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Low- to Moderate-Income Households Struggling in Philadelphia Fed District

HELOCWhile much of the overall economic news has been positive as of late, a report from the Federal Reserve Bank of Philadelphia released Wednesday indicated that low- to moderate-income (LMI) households are still struggling in the areas of employment and household stability.

A total of 38 organizations responded to the Philadelphia Fed's Q2 2015 Community Outlook Survey, providing insight on conditions and challenges that LMI communities are facing across the Fed's Third District (Pennsylvania, New Jersey, and Delaware).

The survey found that economic circumstances of LMI households were largely unchanged from Q1 to Q2, and while job availability improved for the fifth straight quarter, the pace of improvement seems to be slowing, according to the Philadelphia Fed. Slow wage growth has been a problem and may be preventing homeownership growth. Economists have repeatedly stated that significant wage growth will be a key factor in increasing the national homeownership rate, was reported at 63.4 percent at the end of July – its lowest point in nearly 50 years, according to the U.S. Census Bureau.

“In our area, $20 per hour is needed to pay market rent," one survey respondent said. "Many jobs are in production and in warehouses, and many are filled through temporary agencies with very little opportunity for permanent positions. Pay scales are not keeping up with housing costs, especially for renters."

Another survey respondent said, "Official unemployment rates continue to decline but only because LMI households have given up finding a full-time, living wage job."

"Pay scales are not keeping up with housing costs, especially for renters."

Household indicators outside of job availability suggest modest deterioration with a long-term overall trend toward stability–which indicates that conditions are not deteriorating but not necessarily improving, according to the survey. The survey found that access to credit and affordable housing availability have varied over the last few quarters without experiencing any substantial improvement while financial well-being has largely stagnated.

"Due to challenges locating affordably priced for-sale housing in high-demand counties, we recently began constructing homes for sale to LMI households," one survey respondent wrote. "Financing this project in a post-recession environment was extremely difficult, but our first six units are presold and near completion. We are unable to do this in lower-valued housing market areas of the state."

The themes in the responses indicate the positive developments in employment –related indicators are tempered by concerns over wage growth and job stability, while a disconnection between wage growth and rent remains a barrier to housing affordability, according to the Philadelphia Fed.

"Philadelphia is a city full of empty homes and low-rent housing stock," another respondent wrote. "We are also a city full of homeless people and abject poverty. Yes, we have many ‘low-rent’ units, but even they are not low enough for the income levels of many individuals and families. We need more subsidies and a long-term plan for education and employment that pays a living wage."


About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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