Simone Cordery-Cotter
Simone Cordery-Cotter
CivicSpark AmeriCorps Fellow, Climate Planning

The Sticky Intersection of Wages and Housing

This is part 2 of a 3 part series on California's rural housing crisis. You can read part 1 of the series by clicking here

After publishing part 1 of this housing series, a reader commented inquiring about the impact wages have on the relative unattainability of housing in rural areas. I thought it was a great place to dig into for my second piece on the subject.

COMM DowntownTruckee Winter CroppedTo their rather insightful point, since the Great Recession in 2008, wages have stagnated, and grown at just 0.2% per year while cost of living has risen more drastically. A few simple numbers illustrate this nicely for Nevada County specifically: average median income is $57,429, a growth of 1.6% over the past year, while the median property value is $355,900, an increase of 2.6% over the past year. When property value increases outpace median income growth, local earners can feel a squeeze, and that can force one of two things: residents spend a higher percentage of their income on housing, or move elsewhere to more affordable areas.

One of the issues a recent Legislative Analyst Office report pointed to was the uneven distribution of the housing crisis to those with lower incomes. The poorest 25% of households in California can pay up to 67% of their income toward housing costs. In Nevada County, median income allows for a home that costs $259,303, which means that 28% of an earner’s median income is going toward their mortgage payment. When adjusted for median property values, that earner is looking at something closer to to 38% of their income going toward housing costs. That percentage increases drastically for earners below median income, and in a rural county where wages can lag up to 30% behind urban incomes, the consequences become even more exacerbated. 

All of this arithmetic is aimed at illustrating what many rural residents already know: it’s difficult for rural wages to keep pace in a housing market that also experiences outside influences like urban wage earners purchasing second homes and large investment groups inflating housing costs.

The other side of the coin is not on the demand side, but on the supply side. Smart Cities Prevail, an organization dedicated to advocating for living wages for construction trades, released a report in January illustrating just how much disconnect there is between the clear and present need for construction labor, and the wages paid in the state of California. The report cites the industry’s seasonality and vulnerability to economic downturns, aging workforce, and failure of wages to keep pace with cost of living as major factors contributing to a tightening labor market. The result is a vicious cycle. Construction laborers can’t afford to live in the areas that need housing, so they can’t build housing, so there’s no available housing so they can live there…so it goes. Rural areas are difficult to commute to, hospitals can be far away and difficult to reach in case of onsite injuries, and shipping raw materials to rural areas can result in rising costs.

If nothing else, this whole narrative demonstrates and reminds us how complex the issue is and how many contributing factors have led the state’s rural areas to the current crisis. I hope that these numbers contextualize some of the complexity that is familiar to so many. I look forward to sharing my next piece, which will offer a few ideas and current projects around what we’re all looking for: solutions.