Aja Labrador

How Stagnant Wages Affect Housing Affordability

Abstract:

Historical data indicates that average real wages have remained stagnant since the 1980’s. This led to research investigating how flat wages affect housing affordability amongst renters within the United States. Research regarding stagnant wages and housing costs helps us understand how this disparity occurred and what results from the advancement of housing prices along with static wages. When initially determining how stagnant wages affect the ability to acquire adequate housing, I first use data from all counties in the United States between 1980 and 2014 to measure to document that households are spending more of their income on rent on average. Following that I look more specifically for whether or not there are similar trends throughout all counties that may lead to inability to afford housing. A quantitative analysis is used to conduct the research and analyze the data collected by each county. Once the foundation is formed about rising inequality and housing costs, a hedonic regression is used to closer analyze results for replication and ultimately, a closer look at characteristics that affect the inequality will be performed. Initial results show that nationally, people spend 5.65% more income on rent in 2014 as compared to 1980. When hedonic regressions are performed, results show that people in poverty are the most vulnerable population and experience affordability issues the most. Housing quality, income, and many other characteristics have not significantly contributed to the increase in rental costs.