the local faith-based group Sacred Heart Community Service.

Myers-Lipton explains, “Early on, there was a discussion that occurs in any campaign asking, ‘Is this winnable? Is it worth putting in all the effort.’ At that point [Sacred Heart Executive Director] Poncho [Guevara] said, ‘You know, win or lose, we need to put forward a vision of what we stand for. We need to be putting our vision forward rather than  always being on the defensive. So even if we lose, we’re going to win in the long run.'”

It sounds like these students are taking their readings and trying to put some of the ideas into practice. It would be interesting to hear how much they have learned about sociology or a sociological perspective throughout this process.

Quick Review: Nickel and Dimed (theater version)

I recently saw Nickel and Dimed in a local theater production. The text is a staple of Introduction to Sociology classes but I was not aware until recently that the 2001 book had been adapted for the stage. While the New York Times reviewed the play in its 2006 New York City debut, I have a few thoughts about the production I saw:

1. Like the book, the play follows Barbara to her three new professions that pay minimum wage (or a little higher): working as a waitress at Kenny’s, working as a housecleaner for a maids company, and working on the sales floor at Mall-Mart. From what I remember of the book, the basic story is the same: Barbara decides to do this in order to understand the experiences of the American working poor, finds that the work is physically taxing and also takes time to master, and concludes that such a life is quite difficult and unfair.

2. Besides Barbara, the key characters are some of her co-workers. These people are often caught in dead-end jobs that offer little money and few or no benefits. With nowhere else to go, some of the coworkers doggedly follow the rules in order to maintain their jobs, others rebel a bit, while others show Barbara compassion that she was not expecting to need. In the final moments of the play, we hear about some of these workers have fared in the long run even as Barbara has returned to her cushy life.

2a. One of the more interesting scenes from these co-workers comes toward the end of the play when her Mal-Mart manager speaks directly to the audience for a few moments. As a manager, he says “the numbers don’t lie” and suggests that there is little that can be done to improve work for he or his employees as the prices dictate the wages and benefits. Of course, he is suggesting that the problem extends higher up in the company.

3. One of the fun parts of the evening was thinking about how the audience was reacting to these scenes. Barbara plays up some of the class conflict ideas and says some uncomfortable things, particularly to a fairly wealthy, suburban crowd.

4. This particular production included four musical numbers which I don’t believe are part of the typical stage production. While I am not a fan of musicals, I thought these numbers added something to the show. I always find it interesting to hear cheerful-sounding numbers about less-than-cheerful themes such as unjust working conditions.

5. Several of my students saw the show and their comments to me suggested that the play hit an emotional nerve in a way that a lecture on social class in America in my Intro to Sociology course has a hard time doing. In additional conversations, we found that my students and I have worked in some similar jobs but the difference was that we knew that we had better educational and career options down the road.

Overall, I enjoyed thinking about these topics in a new way though the theater. Now that Ehrenreich’s book is 10 years old, is there another book that was recently published or that is in the works that can address some of the same issues while attaining the popularity of Nickel and Dimed? That might be a tall task but such works help keep sociological discussions alive in the public sphere.

(I also found that Ehrenreich’s personal page for the book includes positive reviews from a number of sociologists.)