The Hourly Wage Needed to Rent a 2-

Bedroom Apartment Is Rising

Tanvi Misra May 25, 2016

A new report maps how much the average American has to earn to
comfortably afford a modest rental in every U.S. state.

In 2015, the demand for rental apartments reached its highest level ever since
the 1960s. The pinched access to mortgage credit after the Great Recession is
one reason why. Another is that many Americansespecially the poor and
people of colorhavent felt the effects of the economic recovery, and may not
be able to rustle up the funds for a down payment. A third reason is that
Millennials, now the largest generation ever since the baby boomers, are
especially loath to buy homes. The supply of rentals, especially at the lower
end of the market, has been no match for the skyrocketing demand.

That means its getting harder and harder for average Americans to afford a
modest rental in the U.S., a new report by the National Low Income Housing
Coalition finds. The lowest-income renters without housing assistance have
always struggled to afford housing, but in recent years they have become even
more squeezed as more households enter the rental market, Andrew Aurand,
the vice president of research at NLIHC, tells CityLab.

In 2016, a worker would need to make $20.30 per hour to rent a two-
bedroom accommodation comfortablywithout devoting more than 30
percent of income on housing costs. Last year, NLIHC pegged this housing
wage at $19.35 an hour. (And were not talking about luxury apartments
here. The report tallies this average hourly wage against the Department of
Housing and Urban Developments Fair Market Rent, an annual estimate of
what a family might pay to live in a simple apartment.)

To really understand the weight of 2016s housing wage, consider this: The
average hourly wage for Americans is actually $15.42 per the report, which is
not nearly enough to afford a two-bedroom. And the federal minimum wage,
at $7.25, is around a third of whats required. That means minimum-wage
workers would have to work three jobs, or 112 hours a week, to be able to
afford a decent two-bedroom accommodation. From the report:

If this worker slept for eight hours per night, he or she would have no
remaining time during the week for anything other than working and
sleeping.

Of course, both the rental-housing market and hourly wages vary by state.
The map below illustrates the differences in housing wages by state. Among
the states, Hawaii has the highest hourly wage requirement ($34.22) for a
two-bedroom. Among U.S. metros, San Francisco is at the top with $44.02.

(National Low Income Housing Coalition)

And heres a graph showing the states with the biggest gaps between the
current hourly wages and housing wages. Again, Hawaii leads this list:

For poor Americans, even a one-bedroom place is out of reach. Theres not a
single state in the U.S. where a minimum-wage worker can comfortably
afford a one-bedroom by working a 40-hour week. The map below shows the
hours per week this worker would have to put in live in a modest one-
bedroom in each state:

(National Low Income Housing Coalition)

Raising the minimum wage would undoubtedly narrow these gaps, but its
still just not enough: At least 22 local jurisdictions now have a minimum
wage higher than their prevailing state or federal level. All fall short of the
one-bedroom and two bedroom Housing Wage, the report reads. The key
liesyou guessed itin expanding the affordable housing supply. Writes
HUD Secretary Julian Castro, in the reports preface:

This report confirms that investing in affordable housing as HUD is

doing by providing annual housing support for nearly 5.5 million
households and through the new national Housing Trust Fund, as part of
innovative efforts like the Rental Assistance Demonstration, and with
incentives like the Low Income Housing Tax Credit is one of the most
important steps we can take to help people succeed today, and live
healthier lives long into the future.