Cost of living and minimum wage.

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Tamina
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Re: Cost of living and minimum wage.

Post by Tamina » Thu, 3. Jun 21, 17:59

Incubi wrote:
Wed, 26. May 21, 04:12
Using the 30% rule where your rent should never be more than 30% of your income. The highest minimum wage in America is $16.48/hr. A full time job is 40 hours a week but you generally only get paid for 35. based on a 52 week year that is $27,300 divide by 12 and you get $2,275 a month. 30% of that is $682.50 and that is the highest rent that you should pay. This is in Emeryville where your not likely to find even an unfurnished studio in the worst part of town for less than $1,250 which is more than half your income. The median income in Emeryville is $56,614 which claims that the average person is making over $30 and hour.
[...]
This is my angst for the day.
When I was a student, I wasn't able to and not even allowed to work for more than 10 hours a week by law. Most students work for minimum wage jobs because their low-financial situation is exploitet by the free market, and it would be even lower without minimum wage. In fact, in Germany, student interships are not even eligible for minium wage, they can pay you nothing and you have to kiss their asses how thankful you are for this "opportunity". With minimum wage, 10 hours a week, it was a fraction of my rent..

I would even say that the same people or generation of people, in positions controlling wages, are the ones having enough money to own houses and renting them to the same people they are exploiting.

In my opinnion, maximum rents should be tied to the 30% rules. Depending on how much people make in that region, the rent of an average apartment shouldn't be allowed to be increased higher than 30% of that. End of story.

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Und wenn ein Forenbösewicht, was Ungezogenes spricht, dann hol' ich meinen Kaktus und der sticht sticht sticht.
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Re: Cost of living and minimum wage.

Post by Mightysword » Fri, 4. Jun 21, 03:24

Tamina wrote:
Thu, 3. Jun 21, 17:59
In my opinnion, maximum rents should be tied to the 30% rules. Depending on how much people make in that region, the rent of an average apartment shouldn't be allowed to be increased higher than 30% of that. End of story.
It won't be the end of story.

It doesn't matter what kind of scheme you can come up on the income side, it will not do anything meaningful to put more people in housing. To effectively drive down the cost of anything, you need to make sellers compete with each others for buyers, and the only way for that to happen is for supply to meet or exceed demand. Sure you can come up with reasons such as greed as the what makes the market what it is ... but I don't think that's the main reason at all. At the end of the days, the housing market is out of whack is because the buyers have to compete with each others due to low supply, and that will always drive the cost up without fail.

Say, if you have 1000 houses available and 2000 people needing one, thus the competition drives away those at lower income. Now we decide we should give those people more income, that will have some short term effect of making them more competitive but then what? Without more house added to the lots at the end of the day it will still be 2000 people competing for 1000 houses. A cap will also only achieve some short term effect, in the end you may shuffle who get a house and who doesn't (with a raffle?) but you won't be putting any more people into housing. Again, rent/price is what it is because there just isn't enough supply. And I had mentioned in my previous post, a cap might have the side effect of gutting supply in a private market which in this case just gonna make it worse for EVERYONE, unless the government themselves enters the market.


And note that most place with housing crisis is largely not due to just local factor. Before I bought my house about 14 years ago, I paid $600 for a 2 bedrooms. These days I get "weekly" offer for my house at 3-4 times the amount I bought it for. And you'll be lucky to get a 2 bedroom less than $1500 where I live. That kind of jump can not be explained by local growth or simple greed. Colorado had seen explosive growth for the last few years due to various factors, there were years it was even ranked #1 as the fastest growing state in the US. Colorado minimum wages is well above the federal one, at $12.00 an hour, Denver City actually has it own minimum wage at $14.77 this year and will raise to 15.87 next years, and most place will hire for more than that. Still, unless you work more than one job, have overtime, or share the room with someone, you will still gonna struggle with your rent (and forget about affording a house).

And that will be the case until either less people coming here or a lot more houses are built. It's the reason why New York (I think?) last year deny Amazon a plan to build the new HQ there, despite the fact it will draw in many many high paying job. That influx of workers would just give the city a new housing crisis.
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Re: Cost of living and minimum wage.

Post by Tamina » Fri, 4. Jun 21, 03:59

Rents are not driven by supply and demand. Housing is a highly speculative trading asset. People are willing to pay ever increasing prices for property because they are speculating that someone in the future will pay even more for it.

500.000 empty homes in Britain while an ever increasing number of people are living in emergency shelters.

If housing would be based on supply and demand then there wouldn't be empty houses due to nobody being willing to pay the rent. You would expect the rent to go down, but no, there are whole districts in London without a single soul living there.

Rent is what pays off those loans which were used to buy property. So rents are rising with the buying prices. The only solution is to cap rent pricing.

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Und wenn ein Forenbösewicht, was Ungezogenes spricht, dann hol' ich meinen Kaktus und der sticht sticht sticht.
  /l、 
゙(゚、 。 7 
 l、゙ ~ヽ   / 
 じしf_, )ノ 

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Re: Cost of living and minimum wage.

Post by Mightysword » Fri, 4. Jun 21, 04:37

I will not say you're wrong because I'm not educated enough on the matter, but at the very least I will state it doesn't make sense. It makes no sense whatsoever to offer rent at a price that will leave your property empty. Even if your rent doesn't cover your loan, it's still better for it to be occupied, because otherwise you get zero and the entire loan coming from your pocket. And paying that cost at any length of time is simply suicide in term of investment both in term of raw cost and opportunity cost. When COVID hit, I know a lot of landlords who were willing to re-negotiate just to keep the tenant paying. Yeah, some tried to evict people too, but it wasn't so the unit can remain empty, but so they can rent it out to people who can actually pay, empty rent unit means landlord sitting on fire, especially if they got it through collateral investment.

So I gotta ask ... are those units actually regular housing unit or apartment that the "average" public can normally afford? Or are you talking about luxury unit? Are they really for rent? Or they're some kind of vacation house investment, or just simply real estate for sale? I had heard that London in particular suffers heavily from foreign investment in the real estate market. One of the new "scourge" on the real estate market is Airbnb. But that's not a problem capping rent gonna help, you need a whole different kind of regulation for that. At the very least, I don't think it's as simple as the number you're showing.
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Re: Cost of living and minimum wage.

Post by Vertigo 7 » Fri, 4. Jun 21, 05:22

It doesn't make sense to you because you're approaching housing like something you can just run down to Walmart and buy.

Real estate is an investment, it's not supply and demand driven. You're not going to see many landlords sign year+ leases at a guaranteed loss when they can wait and snag someone that will earn them a profit or at least break even. Land lords have to answer to the banks and if they can't make their mortgage payments and the bank forecloses on the property, then who the hell knows what happens next? Likely all of the tenants will be tossed out on the street as the bank auctions off the property. You think the bank is going to cut them a break just because no one in the area can afford the rent? Ask Trump or Kushner how that works out...
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Re: Cost of living and minimum wage.

Post by chew-ie » Fri, 4. Jun 21, 09:59

Next stage of evolution is full transparency [for both "sides"]. That would enable to have the real data to decide [real time dynamic] prices - and not lead to some scenarios being the template for a rigid system and / or perception of that matter.

But that won't happen for a long time I guess because humans.

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Re: Cost of living and minimum wage.

Post by Chips » Fri, 4. Jun 21, 15:41

Was reading an economics book which touched on prices - every year the amount built is a tiny proportion of the total amount of housing, so unlikely to decrease prices by volume built at present. We (in the UK) have record low levels interest rates, meaning cheap to borrow coupled with low incentive on other investment vehicles. This means people can stretch that budget further by being given more money through generous mortgages (95%) and such low interest rates that they can "afford" repayments on otherwise huge mortgages. Now the book didn't specifically say this, it's more technical and better explained with less embellishment :D It's more about explaining markets, and housing is one it used (elastic vs inelastic)

But it is also pointing out the interest rates means debt is manageable beyond normal expectations, so people can borrow far more.

On top with aforementioned high rent (5%) returns, those with money can borrow more and snap up new additions to the market, pushing prices up as the market is forever buoyant. Read a brief article about Govt potentially offering 50% reductions in new build prices to frontline staff in certain areas to help get onto the ladder. Given that's a 100k handout, I'd hope to god it's airtight not exploitable, but of course it will be. A bit like how all that flammable cladding is still legal on properties, including schools and hospitals, and now they're calling into question its use and yadda yadda. Why has it not just been banned outright, catastrophically flammable is catastrophically flammable. 18m is bloomin high. But that's another grumble.

Giving up caring. House prices abroad are a fraction for so much more and next month I'll get a "work from home" job which I'll eventually ask if I can work from abroad :D

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Re: Cost of living and minimum wage.

Post by pjknibbs » Fri, 4. Jun 21, 18:02

I may be wrong, but part of the reason for the mismatch between supply and demand is that more people live alone than they used to. I'm as guilty as anyone--I live in three bed semi-detached house entirely on my own.

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Re: Cost of living and minimum wage.

Post by Vertigo 7 » Fri, 4. Jun 21, 18:04

Chips wrote:
Fri, 4. Jun 21, 15:41
Giving up caring. House prices abroad are a fraction for so much more and next month I'll get a "work from home" job which I'll eventually ask if I can work from abroad :D
I asked my HR if I could move to Canada and was told no. I find that ironic considering they just laid off a few thousand people and outsourced grunt IT work to India in the middle of the pandemic. Millions, if not a few billion USD and thousands of jobs being shipped overseas...
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Re: Cost of living and minimum wage.

Post by Mightysword » Fri, 4. Jun 21, 21:08

pjknibbs wrote:
Fri, 4. Jun 21, 18:02
I may be wrong, but part of the reason for the mismatch between supply and demand is that more people live alone than they used to. I'm as guilty as anyone--I live in three bed semi-detached house entirely on my own.
When you can afford to, yeah. Usually people who own a house and already paid it off or got it when it's cheaper like myself. Also I think the older you get, your tolerance of sharing the living space with someone not completely on your wave length goes down. ;)


I don't think it's much of a preference for young people though. I live near downtown so I know a lot of people boarding together. $1500 by yourself is barely sustainable, half of that and you travel to how it was 10 years ago. Of course, risk a drama come with it, as I also often hear. If anything Landlords often have to be on the watch for people cramping in more person into the unit than stated on contract, especially if the landlords are covering utilities.
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Re: Cost of living and minimum wage.

Post by mrbadger » Tue, 8. Jun 21, 12:54

I don't think I've ever approached minimum wage in my life, unless you count the couple of years in the eighties when I was placed on paid government training courses for £100 a month. Those were to suppose to give you useful skills, in carpentry, painting and metalworking.
Nothing I wanted, they have come in useful over the years, but I'd have preferred college.
After that it was factory work which I despised, but paid astonishingly well. This was most likely due to how crappy the job I did was, along with it still being the eighties, when fair wages were still a thing and my monthly rent for a huge three bedroom flat was £350 and I could live there alone.
I left, and even though I became a qualified nurse, rising to the role of ward manager, I never earned more than I did at that factory.....
Only as a CS lecturer did I finally earn more, 17 years later... But if it was only about the money I'd have stayed put. After all a shocking number of the people I used to work with are still there even now, which baffles me. I needed job satisfaction more.

This minimum wage and zero hour contract thing so many people have to endure now must be horrific. I can't compare my life journey to anyone else's, that doesn't work. My approach meant I didn't experience any of the issues young people of today are, I can think it must be awful, I certainly don't, as so many do, think they're not working hard enough.
I worked alongside some young people while doing my undergrad degree in my thirties. In my case to avoid trashing my savings, but they were mostly trying to start out in a working environment that was already becoming hostile to the concept of a decent working wage for manual unqualified workers.
I had a short period after my Ph.D. without much to do until I got a lectureship, but this is pretty much standard, and I kept those days filled.

One thing that does worry me is how many students I see who are busy accumulating around £50,000 in debt (excluding overdrafts), but don't bother putting enough effort in to their university studies. As if the only important thing is to just scrape a pass mark and 'achieve a degree'. This of course isn't really a viable thing. It is a thing they do, but it doesn't really work.
The issue here being when they hit my more advanced modules, and those of my colleagues who teach advanced, yet required topics, they are totally unable to cope, so things fall apart for them.
I liken it to spending their three years ordering a Macbook, then smashing it every month. I imagine most of them wouldn't do that, but they do refuse to attend lectures and workshops that are costing them the same amount. Then there's my time too. I don't know how much they pay for that and I don't care to find out.

Maybe it's because unlike them I started out in life working in factories and doing a succession of rubbish jobs before lifting myself out of that. I understand the costs of failure, and as of yet these young university students don't.
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Re: Cost of living and minimum wage.

Post by Mightysword » Thu, 10. Jun 21, 19:46

mrbadger wrote:
Tue, 8. Jun 21, 12:54
One thing that does worry me is how many students I see who are busy accumulating around £50,000 in debt (excluding overdrafts), but don't bother putting enough effort in to their university studies. As if the only important thing is to just scrape a pass mark and 'achieve a degree'. This of course isn't really a viable thing. It is a thing they do, but it doesn't really work.
I can think of a couple reason. The first one is the culture of "plastic", after all debt is hardly an issue exclusive to the student population. Often time when I look at 2 "average" working people, one with a good financial status and one buried under credit debt it's not their circumstances that makes the different, but rather one is just more financial literate and discipline then the other. And students ... well, they are probably one of the most financial illiterate population you can have. Half of the people I know taking students loan spent it on stuffs that's not even related to school expense. Rather they treat a few thousand dollars that suddenly "fall on their laps" as stuffs they can enjoy now and worry about 'later', because to them 4-5 years down the line seems to be a life time away. Most young people does not pocess the awareness to appreciate how fast life will flash you by ... and its consequence.

The other reason is the failure of the system to "prepare" students for college education, and by that I don't mean just in term of academic, but attitude and mentality as well. This is something I can speak from personal experience as someone who grew up in Asian where the expectation in general education / K12 / college were very tough (I understand different countries in the West call them differently):

I came to the US after grade 10th so I spent 2 years (11th and 12th) in highschool here in the US and my impression is ... highschool students in America seem to have less work and expectation than even an elementary student in Vietnam. I struggled a little bit at first due to the language barrier but after that, I spent less than half of the effort I used to in Vietnam and still passed with flying color in a foreign country. I grew complacent (thinking I must be a genius!*), went to university and almost fail half of my classes in the first 2 semesters and end up losing all of my scholarship as a result. It was a shocking wake up call and I told myself "I need to get back my Asian mentality fast or I gonna sink!!" I consider myself lucky because I had that old reference (my time in Vietnam) to re-adjust myself to, but to other students who never had that in their life ... it's easier to see why they seemly fell through the hole under their feet.

*In the decade after, I notice this is an issue that often comes up in conversation. Kids are often coddled to think themselves as the next Eisenstein pre-college, but once they get there they got hit with the reality that "you are nothing special", and a lot can't cope with that.
mrbadger wrote:
Tue, 8. Jun 21, 12:54
The issue here being when they hit my more advanced modules, and those of my colleagues who teach advanced, yet required topics, they are totally unable to cope, so things fall apart for them.
I liken it to spending their three years ordering a Macbook, then smashing it every month. I imagine most of them wouldn't do that, but they do refuse to attend lectures and workshops that are costing them the same amount.
My guess (and I'm pretty confident about it) is because the students are simply go through the same motion they did in general education, where that kind of behavior was accepted and still get them what they want. I would bet as an instructor, if you have to sump up all the explanation in one short sentence, it would be something like: "that is not how college works!"
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