June 13th, 2018 | By Laura Paddison
A staggering gap between wages and the cost of rental housing across America threatens the stability of millions of families, according to a Wednesday report.
There is not one U.S. state, metropolitan area or county in which someone working a 40-hour week on the federal minimum wage of $7.25 can afford to rent a modest two-bed apartment. Minimum wage workers would need to work a 122-hour week, or hold down three full-time jobs, to make a modest two-bed rental home affordable.
The hourly wage needed to make a modest two-bedroom apartment affordable is $22.10 – more than three times the minimum wage. Given that the average hourly wage of renters in the U.S. currently stands at $16.88, it’s clear the gap between wages and affordability is stark.
For extremely low-income households – those earning less than 30 percent of the average income in their area – the situation is particularly tough. Families of four on no more than $26,420 a year can afford a maximum of $660 a month on rent but the national average fair market rent stands at $931 for a one-bed rental.
“The results of this are that a lot of the lowest-income families spend an exorbitant amount of their income just on housing,” Andrew Aurand, NLIHC’s VP for research, told HuffPost. About three-quarters of households earning below the poverty level, many of whom are working, spend more than half their income on housing, he added. This “puts them at risk of losing their home if they have some kind of financial emergency because they have no cushion.”
With this instability comes other problems, said Aurand, including worse outcomes for children at school, risks to jobs and problems with physical and mental health.
The crisis of affordability can be traced to stagnating wages and wage inequality, according to the report. Between 1979 and 2016 real hourly wages increased 51.7 percent for workers at the 95th percentile but only 4.4 percent for workers at the 10th percentile. And low-wage work is expected to grow.
“If you look at the 10 occupations that are projected to grow the most over the next decade, seven of those ten occupations are low-wage occupations that pay less than what is needed for a full-time worker to afford rental housing,” said Aurand. These include roles like home care aides and food preparation workers.