August 25, 2014 Brian Kelsey

Debating Austin’s Future

City council races in Austin are heating up, and perceptions of “old” Austin versus “new” Austin seem to be popular firing lines. For the non-Austinites among you, voters in November will be electing representatives for single-member districts for the first time, drawing nearly 80 candidates for ten districts and mayor. It’s a historic turning point in local governance, as well as another milestone for the timeline marking Austin’s evolution from college town to big city. It’s been more of a sprint than a march down that timeline lately–the Austin region is adding approximately 50,000 per year–and the pace of change has elicited many competing viewpoints about the best ways to manage Austin’s growth and development.

I’m a fan, generally, of “new” Austin. Admittedly, my historical perspective is limited–Austin has been home base since 2002–but I enjoy the opportunities and amenities that come along with a thriving economy. However, through luck and good fortune of timing, I’m also in a position to take advantage of opportunities in “new” Austin. We purchased our home in 2005 and don’t have to face the skyrocketing housing costs in Austin. I have an advanced degree. I’m self-employed and not competing with the thousands of well-educated people moving here and looking for jobs.

I don’t know most of the 78 candidates running for city council or mayor. Most of them appear to be thoughtful, well-intentioned people concerned with the future of Austin. So in the spirit of contributing to what I’m sure will be a rich debate between now and November about affordability, equity, and what life is like for most Austinites, here are some points to ponder:

  • Austin is adding an average of 16,000 people with a bachelor’s degree or better every year, most of them moving here from other places. In “boom” years with the strongest job growth–we’re on pace to add about 37,000 jobs in 2014–only 8,000 new jobs are created in occupations that typically require a bachelor’s or advanced degree. In “normal” years, or at least what’s normal for Austin, that figure is more like 4,000. Now, not all the well-educated people moving here are active job seekers in the labor force (Austin is one of the most popular destinations for relocating Boomers and retirees), and there is turnover in existing jobs that need to be filled. But if you are one of the many people in Austin with a bachelor’s degree or better and you are surprised at how difficult it can be to find a well-paying job, you’re not imagining it.
  • 70% of projected job growth this year in Austin will be in occupations that typically require no postsecondary education. For those jobs typically requiring just a high school degree, the average wage is approximately $40,000 (across all levels of experience, not entry-level positions which are usually much lower paying). Housing researchers say that affordability means paying no more than 30% of income on housing costs. So $40,000 per year works out to about $1,000 per month in terms of what workers with a high school diploma, on average, can afford for housing. For workers in jobs requiring less than a high school diploma, affordability means paying no more than about $560 per month for housing.
  • According to the latest rental data available on Zillow*, there are only six neighborhoods in Austin where the median rent is less than $1,000: Highland, St. Johns, Heritage Hills, Pleasant Valley, Parker Lane, and North University. Workers with no postsecondary education make up about 368,000 people in the labor force, and 70% of job growth is occurring in jobs that pay, on average, enough to afford a maximum of $1,000 per month for housing. Six neighborhoods is a pretty limited offering for a city with aspirations of dense, centrally-located, mixed-income neighborhoods.
  • 60% of Hispanics and 40% of African Americans in Austin age 25+ have no postsecondary education. Hispanic and African American workers make up about 310,000 people in the labor force. The average wage for African American workers is about $39,000 per year, and for Hispanic workers is about $38,000 per year. Affordable housing at those wage levels means paying no more than about $975 per month. That, according to Zillow*, reduces your options to four neighborhoods in Austin: Highland, St. Johns, Heritage Hills, and Pleasant Valley. White and Asian workers, by contrast, earn average wages that can support monthly housing costs in the range of $1,500 to $1,700.

If we’re going to debate affordability and equity in Austin, let’s at least start with an understanding of the scope of the issue, and not limit the conversation to the skyrocketing list prices of owner-occupied housing in central Austin. Homeownership is, of course, an important part of the debate about affordability in Austin, but we are a renter-dominated market with a significant portion of the workforce, largely Hispanic and African American, increasingly unable to afford housing in Austin. If diversity is a goal, then we need a better understanding and greater appreciation for the connections between workforce preparation, wages, and housing affordability. I’d throw public transportation in, as well, but that’s a topic for another day.

“New” Austin is great, as long as you can afford to enjoy it.

We’ll be discussing these topics at the next UT Opportunity Forum event on September 12.

*Source: Zillow, median rent price, June 2014. Data is the median of the rental price for homes listed for rent on Zillow. Not representative of the universe of rental stock because not all residential rental properties are listed on Zillow.

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