By Alan Greenblatt | Governing
Whenever a minimum-wage increase is proposed, you can count on hearing certain warnings, including that employers will cut back on hiring, or that prices could go up for consumers. Now that cities have gotten in the habit of setting their own minimums, a new concern has come up: the possible effect on housing prices.
The cities that have adopted a $15-per-hour minimum wage — Los Angeles, San Francisco and Seattle — are already some of the country’s most expensive places to live. Some economists are concerned that increased incomes will put still more pressure on housing markets in these areas. It’s simple supply and demand, says Chris Thornberg, founding partner of Beacon Economics in Los Angeles. If people have more to spend in the low-end rental market and there isn’t new construction, prices are bound to rise, he says — eating up much of the benefit of increased wages, “particularly with a big-ticket item like housing.”
