As housing costs rise, Utah blocks ways to increase wages

Despite years of stunning economic growth, the state’s wages have remained flat.

(Illustration by Christopher Cherrington | The Salt Lake Tribune)

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Jen Frodsham counts herself lucky.

For $655 a month, the 34-year-old lives alone in a spacious one-bedroom apartment in east Salt Lake City’s coveted 9th and 9th neighborhood — a steal of a deal in a city where the average cost for such a unit runs nearly double.

“My friend pays about as much, maybe a little less,” she said, “for just a bedroom inside of an apartment with friends in Millcreek.”

Still, Frodsham has had struggles. The problem wasn’t her desirable rent. It was, until recently, her less-than-desirable paycheck. Her part-time employment paid $20 an hour, which covered the rent but little else. So she juggled a few jobs on the side to pay for groceries and the occasional camping trip to southern Utah.

During the current housing chaos, the challenge for Frodsham, like many other Utahns, isn’t just mushrooming mortgages and rising rents, but also lagging wages.

Nearly 1 in 5 Utahns are severely cost-burdened, spending half or more of their income on housing, according to federal data. Experts advise that no one should pay more than 30% on housing costs.

In the current market, though, paying 30% or less of income on housing is increasingly unattainable for the third of Utahns with leases as well as those aspiring to buy a home.

Utah wages haven’t surged like the housing market — even as the state’s economy has grown at a faster pace than the rest of the country. Adjusted for inflation, Utah’s median incomes have held all but flat since 2002 even as its job base and gross domestic product have increased.

(Christopher Cherrington | The Salt Lake Tribune)

The labor shortage hasn’t necessarily changed that dynamic. Securing employment that will pay enough to keep up with unpredictable rent hikes remains tricky. Frodsham spent two years searching for a higher-paying job before landing at a technology startup at $40 an hour.

“It’s kind of hard to go get a better-paying job and to expand your life when you’re so stressed just to make ends meet with what you’ve got,” Frodsham said. “I think that incomes need to rise or the rent prices need to lower.”

How much should housing cost?

A new bill introduced at the Utah Legislature seeks to define housing affordability statewide — regardless of what Utahns actually earn.

HB36, which has passed the House, sets affordability as “the ability of a household to occupy a housing unit paying no more than 30% of the household’s income for gross housing costs, including utilities.”

The provision — tucked inside a larger piece of legislation redefining the role of the state’s Commission on Housing Affordability within state government — goes no further than that. But sponsoring Rep. Steve Waldrip, R-Eden, said it offers a key metric for evaluating state and city housing policies meant to entice the private sector to build more houses and apartments within reach of average Utahns.

That 30% guide has long been a rule of thumb for mortgage lenders, Waldrip said, “and we’re adopting that standard as sort of the benchmark for determining whether or not we’re really doing affordable or attainable housing.

“It’s not just for low-income housing,” Waldrip said. “This is for moderate-income housing, market-rate housing. All of those things should have that same baseline metric so we’re not creating house-poor households, where you’re putting them on the ledge, where they can’t afford to save or buy food.”

Francisca Blanc, assistant executive director of the Utah Housing Coalition, calls Waldrip’s analysis that no one should pay more than 30% of their income on housing “the golden rule.”

To afford a two-bedroom apartment in Salt Lake City, a worker would have to earn roughly $25 an hour, according to the National Low Income Housing Coalition. The average Salt Lake City resident makes $18 an hour, a few bucks short of what HB36 would consider affordable housing.

(Christopher Cherrington | The Salt Lake Tribune)

“Low-income earners, like people on a fixed income like seniors and people with disabilities, they’re paying way more than 50% of their income on housing,” Blanc said, “which affects their health and nutrition, their mental health and so forth.”

Since each city has a different cost of living, couldn’t Salt Lake City, for example, like some U.S.municipalities, set its own minimum wage to help residents more readily cover those housing costs?

Nope. State law forbids it from doing so.

Lack of local control

In 2001, for instance, the GOP-dominated Legislature banned city leaders from requiring their contractors to pay anything above the federal minimum wage, which was $5.15 an hour at the time.

A few years later, then-Salt Lake City Mayor Rocky Anderson proposed a living-wage ordinance — one that would allow the city to give preference to contractors when they paid above the minimum wage. The Legislature shot down that proposal, arguing that various minimum wages in different communities and living-wage policies would harm businesses.

Even so, some low-income advocates view municipal living-wage measures as an important weapon in the arsenal to combat Utah’s housing crisis.

“There are cities where the cost of living has grown so fast,” said Bill Tibbitts, an advocate for Crossroads Urban Center. “Rents in some locales have as much as doubled in recent years, yet very seldomly are you going to see wages go up that much right across the board.”

Preemptive state wage laws — which prevent cities from mandating pay on their own — “thwart action by local governments” to address the needs of their residents, said Mustafa Hussein, assistant professor of health economics and policy at the CUNY Graduate School of Public Health.

More than 100 jurisdictions, including Burlington, Vt., and Lincoln, Neb., have enacted some sort of living-wage ordinances. These laws typically apply to a small population, around 2% to 20% of low-wage workers in any given local labor market, Hussein notes, but the policy still has a noticeable outcome.

Hussein recently examined the impact of 19 cities with living-wage ordinances. His research, which is currently under peer review, found the policy resulted in better access to health care, stronger employee retention and substantial raises for low-income workers. Additionally, research indicates local living-wage ordinances don’t negatively impact businesses or the statewide economy.

“Federal minimum wage policies have tons of holes in them,” Hussein said, “and they are not nearly enough to ensure fair wages, generous benefits and economic security for a lot of working families.”

Is a pay raise in Utah’s future?

As of Jan. 1, 11 states upped their minimum wage. In Missouri, voters boosted the state’s base pay through a ballot initiative. Utah’s minimum wage has remained at $7.25 since 2009 — despite past attempts to raise it.

“We could take thousands of families out of poverty,” said Rep. Clare Collard, D-Magna, “by increasing the minimum wage.”

Last year, Collard sponsored a bill that would have lifted Utah’s minimum wage in yearly phases, elevating it to $15 by 2026. The measure died in its first public committee hearing.

“I know that there’s most likely not an appetite to raise the minimum wage at this time,” Collard said, noting she’s not bringing the bill back this session. “It was really quite unpopular last year, and I just don’t see that happening yet.”

Collard said she instead would pursue a measure to raise minimum wages for workers who rely on tips, from their current $2.13 an hour to $7.25 — creating, she said, “just one minimum wage in our state.”

Even if lawmakers were to repeal the preemptive law and raise the minimum wage, Blanc, with the Utah Housing Coalition, noted it wouldn’t necessarily solve the problem of Utahns being priced out of a home.

“Increasing the wage has to go hand in hand,” Blanc said, “with making sure that the cost of housing is not going to increase exponentially.”

The lack of agreement from state officials on a method to tackle low wages and high housing costs is one of the reasons Jen Frodsham will stay in her affordable apartment for as long as she can.

“If I decided to upgrade, I’d probably have to double my income again before I own a house,” Frodsham said. “And with house prices going up, maybe I’ll have to start my own tech company.”

— Tribune reporter Tony Semerad contributed to this story.