Housing Bubble
Working Families Face Crunch As Housing Bites Deeper Into Stagnant Wages
With post-boom unemployment stuck around 6 percent and stagnant jobs and wages confounding predictions of a recovery, the news that housing costs are eating up a larger portion of family budgets aims another blow at working families.
A new report issued today by the Center for Housing Policy, the research arm of the National Housing Conference, reveals that many working families have been falling further behind intheir effort to keep pace with rapidly rising housing costs.
“This study shows a growing housing crisis, even during the boom of the late ‘90s,” said the Economic Policy Institute’s co-director of research, Jared Bernstein, speaking at a Washington news conference. “If families couldn’t keep pace with housing costs even in the best of times, this problem will only get worse unless we find a way out of this jobless recovery.”
Bernstein, who is a co-author of EPI’s biannual comprehensive book on working people and the economy, The State of Working America, described the sluggish economy and job market as a complicating factor for families struggling to meet rising housing costs. The latest edition, released on this past Labor Day, paints a broad picture of the challenges facing working families. Among them:
- With unemployment up sharply
and job growth stagnant at best, the tight labor market ofthe ‘90s
boom is quickly unwinding and its benefits are beginning to fade. On
the positive side, strong productivity growth remains a lasting legacy
of the “new economy,” and wages, though growing more slowly,
continue to outpace inflation, at least for those who remain employed.
- On the downside, household debt has increased significantly, totaling 109% of annual disposable income by 2001. In 1998, the average household’s debt – typically mortgage and credit card debt – added up to $45,800. Even in a time of prosperity, the growth of debt is troubling. In 1998, about one in 12 households paid at least one bill at least 60 days late. In 2001, seven out of every 1,000 adults declared personal bankruptcy, a share nearly twice as high as in the last business cycle peak in 1989. This rising debt is especially troubling in the midst of an ongoing labor market recession, when income is growing slowly at best.
The Economic Policy Institute was established in 1986 to broaden the discussion about economic policy to include the interests of low and middle-income workers. Its mission is to provide high-quality research and education in order to promote a prosperous, fair, and sustainable economy.
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