For a full-time worker to afford a decent two-bedroom apartment at the federal “fair market rent” and not spend more than 30 percent of their income on housing, they must earn $19.35 an hour, according to a new report released Tuesday.
This so-called “housing wage” is 2.7 times greater than the federal minimum wage of $7.25 per hour and $4 more than the nationwide average renter’s wage of $15.16 an hour.
Full-time workers need $15.50 an hour just to afford a one-bedroom apartment at the fair market rate and not pay more than 30 percent toward housing, the report found.
That’s why there’s no state where a full-time minimum wage worker can afford a one-bedroom apartment at the fair market value.
Those are some of the main findings from “Out of Reach,” the annual analysis of U.S. rental affordability by the National Low Income Housing Coalition.
The report suggests that low-wage workers are suffering the most from a shortage of affordable housing as increased demand for apartments drive rental prices higher while wages stagnate for most Americans.
While rents have increased in nearly all metropolitan areas since 2012, 44% of jobs created in the aftermath of the Great Recession pay less than $13.33 an hour.
Of the nation’s 42 million renter households, 25% have incomes at or below 30% of the area median income, the report found. That means they can only afford rents of $509 a month. That’s well below the national fair market rents of $1,006 per month for a two-bedroom apartment and $806 for a one-bedroom unit.
In addition to increasing the federal minimum wage, the report calls for increasing the supply of affordable housing for low-wage workers who must now compete for a limited supply of apartments with higher-earning renters who would normally be homeowners if the economy and housing market were stronger.
“Partisan paralysis in Congress makes it nearly impossible to raise the federal minimum wage or increase funding for HUD programs such as Housing Choice Vouchers and Public Housing,” said a statement from NLIHC President Sheila Crowley. “And yet the market continues to fail to provide affordable homes for the lowest income households. When the market fails to provide for such a basic human need as housing, government must close the gap.”
To view the “Out of Reach” report, go to http://nlihc.org/oor