You Can’t Afford Rent In Most States On Minimum Wage

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If you make minimum wage, you can’t afford to rent a two-bedroom apartment in any state in the union. That’s the harsh but honest truth in a report issued last week by the National Low Income Housing Coalition (NLIHC).



You might expect that’s the case in major, expensive cities such as New York, Los Angeles or San Francisco. However, the report shows that no single person making minimum wage can afford a market-rate two-bedroom apartment anywhere in the United States if they pay the standard 30 percent of their income on housing.

Far above the minimum

The NLIHC report states that a worker must earn at least $20.30 per hour to afford a fair-market rent two-bedroom apartment. To afford a fair-market rent one-bedroom apartment, a worker must earn at least $16.35 an hour. The federal minimum wage is just $7.25 per hour. That means the campaign to more than double the minimum wage to $15 per hour still won’t allow a minimum-wage worker to rent a one-bedroom apartment using the 30 percent of income standard, let alone a two-bedroom home.

Work and sleep

A person earning the federal minimum wage would have to work 112 hours per week, the equivalent of nearly three full-time jobs, in order to afford a two-bedroom apartment. That means the worker’s life would consist only of working and sleeping eight hours a night.

Most expensive states

In six states and Washington, D.C., a worker must earn at least $25 an hour to afford a market-rate two-bedroom apartment. Below are the six states:

  • California
  • Connecticut
  • Hawaii
  • Maryland
  • Massachusetts
  • New Jersey

In Hawaii, a person must earn at least $34 per hour to afford a two-bedroom apartment.

Most expensive metropolitan areas

In the country’s most expensive metropolitan areas, employees must earn between $30 and $44 per hour to pay for a two-bedroom apartment. San Francisco tops the list at $44 hourly. The other most expensive metropolitan areas include the following:

  • Oakland-Fremont, CA
  • San Jose-Sunnyvale-Santa Clara, CA
  • Honolulu, HI
  • Stamford-Norwalk, CT
  • Danbury, CT
  • Orange County, CA
  • Washington- Arlington-Alexandria, DC-VA-MD
  • Nassau-Suffolk, NY
  • Santa Cruz-Watsonville, CA

Least expensive states

The least expensive states for renters usually adhere to the federal minimum wage of $7.25 per hour:

  • Alabama
  • Arkansas
  • Idaho
  • Iowa
  • Kentucky
  • Mississippi
  • Nebraska
  • Ohio
  • Oklahoma
  • South Dakota
  • West Virginia

Nationwide, the “housing wage” for a two-bedroom unit is $13.05 higher than the federal minimum wage of $7.25, and $4.88 higher than the estimated average wage of $15.42 earned by renters, according to the NLIHC.

Burdening costs

Of course, many low-income people manage by paying more than 30 percent of their income for housing. That leaves them less money for necessities such as food, clothing and health needs, and virtually nothing for saving. As a result, a job loss often means homelessness quite quickly, as they don’t have the funds to temporarily tide them over until new employment is found.

National Housing Trust Fund

One way to help solve this affordable housing crisis is by allocating money to the National Housing Trust Fund (NHTF). Overseen by the US Department of Housing and Urban Development (HUD), these funds are available as block grants to communities for the first time this year. Each state must meet two minimum conditions to qualify for NHTF funds:

  • designate an entity to administer the NHTF and notify the HUD secretary of the administering entity; and
  • prepare and submit a NHTF Allocation Plan to HUD.

This year’s available NHTF funds total $174 million. Communities receiving the block grants may build, repair or restore rental homes for low-income individuals and families.

Other avenues

While raising the minimum wage would help low-income workers, in many areas even a substantial raise would not make housing affordable. In addition to NHTF funding, the NLIHC recommends expanding housing vouchers, as well as increasing and improving public housing, and increasing funding for other affordable housing initiatives.

Low-wage workers face a genuine housing crisis. Lawmakers and the public must come up with solutions so that every worker has a roof over their head.

—Jane Meggitt

Sources:
http://www.huffingtonpost.com/entry/how-much-income-you-need-to-afford-rent-by-state_us_574880cae4b0dacf7ad4c828
http://nlihc.org/press/releases/6845
http://nlihc.org/oor
http://nlihc.org/issues/nhtf
http://nlihc.org/sites/default/files/NHTF_StateAllocations_2016.pdf

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  • Headache

    Refugees and illegal aliens disrupt supply and demand in the market forcing higher rents. Notice the most expensive states are the most progressive run by Democrats!

  • Curtiss

    Be wary of $15.00 minimum wage, this is a big boon for the government in tax revenues, not so much for the little people. My business provides a service to handicapped people, if we go to $15.00 minimum wage tomorrow, I would have to raise my rates by $46.00 per service, just to make payroll, i have 15 employees full time, and 2 part time. wages go up, prices go up, the employers have to get it somewhere, or they can’t make payroll. I cannot automate like McDonalds, i have to have my employees or i am out of business. I am not crying as an employer, you just don’t realize what the implications are unless you do the math like i have done. I am also on the Medical industry, so if medicare, medicaid, and insurances don’t increase the money to nursing homes, hospitals, and hospice, they will not be able to afford to pay for our services. That will definitely cost me my business, and the services will vanish or crappy service will have to be taken on by the government and we know where that will end up.

  • Curtiss

    Ok you can’t pay rent on minimum wage, so lets raise minimum wage to $15.00 per hour. Now, the price of new carpet goes up from $15/yard, to $25/yard–the price of a new water heater goes from $250 to $350–Paint goes from $12/gallon to $28/gallon. so the rent foes from $400/month, to $525/month. a minimum wage increase won’t go far for long. It is a vicious circle!

  • Patriot

    Well said @curtiss and @headache. I have been trying to explain those same things to people for over 20 years. Most people just don’t get it. They just want to see bigger numbers on their paychecks regardless of the consequences in real life terms. Raising minimum wage is bad for the economy and most people. It only helps the government get more taxes and helps a few ultra rich take advantage of the masses (which they do in any case). Some few will play the markets cleverly because they will see the changes coming down tne pipeline. Other than that everybody loses. It is how the market works. The rich get richer by screwing everyone else.