The growing gap between stagnant wages and rising housing costs impacts millions of low-income renters. According to Out of Reach 2018, an annual report of the National Low-Income Housing Coalition (NLIHC), there is not a single area in the U.S. where a full time worker earning minimum wage can afford a modest two-bedroom apartment. And a modest one-bedroom apartment is affordable for minimum wage earners in only 22 of the 3,007 counties in this country.
A full time worker needs to earn $22.10 per hour to afford the national average of a two-bedroom unit at Fair Market Rent (FMR), or $17.90 per hour to afford HUD’s one-bedroom FMR. The amount needed to afford a modest home is often called the housing wage, and is one way of looking at the minimum you need to earn to get by in current American society. The lack of affordable housing is often cited in efforts to raise the minimum wage.
The FMR is used as the rent limit for Section 8 Housing Choice Vouchers and other affordable housing programs in that area. A city or county’s FMR is updated each year, based on the current housing market. Out of Reach shows that minimum wage workers cannot even afford rents the federal government sets as the bar for affordable housing programs.
Another way to look at the housing affordability crisis is seeing how much work it takes to afford a modest apartment at minimum wage. Nationally, someone earning minimum wage needs to work 122 hours per week for 52 weeks to afford the two-bedroom FMR. This equates to working more than three full time jobs.
Out of Reach also examines the gap between what the average renter household earns, and what is needed to afford the area’s two-bedroom FMR. Hawaii’s housing wage gap was the greatest, at $19.98 per hour, followed by Maryland ($11.53 per hour) and California ($11.18 per hour). Other states rounding out the top ten with the greatest housing wage gap are New Jersey, Vermont, Massachusetts, Washington, Connecticut, Maine and New Hampshire.
The federal government says that households should not pay more than 30% of their monthly income for rent. Households that pay more experience housing cost burden, which leaves less money for food, clothes, medicine and other necessities. Nationally, a minimum wage worker can afford $377 in monthly rent. Someone receiving Supplemental Security Income (SSI) can only afford rent of $250. Extremely Low-Income households, those who earn less than 30% of the area median income, can afford rent of $660. The average renter can afford $878 for rent. By contrast, the average two-bedroom FMR nationally is $1,149 and the average one-bedroom FMR is $931.
Affordable Housing Online has a page that makes it easy to search for the affordable housing snapshot in your state, county or city. You can find data for your area of interest here.
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