Minimum Wage Is Rising in the District, but So Is the Rent

June 24, 2023
Blog Post

By Rachel Metz on June 26, 2023

The District of Columbia is one of the country’s most expensive places to live. So it’s welcome news that the minimum wage will increase to $17 per hour on July 1. The pay boost represents a critical step toward enabling working families to earn the money they need to provide for their households. At the same time, much more must be done to ensure everyone who works in the District can afford to live here. Unfortunately, that’s unlikely to be the case until the District addresses the high and often out-of-reach cost of housing, and passes a living wage–or provides additional family supports, such as guaranteed basic income.

Thanks to sustained years of organizing–beating back numerous efforts by big business to block or roll back efforts to raise wages–the District has the highest minimum wage of any state. Ultimately, these are fights for racial and economic justice. According to 2016 data from the Economic Policy Institute, roughly half of all minimum wage workers in the District of Columbia are women, almost half are Black, and almost a quarter are Latino. More than a quarter of affected workers have kids (19.2% are single parents, 8.5% are married parents). The minimum wage increase will put money in the pockets of 127,000 minimum wage workers directly, or a total of 168,00 workers, including those who earn just over the minimum wage who are likely to get a raise so their salary stays competitive.

One group of workers that has long missed out on the benefits of minimum wage protections is tipped workers, whose base rate of pay is extremely low. Although the expectation is that employers will make up the difference between tipped worker pay–currently $6 per hour–and standard minimum wage if tips don’t cover it, the regulation is not adequately enforced. In 2022, voters took the historic step of supporting Ballot Initiative 82 to eliminate the sub-minimum wage for tipped workers. The District is slowly implementing this initiative (scheduled to be in full effect in 2027), which will result in tipped workers earning the full minimum wage. Until then, they earn a sub-minimum wage, scheduled to increase to $8 on July 1, with tips making up the difference. Unfortunately, even these gains are under threat, though restaurant workers and their allies are organizing to defend them.

The first of the month is typically when rent is due. The National Low Income Housing Coalition estimates that, to afford a one-bedroom rental home at fair market rent in the District, a worker making minimum wage would need to work for 73 hours each week, even after the July 1 increase. As a result, many families have to try to get by on less money so they can keep a roof over their heads. In 2021, 31% of DC children were living in households with a high housing cost burden, which means families pay more than the recommended 30% of their income on housing. Families of color disproportionately bear that burden – 35,000 out of 39,000 children in families paying too much for housing are children of color.

The disconnect between the wages families earn, and the cost of housing is so dramatic that, of the adults experiencing homelessness with children on the 2023 Point in Time count42% were homeless despite being employed. Support available to families experiencing homelessness does not provide long-term solutions to address the issue. Increasingly, families experiencing homelessness have been placed into the DC Department of Human Services’ Rapid Rehousing program. As of winter 2023, 3,034 families were in the program. In fiscal year 2023, just over half of adults with children exiting Rapid Rehousing had not seen an increase in their incomes between when they entered and exited the program. Even for those who did see an increase, it was only a few dollars a month on average. Without a more robust and holistic approach to addressing both low wages and lack of affordable housing, many District residents will continue to experience homelessness, or be forced to move out of the city.

DC Has Missed Chances to Support Residents’ Housing Needs

While the District has taken steps to boost affordable housing – or at least try to stem the tide of affordable housing being torn down or allowed to fall into disrepair – these efforts have been half-hearted. Residents need a bolder agenda if we are going to be a place where all people can afford to live.

The District has a landscape of programs intended to help address its insufficient supply of affordable housing. Mayor Bowser has especially touted her administration’s investments in the Housing Production Trust Fund (HPTF). To officials’ credit, from 2019 to 2022, the District built four out of five of all new housing units for extremely low-income households (those with incomes at or below the federal poverty cut-off or 30% of the area median income) in the region. Nearly as high a share of the region’s new units geared towards the next highest income range (30% to 50% of area median income) were built in DC. While these efforts compares favorably to neighboring jurisdictions, the low-income housing production doesn’t comply with District law, which calls for half of HPTF funding to go for projects for extremely low-income households. 2021 audit by the Office of the Inspector General found that nearly $82 million in HPTF funds intended for extremely low-income households instead went toward other income brackets under 80% of the median income. 

Of these extremely low-income households, many (29%) work and would benefit from a living wage, but others are single adult caregivers for young children (5%), seniors (30%), or disabled (19%). Given that range of people, officials have argued that other programs are better suited than HPTF to meet the housing needs of residents in this income bracket. However, funding for Permanent Support Housing–one such program–falls well short of what DC’s strategic plan to end homelessness outlined.

While the District has taken many positive steps in recent years, including investments in the Housing Production Trust Fund, we have also missed many opportunities to be a place where all workers can afford to live. We could have:

  • Passed a living wage
  • Passed the deed tax proposal that would have boosted funding for the HPTF next fiscal year, when Mayor Bowser’s budget reduced it significantly compared to previous years
  • Ensured that Housing Production Trust Fund investments are paired with ongoing operating subsidies to keep tenant rents low
  • Funded more Permanent Supportive Housing vouchers
  • Invested, and provided adequate oversight to ensure, livable public housing
  • Expanded and strengthened rent control

Raising the minimum wage is an essential step toward putting more money in the pockets of working people, many of whom support families with children. However the high cost of living in the District reminds us that we cannot simply afford to do the minimum. We need to set our sights higher and aim for bold and radical policy changes to help working families, children and youth to thrive, not merely survive.