Affordability Crisis: Low-Income Workers Can't Afford A 2-Bedroom Rental Anywhere In America

The National Low Income Housing Coalition’s (NLIHC) annual report, Out of Reach, reveals the striking gap between wages and the price of housing across the United States. The report’s ‘Housing Wage’ is an estimate of what a full-time worker on a state by state basis must make to afford a one or two-bedroom rental home at the Housing and Urban Development’s (HUD) fair market rent without exceeding 30 percent of income on housing expenses.

With decades of declining wages and widening wealth inequality via the financialization of corporate America, and thanks to the Federal Reserve's disastrous policies (whose direct outcome is the ascent of Trump), the recent insignificant countertrend in wage growth for low-income workers has not been enough to boost their standard of living.

The report finds that a full-time minimum wage worker, or the average American stuck in the gig economy, cannot afford to rent a two-bedroom apartment anywhere in the U.S.

According to the report, the 2018 national Housing Wage is $22.10 for a two-bedroom rental home and $17.90 for a one-bedroom rental. Across the country, the two-bedroom Housing Wage ranges from $13.84 in Arkansas to $36.13 in Hawaii.

The five cities with the highest two-bedroom Housing Wages are Stamford-Norwalk, CT ($38.19), Honolulu, HI ($39.06), Oakland-Fremont, CA ($44.79), San Jose-Sunnyvale-Santa Clara, CA ($48.50), and San Francisco, CA ($60.02).

For people earning minimum wage, which could be most millennials stuck in the gig economy, the situation is beyond dire. At $7.25 per hour, these hopeless souls would need to work 122 hours per week, or approximately three full-time jobs, to afford a two-bedroom rental at HUD’s fair market rent; for a one-bedroom, these individuals would need to work 99 hours per week, or hold at least two full-time jobs.

The disturbing reality is that many will work until they die to only rent a roof over their head.

The report warns: “in no state, metropolitan area, or county can a worker earning the federal minimum wage or prevailing state minimum wage afford a two-bedroom rental home at fair market rent by working a standard 40-hour week.”

The quest to afford rental homes is not limited to minimum-wage workers. NLIHC calculates that the average renter’s hourly wage is $16.88. The average renter in each county across the U.S. makes enough to afford a two-bedroom in only 11 percent of counties, and a one-bedroom, in just 43% .

FIGURE 1: States With The Largest Shortfall Between Average Renter Wage And Two-Bedroom Housing Wage

Low wages and widespread wage inequality contribute to the widening gap between what people earn and mandatory outlays, in the price of their housing. The national Housing Wage in 2018 is $22.10 for a two-bedroom rental home and $17.90 for a one-bedroom, the report found.

FIGURE 3: Hourly Wages By Percentile VS. One And Two-Bedroom Housing Wages 


Here is how much it costs to rent a two-bedroom in your state:

Case Shiller House Prices have continued to surge to bubble levels with growing demand for rental housing in the decade post the Great Recession.

The report indicates that new rental construction has shifted toward the luxury market because it is more profitable for homebuilders. The number of rentals for $2000 or more per month has more than doubled between 2005 and 2015.

Here are the Most Expensive Jurisdictions for Housing Wage for Two-Bedroom Rentals

Here is how your state’s ranks regarding Housing Wage: 

“While the housing market may have recovered for many, we are nonetheless experiencing an affordable housing crisis, especially for very low-income families,” said Bernie Sanders quoted in the report.

The fact is, the low-wage workforce is projected to soar over the next decade, particularly in unproductive service-sector jobs and odd jobs in the gig economy, as increasingly more menial jobs are replaced by automation/robots. This is not sustainable for a fragile economy where many are heavily indebted with limited savings; this should be a warning, as many Americans do not understand their living standards are in decline. American exceptionalism is dying.

Housing Wage And Median Wages For Occupations With Highest Projected Growth 

The bad news is that for the government to combat the unaffordability crisis, deficits would have to explode because even more Americans would demand housing subsidies, setting the US debt on an even more unsustainable trajectory. Even though Congress marginally increased the 2018 HUD budget, the change in funding levels for some housing programs have declined.

Changes In Funding Levels For Key HUD Programs (FY10 Enacted To F18 Enacted) 

But wait a minute, something does not quite add up: consider President Trump’s cheerleading on Twitter calling today’s economy the “greatest economy in History of America and the best time EVER to look for a job.”

He may be right, of course, if you are looking for a low skill/wage job in the gig economy as there are plenty (from which you will be promptly fired), but even if you keep it, you will not be able to cover even the cost of rent.

Comments

RAT005 David2923 Sat, 06/16/2018 - 22:09 Permalink

I don't think the basis of their crisis is at all relevant.

If someone skipped real education and is doing a job a responsible high school kid could manage then they'll also just have to skip the privilege of their own 1 bedroom.  As the chart shows, 2 low income can afford a 2 bedroom near enough to any location.

In reply to by David2923

uhland62 wadalt Sun, 06/17/2018 - 00:39 Permalink

Right, but one day the baby-boomers fat (as I call it) will be eaten up. Then you can still live in that house (if you are lucky enough to be a single child), mum and dad are gone, so are their savings - and you can't even maintain that dwelling any more.

It's called free enterprise - your work is not worth enough to have a roof over your head. 

In reply to by wadalt

brushhog gzcekkyret Sun, 06/17/2018 - 08:33 Permalink

Since when has minimum wage implied the ability to afford a 2 bedroom house and spend less than 30% of your income? God-forbid a MINIMUM wage earner should lower himself to live in a one bedroom apartment or take a roommate.

It's called MINIMUM wage.

" The disturbing reality is that many will work until they die to only rent a roof over their head. "

If you are working for minimum wage "until you die" then you are basically brain dead or mentally handicapped and are probably receiving state assistance.

In reply to by gzcekkyret

RedBaron616 wadalt Sun, 06/17/2018 - 06:04 Permalink

"The report finds that a full-time minimum wage worker, or the average American stuck in the gig economy, cannot afford to rent a two-bedroom apartment anywhere in the U.S."

If you are making minimum wage as an adult, that means you have no skills that anyone else can't pick up in a week or less. So why would you either be married or have a kid when you make that small paycheck? I made minimum wage when I started my current job, but I moved up in skills and wages as time went along. I even went above minimum wage as a teenager, so if adults can't do that, perhaps it is because the minimum wage is exactly that. It is not something you are expected to be at most of your life. So show some ambition. Ask for more responsibility. Try to better yourself. What a concept! 

In reply to by wadalt

CashMcCall Quantify Sun, 06/17/2018 - 09:39 Permalink

Under the Orange Ceasar border crossings are up. 36 million Mexican squatter in MERICA remain. They toss off 1500 anchors a day. Trump has not deported one gang member. Trump deportation less than half that of Obama. Yeah, Trump is doing a great job of NOTHING but he keeps bullshiting the Trumptards into believing otherwise. Where's the wall Tards? 

And now... DACA Amnesty... and Trump will sign it. Over 3 Million new Welfare recipients and looters. The Orange Ceasar is killing you worse than Obama because at least you never "Believe" Obama but with Trump, you make every excuse in the book as he betrays your votes. 

In reply to by Quantify

CashMcCall helltothenah Sun, 06/17/2018 - 09:26 Permalink

Thanks, Karl Marx for your editorial. Since when does any person owe a 2 bedroom appt to anyone else. What's next? Cable, Internet services. Where do you socialists get off with this "each for their needs" garbage? I need a Ferrari. So I expect it in my driveway by 6PM so I can take it to dinner at the four seasons tonight. 

I owe you nothing parasite.

In reply to by helltothenah

Offthebeach helltothenah Sun, 06/17/2018 - 13:15 Permalink

Article is bull.

I know schlubs pulling $100K.  We're broke .  I do the math, dump the cigs, the pot, the twice weekly take out, the $10 DunkyDo coffee runs.  Bingo. 10 grand, cash.  Work 3 Saturdays a month,  Bingo, another $7k.

$17k.  $34k in two years.  Thats a ok down payment.

 

Heck I know schlubs making sub $30k smoking two paks Marlboro a day, plus a $10 scatchy and $10  7/11 lunch.  They can't figure out why they are broke.  ( kinda like our gooberment )

 

 

In reply to by helltothenah

Vlad the Inhaler RAT005 Sun, 06/17/2018 - 00:26 Permalink

Damn straight, this entire premise is dumb because minimum wage workers never could afford their own apartment.  Minimum wage is for people who need extra money or are just starting out to gain experience.  If you can't afford your own pad then you live with mom and pop or with roommates, same as it used to be, the only difference is the attitude of entitlement.  Also the really desirable cities have become luxury markets, so move to Boise or Pittsburgh already and stop complaining.

In reply to by RAT005

Jessica6 Vlad the Inhaler Sun, 06/17/2018 - 06:19 Permalink

A TWO bedroom apartment now....anti-poverty activists used to have a metric of a one-bedroom flat. I've never thought anyone right on the bottom rung was owed that....there's always shared accommodation, homeowners who take in lodgers. Make a few temporary sacrifices, don't do anything extraordinarily stupid like have children with a criminal or get hooked on drugs, and a degree of social mobility is really not that hard.

In reply to by Vlad the Inhaler

Endgame Napoleon RAT005 Sun, 06/17/2018 - 00:27 Permalink

How about a person with a bachelor’s degree, four licenses and decades of experience, including small business ownership, who never failed to meet a quota? Except for a handful of managers, wages are too low to cover rent for almost everyone in almost every place that I have worked.

The people who can afford independent housing are those with spousal income, child support that covers rent and non-refundable child tax credits [or] subsidized rent, EBT groceries, monthly cash assistance, free electricity and up to $6,431 in refundable child tax credits.

Streams of unearned income from government are only available to the citizens & noncitizens with kids. Which is why a one-bedroom apartment is impossible for most childless, single, welfare-ineligible citizens to afford on earned income alone, and a two-bedroom apartment is often only one hundred per month more.

In reply to by RAT005

Offthebeach shovelhead Sun, 06/17/2018 - 13:24 Permalink

Car, boat, truck, aircraft mechanics .  Heat, AC, refridg.  Paint, roof, frame, side.  Heck, instal curtains, storm doors.  Drive truck, oil rig, run wire for electricians( once you get the hang and he can leave you, you get paid good), commercial fishing/schucking $1k a day,  .....on and on and on.  Real work, good guys and galls..

In reply to by shovelhead

Chauncey Gardener RAT005 Sun, 06/17/2018 - 16:10 Permalink

I call BULLSHIT. Try being an entry-level wage earner, or single parent. This is a SERIOUS issue, and in the Metro Portland, OR area, I blame the sudden plague of parasitical "property management firms," mostly headquartered in CA for sudden, outlandish rises in rent. Case in point, new apartment complexes in Wilsonville, OR, with 2-bedroom units and a wall a/c unit, go for $1495. Older (very OLDER) complexes without ANY upgrades including new paint or carpet, WERE renting for $995/month. Magically, they are now $1295-$1495/month because that's the going rate/what the "market" will bear. BULLSHIT on your claim, indeed.

In reply to by RAT005

Kidbuck JBL Sat, 06/16/2018 - 21:07 Permalink

Section 8 pays enormous rents for luxury apartments (that are often owned by Blackstone and other Wall Street whores) and puts low life scum in them. Then the honest poor have to compete with that. Google Westchester at the Pavillions in Waldorf, MD for a prime example.

In reply to by JBL

HRH of Aquitaine 2.0 Wilcox1 Sat, 06/16/2018 - 22:45 Permalink

Me either. But I thought it was kinda funny considering Rosanne Barre was dumped a few weeks ago because she made a reference to Planet of the Apes (a movie that was loved enough to be remade). The end was a bell ringing when they turned to look at the picture of the Mona Lisa.

Caucasians make up less than 8% of the global population. This video was a message and a threat. But you know the drill, some animals are more equal than others.

In reply to by Wilcox1

Chris2 HRH of Aquitaine 2.0 Sun, 06/17/2018 - 00:28 Permalink

These articles over and over again are just horseshit.

It has since the 70s in California taken two incomes sharing a bedroom to afford a 1 bed apartment.

Only professionals can afford to be single. Even with roommates you now need a two bedroom or get creative.

Find someone, anyone.....I did always for this reason...lol

And now in my 60s I am livin large 2 people and a bigass dog in very cool 3 bed 2 ba house with a big lot.

But I haven't eaten out in 10 yrs, I do all my yard work, laundry, cleaning, house maintenance that I can do since I can read I find out how to do it. It quit raining so I took out the lawn with a pitchfork myself, installed crushed granite and did a Japanese rock garden that everyone asks "who did your yard, its so beautiful and simple?" myself. I don't go to nightclubs, buy things I don't really need , take vacation or have parties. I live simple minimalist Zen in my own slice of heaven....:) House will be paid for next year, 7 yrs I have been here. Stop wasting your resources get frugal, see how happy you can be with less. Just went to grocery store, guy buying cherries pre packaged they can't even be bothered to pick them up and put in bag. Waste of money.

Took me a lifetime to get here, stop bitching teenage mutants.

In reply to by HRH of Aquitaine 2.0

brooklinite8 Chris2 Sun, 06/17/2018 - 07:40 Permalink

I have to agree with you on being frugal has its own benefits. I live in a very old pre war building 30 min into grand central. Americans need a crash course in frugality. Can you believe I even went to Thailand when I couldn't afford a doctor here. I got my colonscopy, endoscopy and polyp removed for about 1000USD in one of the nice and clean hospitals in bangkok with the doctors as good as the good old USA. I had a girl dump me because I was cheap. Actually I am proud of it. Some of my friends call me the cheaptest. Its the title I cherish. Financial freedom is a peace of mind that neither Yoga nor any medicine can provide. My friends who hold masters degrees still can't understand how I can do all of this. I started being just because i hated how bad the products were for the price that they were charging. I felt like eating outside spending 10 bucks a meal was the one I started with. Cooking at home. Then followed other ways of pinching. 

In reply to by Chris2

shovelhead Chris2 Sun, 06/17/2018 - 09:49 Permalink

 I bought my first house in So.Cal in the early 80's as a single guy with a first and a 12% second mortgage I assumed. The typical 1500' 3 bed 2 car garage Orange County tract home. Pretty nice neighborhood but the main drag was starting to turn weird with a lot of Vietnamese stores going up. When my girlfriend moved in and offered $250 a month is was like manna falling from heaven. I opened up the dining room ceiling, made a 3'X6' skylight and capped the trusses with oak plywood 'beams' and put a garden window in. I relaminated the ugly dark ash 60's cabinets with a light oak veneer to lighten up a terminally dark space which instantly (ha) changed the house from a loser with a couple of nice points to a full on winner.

Good thing I was cheap and didn't waste whatever money the house didn't eat up. It was tough but it was a gamble that I was willing to take because I figured it would pay off. At that time I wasn't a 'Professional' and it ate up over 50% of my income.

It paid off. Real estate took off again when rates came down and I made a tidy little bundle.

It ain't what you make but what you spend and what you spend it on. And you're right, it takes a lot of long hours and hard work to make some investments pay off.

In reply to by Chris2