Gentrification, rising rents put squeeze on more Austin households


Highlights

Urban Institute report suggests that the rising cost of living is affecting more middle-wage households.

Austin’s higher rents make it harder to recruit nurses, potentially boosting the region’s health care costs.

The pressures of gentrification and rising rents grew faster and spread farther in Austin than in comparable metro areas around the country, setting off ripple effects that could raise health care costs and undermine the quality of education for residents throughout the region, according to the authors of a report due out Tuesday.

Researchers at the Urban Institute, a nonprofit research organization, found that almost half of Austin renters were “burdened” by their housing costs in 2015, an increase from 41 percent in 2000.

The situation deteriorated even further for the metro area’s low- and middle-income households, or those that earned between 50 percent and 120 percent of the area median income (or $38,400 to $92,160 a year for a four-person household in 2015).

The number of Austin’s low- and middle-income households that spent at least 30 percent of their income on rent rose to 25 percent in 2015, up from 9 percent in 2000.

That increase helped underscore that the stress of the region’s rising cost of living is creeping farther up the income ladder, pressuring more middle-wage workers even as local workforce experts seek ways to move low-income residents into nursing and other middle-class occupations.

“If you have trouble attracting nurses — and there are conversations about how challenging it is finding housing for teachers, too — those are signs that there’s more that needs to be done,” said Diana Elliott, senior research associate at the Urban Institute, which produced the report. JPMorgan Chase funded the Urban Institute to examine housing and affordability issues in Austin.

Residents throughout the region might feel the ripple effect on health care costs most acutely, Elliott and local officials said in interviews Monday.

According to a plan designed to coordinate the region’s workforce training efforts, Central Texas health care providers will need more than 3,800 new registered nurses over the next five years. However, at current rates, the region’s two- and four-year nursing programs would fill about 1,500 of those positions.

The rest would have to be recruited, raising costs and potentially affecting the quality and consistency of care.

“You have to pay well for a nurse, but not to have them costs even more money,” said Steven Jackobs, executive director of Capital IDEA, an Austin job training organization. “So a better pipeline means lower health care costs, and the well-paid jobs mean better affordability for people who live here.”

Capital IDEA works with Austin Community College on programs to bring more low-income residents into health care and information technology programs, hoping to boost incomes and provide for more stable households.

However, while the program produces significant income jumps for its graduates, the health care providers in the Central Texas market pay nurses lower wages than they can find in the larger Houston and Dallas areas — despite Austin’s higher cost of living.

Roughly half the 2016-17 school year’s graduates from the University of Texas School of Nursing said they accepted jobs in Austin, said Alexa Stuifbergen, the school’s dean. Yet, the Austin area paid the lowest base salaries of the major Texas metro areas, at $23.47 an hour.

Houston-area providers paid an average of $27.83, she said.

“When you look at that, someone who takes a job in Houston will start out making $9,000 more a year than a student who stays here,” Stuifbergen said. “Yet the cost of living in Houston is lower.”

For many nursing positions, the Seton Healthcare Family will match wages paid in the state’s larger health care markets, said Greg Hartman, Seton’s chief external and academic affairs officer. However, to overcome Austin’s higher cost of living, he said, they’d have to pay even more.

So the organization looks instead to beef up other benefits, including signing bonuses, tuition reimbursement programs and mentoring initiatives. It also points to the future of the industry in a growing metro area with a new medical school and an innovation zone in development, Hartman said.

“We have a good medical community, and it’s growing quickly with the medical school and all the population coming in,” he said, “but it’s still difficult to match starting salaries at these much larger health care economies.”

According to data compiled by EMSI based on online profiles in the top 50 metro areas, about 81 percent of ACC nursing graduates worked as nurses in the metro area. The rates were far lower for UT, Texas State University and Concordia University Texas.

In some cases, regional health care providers have to turn to “traveling” nurses and short-term contracts to fill shortages at certain key positions, paying a premium for an employee who is not a long-term investment. But even for long-haul employees, the heavier reliance on external recruitment comes at a higher cost.

And, because nurses account for such a large share of health care professionals, Stuifbergen said, “it logically has to be a significant part of the whole health care equation — not just in terms of cost, but of quality as well.”

Hartman, Jackobs and other workforce and health care experts already have emphasized the nursing shortage as a key target. Both Seton and St. David’s HealthCare, the region’s two largest providers, have invested millions of dollars in education programs at the high school and college levels.

ACC will add a four-year degree program for nursing, which could help boost local graduate numbers. And the regional workforce master plan identified health care as one of the region’s prime opportunities for lifting low-income residents to better-paying jobs.

Yet, as the Urban Institute report shows, raising incomes addresses only one side of the region’s affordability issue.

Overall, the report said, housing capacity in the metro area kept pace with the rapid population growth from 2000 to 2015, increasing 19 percent as the population rose by 20 percent.

But that growth was not uniform, the researchers noted. Far more housing came online in neighborhoods around the city’s periphery, while soaring demand for real estate — especially for East Austin properties near downtown — sent rents higher.

The Chestnut neighborhood in central East Austin felt the impact of the rising costs and gentrification more than most, Elliott said.

From 2000 to 2015, the neighborhood jumped from 90th to 22nd in the report’s index of resident economic success and housing market health. Unemployment and poverty rates dropped sharply, but median property values rose by almost $228,000 after adjusting for inflation, the report said.

Chestnut is surrounded by mid- and low-performing neighborhoods, the report said, “indicating a (gentrification) trend of neighborhood change that, without intervention, is likely to affect the entire central-east area.”

Even before any further spread, Elliott said, the breadth of Austin’s gentrification already stood out in the research.

“What’s astonishing, if you look at Austin relative to the other cities we looked at, is how East Austin in particular has really changed in the last 15 years,” she said. “In other cities, you have neighborhoods sporadically represented in terms of gentrification and change, but the map of Austin was really stark in terms of all that gentrification moving eastward.”



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