Tim proposes tying minimum wage to 30% of local housing costs instead of a flat federal rate. He argues this would make housing affordable and let people live where jobs actually are, while pushing employers to fund housing through sustainability bonds.
So the American dream is alive and well for a family. If you can spend less than 30% of your income on housing. There's been lots and lots of work done on this, MIT and others that everything else works. If whatever you get paid, if you can take 30% or less of that gross income each month, fund your housing, everything works for your family. You can provide for your family. In 1970, in America, you could take any job, work 40 hours a week, and be under 30% income spent on housing. Today, in 2022, 45% of hourly jobs no longer match the less than 30% on housing. There's two reasons. Wages have been fairly stagnant during that time. But more importantly, housing has not kept up with population. So now there are way more jobs than housing units. And the other problem is a lot of the jobs have been in a very small number of cities. Energy jobs, tech jobs, etc. Have driven most of the job growth. And those are all consolidated in a small number of geographies. So you have extra housing units in Detroit, but you have way too few housing units in the Bay Area or in any of the other tech hubs that are emerging. So what's interesting is the politicians talk about a $15 minimum wage as a potential solution. The problem is $15 is not enough in the San Francisco Bay Area, and it's way too much in areas of West Virginia. So the politicians never get anywhere with a $15 minimum wage. So my proposal is let's get rid of the dollar figure on minimum wage and let's make it a 30% minimum wage. And the idea there is HUD housing and urban Development publishes what's the cost for a median studio apartment in each county in the country? So by county, let's set the 30% minimum wage annually at what is the median studio apartment cost as defined by HUD in that county? And what do you need to make per hour to spend 30% of your income? If you work full time 40 hours a week on that apartment, if you do that, something magical happens. Everybody then, if they're willing to work 40 hours a week, can have a job that pays enough to spend less than 30% on housing. Now, it turns out the worker doesn't really care what the dollar number is. They just care. Whatever they make, can they turn around and spend 30% or less of that on housing? The employers care a lot about what the dollar number is because that goes directly to profits. By doing a $15 minimum wage, employers can't have any effect on what the minimum wage number is if you do a 30% minimum wage, the largest employers in the county can have massive effect on what the actual dollar number is, because they can influence housing availability. So there's a really cool thing that's emerged in the world of esg, an impact called sustainability bonds. And these are bonds that you can access. They're about 2% interest, and folks are funding them if folks will do green and social projects. So a big employer in a county can take down sustainability bonds, enable extra housing with it, especially workforce housing. And when jobs and housing match in that county, jobs and housing match, then you have affordability. So in a lot of these markets, where we have affordability problems is jobs have grown like that, but housing has grown like that, and this gap is the biggest problem. So the bigger that gap, the more the hourly jobs don't pay 30% minimum wage. And homelessness accelerates, traffic accelerates because hourly workers have to work counties and very far away from where their job is, so do the 30% minimum wage by county. Then the employers are incented to take down sustainability bonds and enable more housing in the counties in which they operate, which then brings the actual dollar number down and everybody's happy.
