In his fifth State of the Union speech, President Barack Obama called for a long overdue increase in the federal minimum wage and an expansion of the Earned Income Tax Credit. Both are important measures to address persistently high rates of poverty and widening income inequality in the United States. I applaud the executive action President Obama will take to increase the minimum wage for workers in companies with future federal contracts.
Increasing the buying power today of the lowest income U.S. workers certainly will improve their economic well-being and boost local economies. But much more needs to be done to address the acute shortage of housing that people in the low wage workforce can afford.
Today in the Washington, DC metropolitan area, a full time worker must earn $27.15 an hour to be able to afford the rent on a modest two bedroom home. This measure is known as the housing wage. In half of the states, the housing wage exceeds $16.00 an hour. In no state is even the proposed increased minimum wage of $10.10 an hour sufficient. Families and communities need affordable housing now if they are to thrive and prosper.
I am pleased that President Obama called on Congress to take up housing finance reform this session. We know that the Administration supports legislation that will continue to require the housing finance system to contribute to the National Housing Trust Fund, as Fannie Mae and Freddie Mac are required to do now (but have not done so yet). I urge the Administration to advocate for the largest possible assessment in the new system and robust funding for the National Housing Trust Fund.
The President’s pledge to exercise his executive authority to advance his economic agenda is welcome news. The new director of the Federal Housing Finance Agency, Mel Watt, has the authority to begin funding the National Housing Trust Fund today. Indeed, 33 U.S. Senators sent a letter to Mr. Watt last week urging him to do just that.
The National Housing Trust Fund has the potential to expand the supply of housing that low wage workers can afford. Funding the National Housing Trust Fund to scale would be one of the most important accomplishments of the Obama presidency.