2-Bedroom Rental Housing Is ‘Out of Reach’

A worker making federal minimum wage of $7.25 for 40 hours a week is unable to afford a two-bedroom rental anywhere in the country, according to a recent study.

In its 2018 edition of its “Out of Reach: The High Cost of Housing,” the National Low Income Housing Coalition looked at the wages necessary to afford rental housing in all 50 U.S. states and the District of Columbia. The annual report uses the national housing wage, which is the estimated full-time hourly wage a household must earn to afford a rental home at the U.S. Department of Housing and Urban Development’s fair market rent. According to HUD, affordability is defined as spending no more than 30 percent of gross household income on housing costs. This housing wage is $22.10 per hour nationally for a two-bedroom rental, which is up from the $21.21 per hour national housing wage in last year’s report.

When considering the federal minimum wage of $7.25, the study finds that people earning minimum wage would have to work 122 hours per week for every week of the year or work three full-time jobs in order to afford a modest, two-bedroom rental. Within the states, housing wages range from $13.84 in Arkansas to $36.13 in Hawaii. The figures are particularly high in certain metropolitan areas such as San Francisco, where the housing wage is $60.02 per hour, or Honolulu, where you would need to earn $39.06 per hour.

Renters nationally make an average of $16.88 an hour, the report estimates. Thus, the discrepancy between wages and rent is not limited to minimum-wage workers but it affects low-wage earners more: “Seventy-one percent of extremely low income renters spend more than half of their incomes on housing, leaving them few resources for other necessities and putting them at risk of losing their homes given the difficulty of sustaining their rent payments.”

Downsizing to a smaller place does not help a lot in terms of affordability, as the national housing wage for a one-bedroom rental is $17.90 per hour. Out of more than 3,000 counties nationwide, in just 22 of them can someone working full time at minimum wage afford a one-bedroom rental at fair market rent. These counties are located in states where the minimum wage is higher than the federal standard of $7.25.

The study also noted that the demand for affordable housing grew in the past 10 years, due to demographic shifts and the Great Recession, leading to fewer properties available to renters. “Between 2005 and 2016, the number of renters increased by nearly 10 million households to a record 43.3 million,” according to the study. Also, most of the new rental construction has been toward the higher end of the housing market, leaving medium- and low-income customers without options.

Sen. Bernie Sanders (I-Vt.), who prefaced the report, wrote: “In America today, nearly 11 million families pay more than half of their limited incomes toward rent and utilities.” His recommendation: “(W)e must start to close the housing-wage gap by raising the minimum wage to at least $15 an hour – so that no full-time worker lives in poverty.”