In Paterson, the “American Dream” of owning property and accumulating wealth is unachievable for most residents. Along with living in the sixth least affordable housing market in the nation, Patersonians earn an income of $36,000 per year, which is only slightly greater than half of the median household income of the nation. Despite earning less money on average than most Americans, Patersonian’s spend an exorbitant percentage of what they earn on housing.
According to a 2017 study conducted by SmartAsset, a New York City-based personal finance firm, “renters in Paterson spend 44-percent of their income on housing while in Passaic County renters spend 50-percent – which is the highest in the U.S.– of their income on rent”.
By spending so much of their income on housing, Paterson residents are financially stressed. In fact, according to the Department of Housing and Urban Development, it is recommended that a family spend 30-percent or less of its income on housing; families spending over 30-percent of their income on housing are considered “cost-burdened”.
The effects of the housing market in Paterson are disastrous: not only are residents unable to afford the basic necessities of food, clothing, transportation, and medical care but they are also susceptible to falling below the poverty line. As of 2018, the Paterson poverty rate was 29.1 percent, which was triple the statewide count of 10.4 percent.
To save costs, low-income families, like those of Paterson, tend to reduce spending in areas like food and healthcare. According to A.J. Smith, who is the vice president of financial education for SmartAsset, “This reduced spending impairs the household’s quality of life and can be a drag on the local economy. Additionally, these families have less money to secure their financial future (saving for retirement) or meet other financial goals (saving for their child’s education).”
Further, Smith highlights the same Smart Asset study that “From 2011 to 2015, rents in Paterson remained the same, but the average household incomes dropped, from $32,400 per year to $31,500 per year, worsening the housing cost burden for residents.”
Today, Paterson City Hall’s recently appointed economic developers must address the disparity in income and rent cost that most Paterson families face by creating more affordable housing units; this step must be taken in order prevent low-income families from becoming homeless because it provides residents with a greater opportunity of owning homes that they can actually afford.