Low-Income Renters Struggle to Find Affordable Housing

March 28, 2014

An individual needs to earn $18.92 an hour to afford a two-bedroom rental at HUD-estimated Fair Market Rent, says a recently released report by the National Low Income Housing Coalition (NLIHC). This figure is referred to as the “Housing Wage.” This wage allows the individual to spend no more than 30 percent of income on housing costs. The report finds that today’s national average Housing Wage is more than two-and-a-half times the federal minimum wage, and 52 percent higher than it was in 2000.

An individual needs to earn $18.92 an hour to afford a two-bedroom rental at HUD-estimated Fair Market Rent, says a recently released report by the National Low Income Housing Coalition (NLIHC). This figure is referred to as the “Housing Wage.” This wage allows the individual to spend no more than 30 percent of income on housing costs. The report finds that today’s national average Housing Wage is more than two-and-a-half times the federal minimum wage, and 52 percent higher than it was in 2000.

At the current federal minimum wage of $7.25, NLIHC calculated that it would take more than two people working full-time minimum wage jobs to afford a decent two-bedroom rental home for their family. Even if the federal minimum wage was raised to $10.10 per hour, as proposed by the Fair Minimum Wage Act of 2013, the 2014 two-bedroom Housing Wage would remain higher, and therefore, rent would remain unaffordable, in every state. Only in Arkansas, Kentucky, and Puerto Rico is the 2014 one-bedroom Housing Wage less than $10.10.

NLIHC President and CEO Sheila Crowley states, “We fully support increased wages, as well as improving the tax code to be fairer. Raising the federal minimum wage to $10.10 an hour would benefit millions of low-income Americans; however, it unfortunately would be an insufficient response to America’s housing affordability crisis. Increasing the stock of affordable housing is a critical part to addressing the extreme shortage of affordable housing in America.”

Affording Rent

The report also reveals the drastic difference between what renters need to earn to afford rent and what the average renter actually earns. In 2014, the mean renter wage, or what the average American renter earns, is $14.64 an hour. While housing costs vary nationwide, the report found that in no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at the Fair Market Rent. It also found significant differences between the national Housing Wage of $18.92 and state and county Housing Wages, as well as between metropolitan and non-metropolitan areas. According to the report, the top five most expensive states are:

  • Hawaii, with a Two-Bedroom Housing Wage of $31.54.
  • District of Columbia, with a Two-Bedroom Housing Wage of $28.25.
  • California, with a Two-Bedroom Housing Wage of $26.04.
  • Maryland, with a Two-Bedroom Housing Wage of $24.94.
  • New Jersey, with a Two-Bedroom Housing Wage of $24.92.

And New York, Massachusetts, Connecticut, Alaska, and Virginia finish out the list of the top 10 most expensive states in 2014. The most expensive metropolitan area in 2014 is San Francisco, where an individual needs to earn $37.62 an hour to afford a decent two-bedroom rental unit at Fair Market Rent.

Increase in Renter Households

There were over 40 million renter households in the U.S. in 2012, making up 35 percent of all households nationwide. This is a 1.1 million increase over the previous year and double the rate of growth in previous decades. One in every four of these renter households are extremely low income, meaning they earn less than 30 percent of the area median income.

The population of extremely low-income renters has risen to 10.2 million, and these are the households that experience the greatest housing instability and risk of homelessness. NLIHC calculates that there are just 31 affordable and available units for every 100 extremely low-income renter households.

Topics