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Addressing affordability no easy task in Austin

Wednesday, September 8, 2021 by Jo Clifton

During last week’s speech on the state of the city, Mayor Steve Adler identified issues the city has been grappling with, including defeating Covid and homelessness. He also pointed out the next big issues the city must tackle in order to allow Austinites to continue to live and thrive here. The top issue on the list? Affordability.

Adler provided a lengthy fact sheet on affordability designed to demonstrate that, despite the pandemic, Austin remains one of the best places to live in the country in terms of employment.

According to the mayor’s data, Austin has the lowest unemployment rate among the 25 largest cities in the U.S. In July that rate was 4.2 percent, as compared to a high of 12.1 percent in 2020. For the state of Texas as a whole, the rate in 2020 was 12.9 percent, falling to 6.7 percent earlier this summer.

A report from the Austin Chamber of Commerce was even rosier, stating that, on a seasonally adjusted basis, Austin’s July unemployment rate was 4.0 percent, down from 4.4 percent in June.

“Among Texas’ other major metros, Dallas and San Antonio have the next lowest seasonally adjusted unemployment rate, 5.0 percent in July, while Fort Worth is at 5.2 percent, and Houston’s rate is 6.5 percent,” the chamber reports, using data produced by the Federal Reserve Bank of Dallas.

The mayor’s memo on affordability states that Austin has added jobs in 14 of the last 15 months and “regained all but 300 of spring 2020’s pandemic-related job losses.”

Adler argues that Austin has the “the second-best-performing major job market since the beginning of the pandemic.”

“As of July, more than 16,500 jobs had been announced from roughly 60 companies moving to the region and nearly 70 expansions of companies already in the Austin area. This is yet another reflection of how much is going well here and how desirable a city we are. We’ve attracted new, clean manufacturing that will bring much-needed middle-skill jobs (jobs that don’t require a degree) to a city where that is our most significant employment need,” he continued.

But having the jobs and providing the people with the skills to do the jobs are two different things. One thing the city did was provide funding for Workforce Solutions, which has experienced a tenfold demand for remote workforce training and enrolled more people in the first four months of 2021 than it typically would have in an entire year, according to the mayor. Still, it’s a slow process. Over the past year, 574 people have enrolled in the program, with 209 completing the training so far. Of those, 112 have gotten local jobs, according to Workforce Solutions.

Adler likes to compare Austin with Denver and Seattle. Denver’s rate of unemployment was 6.7 percent in June, while Seattle’s was 4.5 percent.

However, according to the website, Austin ranks 18th in terms of job opportunities and wages. The rankings there go beyond unemployment rates and take into account taxes and cost of living. Salt Lake City, Utah, and Birmingham, Alabama, topped its list of best cities for job seekers, taking into account overall job growth, competition for jobs and housing affordability.

Dallas-Fort Worth-Arlington was ranked 17th, beating Austin by less than 2 points overall. MoneyGeek gave Austin 72.6 points, compared with DFW at 74.5 points. Denver and Seattle – the mayor’s two points of comparison – were ranked considerably lower. Seattle came in at 28 and Denver at 29. Houston was ranked at 45, Los Angeles-Long Beach at 50 and New York at 51.

The website found that cities that are major entertainment hubs, including New York City, Los Angeles, Las Vegas and Chicago, fell to the bottom of the list. “However, with the exception of Las Vegas, many of the lower-ranked cities are in high-rent, high-tax areas, including the city that MoneyGeek identified as the worst city for job seekers in 2021: Hartford, Connecticut. In contrast, the top cities – Salt Lake City, Birmingham, Indianapolis and Nashville – are in areas with a lower tax burden and lower living costs.”

Adler, like a lot of long-term Austinites, remembers a time when Austin was the most affordable big city in Texas. Austin’s affordability problem, he notes, is very much related to housing costs.

According to data from RentCafe, the average monthly rent for an Austin apartment is $1,539 a month for an 865-square-foot home. That compares with $1,763 for an 832-square-foot apartment in Denver and $2,234 a month in Seattle for a space that is just 692 square feet.

However, in Nashville that number is $1,502 for an 888-square-foot apartment, while in Salt Lake City the average rent is $1,353 for an 832-square-foot space. The rental price in Nashville has increased by 6 percent over the past year, while the average rent in Salt Lake City has risen by 9 percent over the past year, just like Austin’s. While the rent in Seattle remains exceptionally high, the price has fallen by 4 percent over the past year, according to data from RentCafe.

The city of Austin assisted 5,452 households in 2020 through the emergency rent relief program, which distributed more than $37 million in assistance. The mayor points out that the current City Council has worked to increase the city’s housing supply by providing creative subsidies for affordable housing, including enhanced density bonuses. He said with voter approval of housing bonds, Council has approved more than 600 new units of permanent supportive housing, compared with just 60 in the first two years of its term.

Council also took action earlier this summer to help homeowners by increasing the homestead exemption from 10 percent to 20 percent of a home’s assessed value. According to city data, the typical median household will pay $141 per year less in property taxes than under the old formula.

While not directly related to the cost of housing, Austin has invested in the child care labor force that allows Austinites with young children to focus on their own jobs. Adler says Austin has distinguished itself from other Texas cities by providing $6 million in grants for day care facilities that offer services for families relying on child care subsidies.

The city also provided $100,000 in emergency relief grants for family-based child care providers. Adler believes that without the city’s rapid response to the child care emergency, many of the programs would have disappeared.

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