What San Francisco’s Minimum Wage Can Afford for Housing

A full-time worker earning minimum wage in San Francisco can comfortably afford $780 a month in housing expenses based on the national standard of 30% gross income; housing expenses include rent and utilities. Yet, the city’s housing authority is calling a studio with a rent of $1,190 a month “affordable” for someone who earns only $2,380 a month. Fifty percent of income spent on rent is not affordable.

On July 1, 2018, San Francisco’s minimum wage rose to $15 an hour for all employees. In spite of the increase, a minimum wage worker is still unable to afford the cost to live in San Francisco where a tenant is lucky to find a studio for $1,300. This year, Seattle instituted a minimum wage of $16 for companies with more than 500 employees, such as Amazon. Unlike in San Francisco, a Seattle worker can find a studio for under $900 a month through the rental market. The real estate market in the Bay Area is simply unjust.

The Burden of Cost

San Francisco city authorities are encouraging a cycle of poverty by allowing a high cost burden on its residents.  If a worker earns $2,600 a month and pays $1,300 a month in rent (a home at this rate would probably be at least a 45-minute drive from work in the city), little is left for living. If the worker has a car, the below table might be his monthly budget.

Monthly Expenses
Rent $1,300
Electricity, Water, Gas 50
Phone 60
Taxes 420
Car payment 200
Gasoline 220
Insurance 75
Cash left for food and other expenses 275
Total $2,600

Nothing is left for savings in this scenario. Healthcare costs are not included. Also omitted is the cost of the San Francisco-Oakland Bay Bridge, which is $7 a day if a worker drives alone across the bay. This worker could save a few hundred dollars a month by using public transit but then he would lose travel time, not to mention a sense of freedom. Imagine that this worker has a child. Feeding two people well is not easy for less than $300 a month. Forget the additional time and expenses needed to take the child to and from daycare.

No one should pay more than 30%

Reducing rent from $1,300 to $750 frees $550 a month for a livable life.  It allows for a healthier diet. It allows the worker to relax and go to the movies or enjoy a dinner out.  The worker can put money into a savings account and save for his child’s future. More disposable income supports a stronger economy for local businesses and for the country.

Is San Francisco pressured by the real estate market to offer “low-income” housing at costs too high for its residents? California’s 1995 Costa-Hawkins Act makes matters worse by preventing local governments from mandating affordable units with every luxury project. Instead, the government is forced to subsidize to make up for market rates. Contractors charge a premium for construction fees adding to building costs. Meanwhile, a two-bedroom house in the Castro neighborhood has sat empty for more than a year, its owner and agent waiting for a renter to pay $5,000 a month for it.  Multiple households crowd themselves in shared apartments. Others sleep in their vehicles.

The San Francisco Examiner estimated that 142,000 workers in the city were to benefit from the wage hike last July. According to some workers, instead of helping, the raise resulted in cut hours.  Some earned less as a result, forcing them to find additional work to pay bills. For a city that offers no real affordable housing units, this is no solution.

Build $750 units

The only solution to the housing crisis is to provide housing units people can actually afford with a single full-time job.  This does not necessarily mean repealing Costa-Hawkins. But it does require using innovative strategies. McCormack Baron Salazar is a company based in St. Louis, Missouri, that has been doing just that.  Started as a consulting firm, then McCormack Baron & Associates found an opportunity to become a developer of low-income housing by pooling available resources including tax credits, government subsidies, and private funding. With over 22,000 homes built to-date, and over 68% of them for lower-income households, McCormack Baron Salazar proves that building affordable housing is possible and can be profitable. But it will take commitment and cooperation to make it happen in San Francisco.

Be the Change

In spite of the unjust nature of the real estate market and the slowness of building needed housing, property owners can make a difference.  Care Association wants to help.

If you own a home with vacant space, contact us by email or phone at 415-890-0011 to find out how you can help a low-income tenant.

Affordable Housing May Be Next Door

Homelessness continues to affect us.
Developers continue to build houses that are too big and costly.
Affordable units continue to be in extraordinarily high demand.
New units take too much time and argument to build.

What can we do?

Make Connections

Many homeowners are willing to offer housing below-market to people they like. But many of these homeowners don’t know where to find them. Under federal law, homeowners with no more than four units on the property on which they reside may choose whoever they want to live there. By providing a platform on which homeowners can get to know prospective tenants, Care Association wants homeowners to be able to exercise their rights while helping a household that is unable to compete in a hyper-inflated market. Though a trouble-free landlord-tenant relationship is without guarantee, establishing dialogue can help both parties make better-informed decisions. The goal of the Care For Us platform is to make connections and facilitate this dialogue.

While Care Association is building the platform, we are reaching out to make connections for people in need. Currently, we are working on finding housing for E’Dreana Black and her son. Get to know E’Dreana on her Care For Us page. We are also raising funds for a security deposit.

Vacant Units Exist

The Anti-Eviction Mapping Project found that many-times more vacant residential units exist in San Francisco than do homeless households. Would these units remain vacant if their owners personally knew someone who needed a place to live? Sadly, there is little camaraderie between the Haves and Have-Nots, contradicting idyllic images of community that the Summer of Love presented. California real estate laws are absurdly in favor of the Haves. While rental laws provide some tenant protection, many homeowners avoid having tenants for fear of facing trouble with ones who reserve their right to stay. Until there is change, we need to find alternatives.

One alternative is to reach out to homeowners.

We Have to Start Somewhere

We are starting by working with one household, but the platform will be designed to multiply the effort.  And there will be more. Sign up to join the mailing list to stay informed.

Fundraising in Noe Valley

After the 1906 earthquake, San Francisco responded with emergency housing. Human needs have not changed. Affordable housing is possible today.

The Care For Us Website

Care Association is developing an affordable housing technology solution, a platform to enable homeowners with vacant rooms or units to offer housing to lower-income tenants who tell their stories on the CareForUs.us site. We have found that many homeowners wish to help those in need of affordable housing yet don’t know where to find tenants who are suitable for them.

The Care For Us site will also enable donors to search for, choose, and give goods and services to individuals and charities in need. Goods provided through the program are items that assist individuals in achieving a U.S. standard of living or quality of life and nonprofits in procuring supplies and equipment for their charitable operations. Services may be educational, legal, financial, or health-related. Beneficiaries are verified by Care Association as “in need” based on financial criteria and knowledge of individuals and organizations.

When I first started this nonprofit, I was providing nonprofits with equipment and supplies. I was also providing pro bono emotional regulation care. The website idea came after talking with people about their hesitance getting rid of things that are meaningful to them. Knowing who benefits from donations gets lost when donating to thrift stores. How can we find recipients who would appreciate them? Others mentioned their desire to help people, but didn’t have a way to help without committing to a program. Care For Us would enable pro bono services directly to people in need. But I realized that lack of affordable housing is probably the cause of most low-income stress. If the Care For Us site can connect donors to beneficiaries, why not connect landlords to prospective tenants?

The Care For Us Demo

Today, the Care For Us demonstration website is under construction. We need a demo in order to raise funds, and to show that the Care For Us site will work. Results will enable us to effectively apply for grants. For this demo, I wanted at least five participants who needed affordable housing to be “users” and beneficiaries of the site. I put together an online form where prospective beneficiaries could upload photos and write their stories. I learned that few people are willing to allow someone else to choose housing for them, and that those who struggle with low income do not want to broadcast their needs. Our society looks down on people with low income, leading to shame and embarrassment. Only one out of ten people invited to become participants of the demo completed the form.

The demo site is meant to be a working prototype. So far, the participant who completed our form has a live page hosted at careforus.us. We have been reaching out to landlords and property managers and will soon place an ad to find the participant’s family a home.

Volunteers Are the Heart of Care Association

While we wait for more people to sign up for our demo, there is a lot of work to do. I have been building the demo site by typing out the html markup. It’s not super pretty, but it functions. One volunteer is working on our technology infrastructure with Salesforce at its center. Another volunteer has written an article to boost marketing. Soon we will look for a web architect to plan construction of the launch site. Since we were unable to raise enough funds to hire an engineer, I will be coordinating site construction with volunteers. We had an original beta launch date of January 2019, but it will be much later than that. I am also a volunteer, enabled by loved ones to carry on with this venture. This means 100% of funds received will go toward operations and housing assistance. Currently, we have a GoFundMe campaign to raise a security deposit to help our participant find a home.

Six months ago, when someone told me that nonprofits take a long time to make accomplishments, I thought that I would be the exception and be able to launch our project expeditiously. Now humbled with a fourth revision to our business plan, I still have hope to make this world a better place for some.

Humble Beginnings for a Grand Plan

Building a business is difficult, but building a nonprofit has its own unique challenges.  For starters, nonprofits like ours don’t have anything to offer in return for revenue except a sense of goodwill.  Many nonprofits rely on donations to complete their missions.

To make things more difficult, our project is based on technology — the WWW.  The site needs to provide an easy-to-use interface, to be safe with its data secure, and to connect to secure third-party software for income verification.  And it needs to look good. Building a site that accomplishes what we want, provides the security its users need, and functions in a way that benefits and doesn’t frustrate is no small feat.  To accomplish this successfully, we need money, and a lot of it.  Unfortunately, relying on volunteers is neither efficient nor effective for a technology product that is not about technology.  The computer platform Ubuntu was built by volunteers but for computer purposes.

On September 1, we began fundraising so that we can hire developers to build the site.  We found a table for free on Craigslist and covered it with an old sheet with Sharpie-colored words, “Make Affordable Housing Happen Now.”  Since we are starting from nothing, we had to start somewhere.  At least a picture of our table gave us something interesting to post on our Instagram account (@careforus.us).

Beginning Care Association

When this project first started, it was just me with an idea: create a networking site where people who needed things for a better quality of life could connect with people who had something to give.  Care For Us went on the drawing board.  Unfortunately, someone else in California had the name, another nonprofit that serves children with autism.  As opposed to supporting a silo of people who had differences from others, I wanted to create a nonprofit that could involve anyone in the United States.  With Bruce Wolfe as Treasurer and Cedric Bertelli as Secretary, and with the help of Larry Ross, CPA, we formed Care Association and applied for 501(c)(3) status, but kept the Care For Us name for the project.

When our status letter arrived in the mail, it came as a surprise having been months after the window of time in which the IRS said they would inform us of our status. By then, I had started graduate school thinking the project would never happen unless I funded it myself.  I needed to make money if I were to fund it, and there weren’t any jobs out there that interested me enough.  Someone at the Internal Revenue Service believed in what we want to do… or we just completed Form 1023 correctly, thanks to Mr. Ross.

More than a year after applying, our business plan is written, the organization’s website is up, and wireframes are in process.  Most important, our focus has changed to affordable housing.  While writing the business plan and looking for feedback, I realized that exchanging goods and services wasn’t on the forefront of people’s minds.  But many people, perhaps most in the San Francisco Bay Area have been struggling with the lack of affordable housing.  Even people with money that can afford the high prices are unhappy with the costs.

As with any business, building a nonprofit takes a lot of work.  But unlike for-profit businesses, we rely on donations to help us get started.  Having a business plan and applying for a loan isn’t really an option right now.  Our first project is the Care For Us site, and it won’t be providing revenues right away if at all.  Not only are we not for profit, we are also tech-related.  We don’t have a program with active volunteers going out and meeting people’s needs, but we do have a plan and a vision.  That vision includes bringing the nonprofit world to the frontier of technology.