An individual paid minimum wage for working 40 hours a week cannot afford the cost of a modest two-bedroom rental home anywhere in the United States, according to this year’s Out of Reach report by the National Low Income Housing Coalition.
Based on fair market rent set by the U.S. Department of Housing and Urban Development, the coalition calculated the national housing wage needed for a worker to afford a rental home without spending more than 30% of their income. This year they found a “full-time worker must earn at least $20.40 per hour to rent a modest one-bedroom home, or $24.90 per hour to rent a modest two-bedroom home.”
Both federal and state minimum wages are far below this national housing wage. For a minimum wage worker to afford rent today, she would have to work nearly 97 hours a week for a two-bedroom home or 79 hours a week for a one-bedroom home. Most individuals and families cannot feasibly work the equivalent of two full-time jobs while maintaining other responsibilities or having time to meet basic needs.
A full-time worker “must earn at least $20.40 per hour to rent a modest one-bedroom home, or $24.90 per hour to rent a modest two-bedroom home.”
Put into perspective, the NLIHC notes: “People who work 97 hours per week and need eight hours per day of sleep have around two hours per day left over for everything else — commuting, cooking, cleaning, self-care, caring for children and family, and serving their community.”
Unattainably high rent is not just a problem in large metropolitan cities. Even in rural areas or states where wages exceed the federal minimum wage, the rate is not high enough to pay rent for a fair market two-bedroom home or most one-bedroom homes. A full-time minimum wage worker can afford a one-bedroom rental home in only 7% of all U.S. counties.
“Housing is always unaffordable at the lower end of the housing spectrum,” said Samuel Gunter, executive director of the North Carolina Housing Coalition. “This is what the Out of Reach Report reveals every year. It is an ongoing challenge. There’s just nowhere for folks to afford housing.”
“When people hear the words ‘public housing,’ a lot of people assume that this is for people who don’t work. But frankly, everyone’s working,” Gunter said. “The reality is at each of these income bands, people are working. The fact that you can work 40 hours and not afford housing — that’s not the way it should be.”
The Out of Reach report indicates two important things: minimum wage does not proportionately reflect cost-of-living standards, and the shortage of affordable housing leaves low-income individuals and families housing insecure.
The federal minimum wage remains $7.25 — a rate that has not been raised in 12 years. The NLIHC estimates “if the minimum wage had increased at the rate of productivity growth, it would be over $21 per hour in 2021.”
While the wages of some workers have increased over the last few decades, low-wage earners have not seen much of a raise. Between 1979 and 2019 “wages grew just 6.5% for the lowest-wage (at the 10th percentile) workers and 8.8% for median-wage workers. … In contrast, wages for the highest-paid workers (at the 90th percentile) grew by 41.3%.”
In response to the report, U.S. Rep. Rashida Tlaib, D.-Mich., tweeted, “When someone works 40 hrs a week and makes minimum wage that doesn’t pay rent, what is the definition of minimum for? Minimum respect? Minimum regard for life? Minimum amount that billionaires can part with while still being able to go to space? Pay people a living wage. Period.”
Earlier this year, the U.S. Senate rejected a proposal to gradually raise the federal minimum wage to $15. Some politicians and economists warned that raising the minimum wage would be too burdensome on small businesses and would lead to more job loss. Even if passed, $15 an hour would not be able to compete with the NLIHC’s national housing wage.
While the annual Out of Reach report looks at housing affordability in terms of minimum wage, the focus of the NLIHC is not on raising the minimum wage but on addressing the lack of affordable housing for low-income earners.
Affordable housing shortage is a long-term structural problem that worsened during the COVID-19 pandemic. The extent of the pandemic’s economic downturn is still being documented, but low-wage workers were hit hardest by job loss and pay cuts. Of the 9.6 million jobs lost in 2020, more than 82% were held by low-wage workers.
In a press briefing after release of the 2020 Out of Reach report, Sen. Sherrod Brown, D.-Ohio, shared the story of an essential grocery store worker who told him, “They call me essential, but I really do feel expendable because they don’t pay me much and they don’t protect me at work.”
In 2020, as people lost jobs and faced economic hardship, many families were forced to downsize and search for more affordable housing. This increase in demand led the cost of low-end rental homes to rise, lessening the supply of available homes.
While housing rates were exacerbated because of the economic downturn, affordable housing is not a new problem.
“Even before the pandemic, our nation had a shortage of 7 million affordable and available homes for renters with the lowest incomes,” said Marcia Fudge, U.S. Secretary of Housing and Urban Development.
This housing shortage leaves 85% of extremely low-income renters unable to afford rent altogether, and 70% of low-income renters spend more than half of their incomes on housing costs. As a result, many families are often forced to choose between paying rent and meeting another basic need such as basic nutrition or medical care.
When sacrificing costs of other needs is no longer an option, some families face eviction and homelessness. In January 2020, before the pandemic outbreak, the U.S. Department of Housing and Urban Development reported 580,466 people were experiencing homelessness.
“These results were tabulated practically on the eve of the COVID-19 pandemic, and they show a system under-resourced to meet the needs of people experiencing and at risk of homelessness, much less the coming consequences of the global pandemic and recession,” said Nan Roman, president and CEO of the National Alliance to End Homelessness.
“Housing is a basic human need and should be regarded as an unconditional human right. With the highest levels of job losses since the Great Depression and a pandemic that continues to spread, low-income workers and communities of color are disproportionately harmed,” added Diane Yentel, NLIHC’s president. “The enduring problem of housing unaffordability ultimately calls for bold investments in housing programs that will ensure stability in the future.”
Some see housing not only as a basic human need but as a Christian imperative. In response to the NLIHC report, the Lutheran Advocacy Ministry in Pennsylvania wrote: “The gospel calls us to care and provide for those in need, especially as it relates to our fundamental needs. In light of this data, that must include ensuring all people have access to adequate and affordable housing. Everyone should live sufficiently, not beyond their means and not below society’s means to care for them.”
It is worthwhile for someone who is created in the image of God to have a safe place to lay their head at night.”
Gunter, who is also a Baptist minister, recommends churches help spread the word about emergency rental assistance in their areas as people might not know about or might be distrusting of the resources available to them.
Gunter often discusses the need for affordable housing from a public policy perspective but believes the innate need for shelter should not be a debated topic in churches. He’s noticed that people carry certain prejudices when they hear words like public housing. “We hold impressions we have of who receives assistance, impressions of free-loading. But employed or unemployed, that person is still your neighbor and your neighbor needs a place to sleep. It is worthwhile for someone who is created in the image of God to have a safe place to lay their head at night.”
Gunter hopes people take time to reflect in the wake of COVID-19.
“During the pandemic, we’ve seen the need for people to have a place to shelter,” he said. “We’ve been in our homes 24/7. We see more of the need for a home since we’re all in homes more. There’s an opportunity here. I think the pandemic has offered us a place to rethink our personal lives and community lives, and it’s an opportunity for each of us to think about how we want to create a future community.”
The gift that is missing in our talk about affordable housing | Opinion by Greg Jarrell
Think you understand what it’s like to live on minimum wage? Here’s my story | Opinion by Rick Pidcock
I can’t make sense of how we treat the working poor | Opinion by Ella Wall Prichard