This from one of the 2020 Democrat Presidential forerunners:
In 99% of counties in America, a person working a full-time job at the minimum wage can’t afford a 1-bedroom apartment. This is a crisis and folks deserve solutions. pic.twitter.com/W5SUlRrsG7
— Kamala Harris (@SenKamalaHarris) July 23, 2018
First of all, what is with the Democrats laser like focus on minimum wage workers. According to the Bureau of Labor Statistics in 2016 only 2.7% of the labor force received minimum wage, and half of those people were under 25 years of age. Minimum wage is earned by a small percent of workers at the beginning of their working life.
Raising the minimum wage might temporarily improve the lives of the minimum wage workers who are not laid off after the minimum wage goes up, but raising the minimum wage definitely hurts the working class people above minimum wage whose effective wages go down if they don’t get a corresponding raise. In addition is the increased cost to everyone as increased labor costs are passed on to consumers.
Really, and not to sound too cruel about it, but when it comes to the Democrats go-to “people raising a family on minimum wage” argument, why should I give a shit. Seriously, minimum wage employees are minimum wage employees because they lack the skills to do anything more valuable than minimum wage. We’re talking about people than can barely read let alone drive a nail through a 2×4. If you are in your 30’s or 40’s and raising a family and don’t have the skill set to earn more than $7.25 an hour, your life is a just a series of bad decisions and major fuck-ups. I really don’t believe that society should be restructured to accommodate the least productive among us.
But I digress…
Kamala Harris’ idea is based off a 2017 Joe Crowley bill, so now it seems that Ocasio-Cortez is only slightly more socialist than Crowley.
Taking the bill at face value, a family making less than $100,000, or $125,000 in some regions, and paying more than 30% in rent can get the additional money they pay in rent (everything above the 30%) back in their tax return. Supposedly, the highest earners will only get back 25% of the above 30% rent.
The median cost of a one bedroom apartment in New York City is $2,956/mo. In San Francisco it’s $3,334/mo. So a year’s rent is $35K – $40K. But this is aberrant. The median rent prices in Fresno and Bakersfield are $800/mo. Zillow is showing house rental prices that are on par with Huntsville only 90 minutes away in Stockton.
When I got my first job after grad school, my wife wasn’t working and my starting salary was $85K. My mortgage on a condo in the Chicago Suburbs was $1,450/mo or 20% of my pre-tax income.
So it is clear that Kamala Harris created her bill with the mindset that the norm in America is New York City and San Francisco.
I can only see one outcome of this bill: the total destruction of the housing market.
This bill will encourage people to rent way above their responsible price range because they will get back money from the goverment. At the same time it will encourage landlords to jack up prices of their rentals and then negotiate rates with tenants based upon income so the increased rental cost is payed by the government with a tax return.
Why should an owner ever sell a house when it can be used as a revenue stream by way of artificially high rental value. My mortgage is $1,500/mo. I could charge $2,500/mo to a family making $67K and they’d get a tax refund on their rent and I’d pocket $12K per year.
Irresponsible renting and inflated rental prices would make the sub-prime mortgage crisis look like a wet, sloppy fart by comparison.
This is apparently what Democrat Senators do to the housing market when they want to run for President. They propose feel-good legislation that will collapse it.