With rents rising, and wages barely increasing among lower-income groups, there's a growing "affordability gap" in the housing market. In many parts of the country, it's now impossible to rent somewhere decent if you're working full-time on minimum, or near-minimum, wages.
In its new "Out Of Reach" report, the National Low Income Housing Coalition maps this affordability gap in each state. For example, in New York, you need to be making $26.69 an hour to afford a "modest" two-bedroom apartment. To afford a similar quality one-bedroom apartment on minimum wages, you need to work 101 hours a week (assuming 30% of your income goes to rent—the standard definition of affordability).
New York is an expensive state—the fourth least affordable, according to the report. But it's a similar story elsewhere. In South Carolina, the 39th least affordable, you need $14.84 an hour for a two bedroom and to work 68 hours a week for a single bedroom. In fact, there's not a single state, metro area, or county in the nation where the local minimum wage is enough for a decent two-bedroom apartment.
Hawaii, Maryland, New Jersey, California, and Connecticut have the largest gaps between average rental costs and average wages among renters of two-bedroom apartments. In Hawaii’s case, the shortfall is almost $20 a hour ($34.22 against $14.53).
The NLIHC gives two main reasons for the affordability crisis: Stagnant wages and a lack of housing supply at the middle-bottom of the rental scale. Between 2007 and 2015, wages for the bottom 10% of earners rose only 0.2%, well below the rate of inflation. Between 1979 and 2013, wages actually declined in real terms (accounting for inflation) for the bottom 10% of earners, according to the Economic Policy Institute, a liberal think tank.
"The demand for rental housing is at its highest level since the 1960s," the report says. "In the past decade alone, the U.S. has added 9 million renter households, but only 8.2 million rental housing units to its housing stock. Vacancy rates are at their lowest levels since 1985 and rents have risen at an annual rate of 3.5%, the fastest pace in three decades."
The NLIHC calls for raising the federal minimum wage and expanding upon ideas like the Housing Trust Fund, a new federal program aimed at increasing the number of affordable housing units. This year the HTF got $173.6 million for all 50 states and the District of Columbia—hardly enough to make a real dent in supply shortage.
Cover Photo: Flickr user Ryan Dickey