Tanvi Misra is a staff writer for CityLab covering immigrant communities, housing, economic inequality, and culture. She also authors Navigator, a weekly newsletter for urban explorers (subscribe here). Her work also appears in The Atlantic, NPR, and BBC.
There isn’t a single state, city, or county in the U.S. where someone earning federal or state minimum wage for a 40-hour work week can afford a two-bedroom home at fair market rent.
For most Americans, access to decent, affordable rental housing remains cruelly beyond reach. Only in 22 counties in the United States is a one-bedroom home affordable to someone working 40 hours per week at federal minimum wage.
That’s from the National Low Income Housing Coalition (NLIHC) report, which outlines the mismatch between wages and rent every year.
For people earning minimum wage, the situation is untenable. At $7.25 an hour, they would need to put in roughly 122 hours per week, every week of the year—or magically, work 3 full-time jobs—to afford a two-bedroom home at the national average fair market rent; for a one-bedroom, they would need to put in 99-hour weeks, or the equivalent of two and a half full-time jobs. (Fair Market Rent is an annually updated government estimate, typically the 40th percentile of the gross rent in an area.)
But this isn’t just a problem for the poor. NLIHC estimates that the average renter’s hourly wage in the United States is $16.88. The average renter in each county makes enough to afford a two-bedroom in only 11 percent of U.S. counties, and a one-bedroom, in only 43 percent.
The national “housing wage” in 2018 is $22.10 for a modest two-bedroom rental home and $17.90 for a one-bedroom, the report estimates. (That’s how much an average renter in the U.S. would need to make to afford a modest apartment at fair market rent, without paying more than 30 percent of their income towards housing.)* Of course, there's widespread geographical discrepancy in rents and wages across the country. You'd need to earn $60.02 to reasonably afford a two-bedroom in San Francisco, California, but in Little Rock, Arkansas, it's about $15.60. Still, in not a single state, city, or county can someone earning federal or state minimum wage for a 40-hour work week afford to rent a two-bedroom home at fair market rent.
NLIHC’s first map below shows the wages a person would have to make to afford a two-bedroom in each state. (Keep in mind: HUD’s Fair Market Rents, when aggregated across an entire state, may obscure highs and lows in local markets.)
The second map shows which counties a person on minimum wage would have to work more than 80 hours a week—double the standard workweek—to afford a measly one bedroom. Here, the variation within a single state is more evident:
It’s notable that in all of the 22 counties where a one-bedroom is affordable, that minimum wage is set higher than the national minimum of $7.25. Still, raising wages alone cannot dissolve this mismatch. The incredible shortfall in affordable units remains the more stubborn, intractable problem.
The rental demand has been swelling, in particular since the Great Recession, and the supply hasn’t kept up. What’s more: While including 10-15 percent affordable housing in a new development can yield profits, the new units created in the last decade or so have overwhelmingly catered to the rich. Between 2005 and 2015, apartments costing $2,000 and more increased by 97 percent, according to Harvard University’s Joint Center for Housing Studies; Meanwhile, those under $800 decreased by 2 percent. The most vulnerable renters are languishing in dire need, largely overlooked by the market.
Ushering in an an era of affordability, therefore, hinges on government subsidies—and on that front, things aren’t looking so good either. Even though Congress bumped up the 2018 Department of Housing and Urban Development (HUD) budget by a little, the additional funds still fall way below the 2010 levels:
And the future looks even bleaker. The Trump administration has proposed massive cuts to subsidized housing programs. HUD Secretary Ben Carson has taken it even further. In an attempt to promote “self-sufficiency,” he has backed a bill that raises rents for households getting housing assistance and tacks on mandatory work requirements. A recent analysis by the Center on Budget and Policy Priorities (CBPP) found that low-income renters would have to pay roughly 20 percent more if the bill were to be passed. Via the Associated Press:
That rent increase is about six times greater than the growth in average hourly earnings, putting the poorest workers at an increased risk of homelessness because wages simply haven’t kept pace with housing expenses.
*This post has been updated to clarify the study’s methodology.