A growing labor crisis has thrown into stark relief the economic plight of some of the country’s lowest-paid workers, and calls to raise the minimum wage have been rattling the halls of Congress for years—as has cross-aisle debate on the pros and cons of such a move. Among the arguments are its impact on the labor market, inflation, and low-income families’ ability to buy food and groceries.
But its impact on shelter—arguably one of the most essential basic needs—has been relatively unexplored, according to researchers from Penn State University. The team aims to address that with a recent study published in the Journal of Urban Economics, which analyzed how historical minimum wage hikes have jived with people’s ability to pay rent.
Researchers scoured data on rent payments in 208 cities in 41 U.S. states from 2000 to 2009, including the number of renters who defaulted on payments. As it turned out, the data dovetailed with state-level minimum wage law amendments during that same time. States that upped their minimum wage saw 10.6% fewer rent defaults in the following three months compared to those whose starting pay stayed static.
But while that’s statistically significant, it also didn’t last, researchers say. The boost in rent payments flattened over time, and substantially so by the end of three months. Penn State’s team attributes this to its second major conclusion: that landlords raised their rent prices in response to the wage hikes.
There was still a net positive,...
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