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Guest Opinion | Peter Dreier: Why Measure H – and Rent Control – is Good for Business

Published on Tuesday, November 1, 2022 | 9:19 am
 

Measure H – the Pasadena ballot measure that will give voters a chance to vote for rent control – is good for business.  You won’t hear the Chamber of Commerce saying that, but it is true, and for obvious reasons.

Renters represent 57% of all Pasadena residents. Their total combined household income is roughly $3 billion a year. But if too much of renters’ incomes go directly into the landlords’ pockets, it limits how much renters can spend in local restaurants, grocery stores, pharmacies, clothing stores, and other retail businesses.  (This is what economists call “discretionary income”). 

High rents also hurt local employers – businesses, hospitals, universities, nonprofit social agencies, schools, and others – who depend on Pasadena residents to do the work.  If janitors, secretaries, hotel housekeepers, food servers, day care workers, nurses, dental hygienists,  retail clerks, gardeners, teachers, and other employees can’t afford to live in Pasadena, they’ll be commuting long distances – from places like Palmdale and San Bernardino — to get to and from work. That’s not good for local businesses and it’s not good for the environment either.

Pasadena’s roughly 70,000 renters are a diverse group. Among them, 33% are white, 33% are Latino, 17% are Asian, and 11% are African American, according to the latest Census figures.  About one-fifth of all Pasadena renters are seniors 65 years or older. More than half (56%) of Pasadena renters have lived in the city since 2015.

But rising rents are making it harder for tenants to stay in Pasadena. And as home prices skyrocket, it has become more and more difficult for renters to buy a home. According to Zillow, the typical single-family house in Pasadena has increased from $724,877 in 2014 to over $1.3 million today. During that same period, the typical condo has soared from $488,269 to $764,639.

The difficulty of buying a home is particularly a problem for African Americans and Latinos because of years of discriminatory  redlining and predatory lending by the banking industry.  

Pasadena homeowners’ median household income is twice that of renters — $140,511 to $66,238. But many renters earn much less than that.  About 40% of Pasadena renter families have household incomes under $50,000; 30% have household incomes below $35,000. 

Among Pasadena renters, 56% spend more than 30% of their household incomes for rent. Fully one-third (32.5%) spend over half of their household incomes just to keep a roof over their heads.   

Among renters with household incomes below $35,000, a whopping 94% pay more than 30% of their incomes in rent. 

Among senior renters (those over 65), 59% spend more than 30% of their incomes on rent.

In other words, Pasadena renters have their backs against the wall, because rents have been rising much faster than their incomes. And most of the new housing that the city government has been approving for over a decade are high-end luxury apartments and condominiums, out of reach for most working families. 

We see the consequences in our schools.  The Pasadena Unified School District has lost many students because parents can’t afford rising rents and have had to move to other cities. The housing crisis hurts students because unstable housing — and frequent moves — means that they have to frequently change schools and suffer from the emotional trauma of eviction.

We also see this in Pasadena’s religious congregations, which have been experiencing an exodus of members.  Many of them simply can’t afford to live in Pasadena any longer. Among those who do hang on, many can’t afford to pay dues or put donations in the collection plate. 

We see this in our food pantries, where the most desperate and vulnerable families, who pay too much in rent, go to obtain food for their families, including their children, because they can’t afford to buy food in local grocery stores. 

Measure H will ensure that Pasadena has a mix of housing affordable to workers at all income levels. That’s good for the economy.

Measure H would not prohibit rent increases. If voters pass it on November 8, it will simply limit how much landlords can raise rents each year, based on their costs.  It will end excessive rent increases. It will stop landlords from gouging tenants to take advantage of the severe shortage of affordable housing.

Pasadena is a city of enormous wealth and outrageous income disparities, as described in the report that I coauthored with Glendale College economics professor Mark Maier,  “Pasadena’s Tale of Two Cities.”

A healthy business climate is one where prosperity is widely shared.  Rent control allows renter families to spend more of their hard-earned money on goods and services other than housing.  And it makes it easier for Pasadena employers to hire Pasadena residents.

In other words, Measure H is pro-business

That’s just one more reason to vote “yes” on Measure H.

Peter Dreier, a Pasadena homeowner for 30 years, is professor of politics and founding chair of the Urban & Environmental Policy Department at Occidental College. 

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