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Don Cunningham: Quality Housing is Critical to Future Economic Growth

By Colin McEvoy on March 1, 2017

This column, written by LVEDC President and CEO Don Cunningham, originally appeared on The Morning Call website on March 1, 2017. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

My dad called the other day.

He lives in Florida now, which I believe is required once you retire and hit 70.  He and my stepmom moved to avoid Lehigh Valley winters, which now occur on five random and unexpected days from December to February.

The snowblower he giddily left behind in my garage serves the same purpose as the basement exercise machines: useful but unused wonders of technology. This all ticks him off a bit. It turns out that the happiness of a Pennsylvania expat in Florida increases in direct correlation to the pain and suffering inflicted by winters at home.

During our call, the news of recent 60-degree February days in the Lehigh Valley led to an irritated grumble on the winters of yesteryear and, then, ultimately, a pleasant pivot to a conversation about the old neighborhood and our first house.

Here’s where my schooling began.

That first house – a 1,300-square foot row house in a working class neighborhood on 7th Avenue in west Bethlehem – cost my parents $9,500 in 1966. Their mortgage was $63 per month. That’s less than what most people spend today on their cell phone.

I was one-year-old when they bought it. They were all of 20. My dad was two years out of Liberty High School and worked as a laborer in the Ingot Mold Foundry of Bethlehem Steel Corp. for $2.12 an hour, which translated to an annual income of about $5,000 per year. My mom didn’t work.

Today, according to Zillow, that house is worth $125,000. The neighborhood remains very desirable, safe, and served by good schools.  To afford the same house today it would take a salary of about $65,000 per year, which is not a typical early career wage for those with a high school diploma and no specific vocational and technical training. It’s more likely that two incomes would be used to afford it.  With the added cost of day care, along with increased taxes, insurance and utility costs, a household income of $80,000 today would be much more comfortable.

My aim is not for the cheap “oohs” and “aahs” of economic nostalgia like that engendered by those birth-year cards that shock you with the knowledge that a quart of milk and a gallon of gas both cost 43 cents the year you were born. Although, can you believe it, a mortgage of $63 per month?

The intent here is to realize that economic policy is housing policy and housing policy is critical to future economic growth. Whether it’s the cost to rent or the cost to own, a region needs to have a balance of housing stock and prices to meet the range of wages paid to its workers. Right now in the Lehigh Valley about 40 percent of our workforce has a high school diploma or less. A very typical wage for a non-skilled high school diploma worker ranges from $12 to $15 per hour. That translates to about $30,000 per year.

The explosion of e-commerce and direct to consumer retail growth in the Lehigh Valley has created near full employment in this sector, which is a big employer of workers with a high school diploma skill level. The law of supply and demand has driven average wages across the service and industrial sectors well above the minimum wage and even above the more generous proposals to raise the state and national minimum wage.  Rents and housing prices in desired neighborhoods with good performing public school, however, are often out of reach.

The manufacturing base here remains solid and growing. Those jobs pay a higher wage but most often require much more skilled training.  Hourly rates of $25 to $30 per hour translate to more like $55,000 to $60,000 per year, getting much closer to being able to afford that 1,300-square foot row house my steelworker dad bought on $5,000 per year back in 1966. It remains difficult to find those affordable working class houses in the neighborhoods or towns where people want to live.

The Lehigh Valley is a job center for a much-greater region.  About 92,000 workers commute in every day from surrounding counties. Without them, we couldn’t meet our employers’ demand. We have the opportunity here to be an even larger manufacturing and commercial hub. It will require more workers with more skills. That ultimately will require more housing, affordable housing for working class families.

The regions in America that provide the right amount of workers with the right skills in the right sectors will grow and prosper. Those that don’t will decline. Manufacturing jobs will not be coming back to every rural and small town hamlet across Pennsylvania and the U.S.  They are here and will continue to come if we have the skilled workforce. That means we will need available and affordable housing for those that will work there, just like was here when my dad walked out of Liberty High School and picked up a hammer at the Steel.

Last month, conservative columnist Kevin Williamson wrote in the National Review, “If we want workers and would-be workers to move, we ought to ensure that there are places for them to move to,” in an article where he called for making affordable housing the centerpiece of the Republican agenda for cities.

The days of $63 per month mortgages won’t be back but if we want more manufacturing and commercial growth we need to understand that new workers need housing that they can afford.  Housing policy needs to be part of our economic growth strategy.

Upcoming Events, Report to Highlight Lehigh Valley Commercial Real Estate Climate

A pair of upcoming events will  highlight the regional commercial real estate climate, as will the latest issue of Lehigh Valley Economic Development Corporation's (LVEDC)[...]

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