FOR IMMEDIATE RELEASE April 29, 2005	Contact: Michele Anapol (202) 466-2121 x226 Cell: (703) 862-3033 manapol@nhc.org

HOUSING AND TRANSPORTATION CONSUME TWO-THIRDS OF THE HOUSEHOLD BUDGETS OF WORKING FAMILIES PAYING MORE THAN HALF
THEIR INCOME FOR HOUSING

New Report Documents the Tradeoffs That Working Families Make in Their Household Budgets,
Forced to Choose Between Housing Costs and Other Necessities Such as Transportation and Healthcare

Washington, DC – Working families that pay more than half their incomes for housing spend two-thirds of their household budgets on housing and transportation combined, according to a new study entitled Something’s Gotta Give: Working Families and the Cost of Housing conducted by the Center for Housing Policy, the research affiliate of the National Housing Conference (NHC). It is no surprise that when compared to working families in more affordable housing, families that pay more than half of their household budget for housing reduce expenditures for other essentials such as food, clothing and healthcare. What is surprising, however, is that by far the biggest tradeoff is for transportation.

Working families are defined as low- to moderate-income families that work the equivalent of a full-time job and earn from the minimum wage of $10,700 and up to 120 percent of the median income in their area. Housing is considered affordable if it makes up 30 percent or less of a family’s total expenditures.

Overall working families that pay more than half their income for housing spend 7 percent of their household budget on transportation, and approximately 57 percent on housing – essentially spending two-thirds of their household budgets on housing and transportation combined. Working families in affordable housing spend three-times more on transportation, approximately 24 percent of their household budget, while at the same time enduring long commutes, often losing valuable time with family and friends and therefore reducing their quality of life.

The evidence in this study details the difficult choices that many working families face – that is, pay more for housing and live closer to work, or live in cheaper housing further away. On average, for every $1000 working families are able to decrease their cost of housing, their transportation costs increase by $775.  Although not all of family transportation costs are attributable to commuting, the journey to work from less expensive housing likely accounts for a substantial part of it.

“Commuting, or decisions taken to avoid excessive commuting, are undoubtedly affecting the quality of life for many of America’s working families,” said Chairman of the Center for Housing Policy Ann Schnare of A.B. Schnare Associates.  “To help improve the lives of these families, local governments must learn to think regionally when it comes to creating public transportation options. This is just one way to provide workers with greater access to employment and training opportunities while reducing commuting costs and congestion.”

In relationship to other key findings, when looking at healthcare and insurance expenditures, homeowners and renters seem to differ in their ability to cope with severe housing cost burdens. In particular, while such expenditure levels decline as the housing cost burden goes up for both owners and renters, renters are ultimately left with relatively fewer dollars to spend.  For example, typical healthcare expenditures are about $2,000 for renters in affordable housing and less than $600 for renters paying more than half their total expenditures for housing.  For homeowners, the comparison is $4,000 and $2,300, respectively. 

Paying half their income for housing can be a struggle or, at the very least, a source of stress for families. The results can also be more critical. For example, working families with children are more likely to pay over half their income for housing and to lack health insurance.

For those that are young, educated, or experiencing a short-term loss of income, the problem of severe housing cost burdens may be only temporary. However, with rising costs for housing and other necessities, many other working families will be stuck in a situation where they are unable to get ahead.  And unless incomes gain substantial ground against rising housing costs, or more affordable housing geared to working families is produced, they are likely to be joined by growing numbers of families in similar circumstances. 

Support for Something's Gotta Give: Working Families and the Cost of Housing was provided by the John D. and Catherine T. MacArthur Foundation. The study was released at an Affordable Housing Forum in Los Angeles sponsored by Century Housing, Freddie Mac and the NHC.

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