Minimum wage workers can't afford rent anywhere in the US, report finds

Hourly 'housing' wage for two-bedroom home would need to be set at $23.96, or $19.56 for one-bedroom home

A woman walks past a wall bearing a graffiti asking for rent forgiveness on 1 May 2020 in Los Angeles, California. (VALERIE MACON/AFP via Getty Images)

No person working at least 40 hours a week at a minimum-wage job earns enough to afford a two-bedroom apartment anywhere in the US, according to a new report illustrating the chasm between workers’ wages and the rising cost of housing.

Minimum wage earners would have to work at least 97 hours a week to afford a two-bedroom home at fair market rate, and at least 79 hours a week to afford a one-bedroom apartment, according to the report from the National Low Income Housing Coalition.

The organisation suggests that a national “housing” wage – what Americans would need to earn to afford a fair-market rental and utilities without spending more than 30 per cent of their income – would need to be roughly $23.96 an hour to afford a two-bedroom home and $19.56 an hour for a one-bedroom home. More than 7.7 million extremely low-income renters have spent nearly all their limited incomes on housing costs.

The 50th percentile hourly wage, at $19.68, is only slightly above the one-bedroom housing wage. But half of all workers in the US earn less than that.

On average, a minimum-wage worker would need to work nearly 80 hours a week for 52 weeks to afford a “modest” one-bedroom apartment.

The federal minimum wage is set at $7.25 per hour. More than a dozen states have not set their minimum wage any higher than the federal minimum. Several states have set their rates lower.

The current public health crisis has underscored the ongoing housing affordability crisis – the report captures the state of the US in the months before waves of layoffs and unprecedented unemployment claims followed the outbreak.

“Essential” workers during the coronavirus pandemic bore the brunt of those losses – April job losses in hospitality and health industries accounted for half of all layoffs – while they earn significantly less than an ideal “housing” wage.

Some grocery workers earn a median wage of $11.61 per hour, while cleaning workers and health aides earn $12.94, according to the organisation.

Last year’s report found that a national housing wage would need to be set at $22.96 for a two-bedroom rental and $18.65 for a one-bedroom, as wages remained stagnant despite stock market success and relative economic growth following the financial crisis in 2008.

Faced with surging Covid-19 infections across the US after bars and restaurants reopened, workers are preparing for another round of layoffs as states roll back their reopenings.

Low-wage workers are “profoundly affected” by the pandemic and economic fallout, research analyst Dan Threet said in a video conference with reporters on 8 July.

“Even a brief interruption in income can have a significant impact,” he said. “The report amply shows that even before the crisis, even in a period of low unemployment, low-wage workers were struggling to afford their rent.”

Ohio Senator Sherrod Brown said that the pandemic “has really been the great revealer,” laying bare widespread inequities and “reminding us how our homes affect every aspect of our lives, including our health,” he said.

“Right now, our efforts to ensure that everyone has a safe, healthy home to weather the coronavirus storm are hampered by the fact that we already had a housing crisis in this country before this virus ever hit our shores,” he said.

Housing advocates now fear a looming eviction crisis, as moratoriums on evictions are lifted, courts resume in-person proceedings, “enhanced” unemployment benefits expire, and Congress and the White House appear deadlocked over additional federal relief after a one-time $1,200 check to most Americans was delivered months ago.

A recent report from Apartment List found that nearly a third of Americans missed their housing payments at the beginning of July.

“Pre-existing structural injustices” – from healthcare access to the availability of higher-wage jobs – already has put people of colour in the US at a greater risk of homelessness and housing insecurity.

Black Americans accounted for 13 per cent of the US population in 2019 but 40 per cent of all people experiencing homelessness.

White workers earned a median wage of $22.17 an hour – compared to $16.41 for black workers and $16.18 for Latino workers, the report says.

Housing costs have grossly outpaced wages for lower-income earners over the last several decades, with wages rising by just six per cent since the 1960s, pointing to a “a tremendous structural gap between what people earn and what housing costs,” according to NLIHC president Dianne Yentel.

Economic downturns increase the likelihood of housing instability, as renters are forced to rely on limited relief “at a time when stable housing is vital,” according to the report. “Millions of renters were one financial shock away from housing instability, and for many the pandemic and economic fallout is that shock.”

The organisation is demanding Congress put in place a uniform moratorium on evictions, as well as invest billions of dollars in rental assistance to “stem the tide” of evictions facing millions of people in the coming weeks, Yentel said.

Activists and tenants groups also are urging officials to freeze or cancel rents indefinitely during the pandemic.

“Without immediate federal action, millions of people – predominantly black and Latino people – will be evicted from their homes in coming months and be at risk of homelessness,” she said. “We are running out of time.”