The nation continues to see a mismatch between wages and housing costs, according to the latest Out of Reach report by the National Low Income Housing Coalition (NLIHC).
Wages have remained stagnant or have declined across the country, and the federal minimum wage of $7.25 hasn’t increased since 2009. On the housing side, as a result of historic low homeownership rates, the rental market is tightening with rising rents and declining vacancy rates.
“Full-time minimum-wage workers are just unable to find modest affordable housing in their communities,” said NLIHC research director Megan Bolton during the Out of Reach 2015 press call Tuesday.
In 2015, an American household must earn $19.35 an hour, more than two and a half times the federal minimum wage, to afford a two-bedroom apartment without spending more than 30% of their income on rent. The national housing wage for a one-bedroom unit is $15.50.
Even though the minimum wage is higher in some states, a minimum-wage employee working a 40-hour week still cannot afford a one-bedroom rental unit at fair market rent without paying more than 30% of their income in any state.
To afford a one-bedroom unit, an individual earning minimum wage would need to work 125 hours a week in Hawaii, 101 hours in Maryland, and 100 hours in New Jersey and Washington, D.C.
Thirteen states plus the District of Columbia have two-bedroom housing wages over $20 an hour. The most expensive states are Hawaii, where a household must earn $31.61 an hour to afford a two-bedroom unit at fair market rent; District of Columbia, $28.04; California, $26.65; New York, $25.67; and New Jersey, $25.17.
Ten metro areas across the nation have two-bedroom housing wages over $30 an hour, including San Francisco, where households must earn $39.65 an hour for a two-bedroom unit at fair market rent.
Oregon Gov. Kate Brown, who wrote the preface to the report, also discussed the struggles households are facing in her state. Brown said the challenge to providing affordable housing is the supply. As a solution, she has proposed a $100 million investment in affordable housing that would add 4,000 new units to meet the needs in Oregon communities.
“The bottom line is it’s absolutely critical not just that we have affordable housing, but that we have workforce housing so folks can live and work in their communities without bearing lengthy transportation costs and the time and energy it takes for a family to commute,” said Brown. “I know that without affordable housing, our families are not going to be successful.”
Sheila Crowley, NLIHC president and CEO, said the organization supports increases to the federal minimum wage and encourages employers to provide sick leave and paid annual leave for their employees to create more income stability.
However, wages are only one piece of the puzzle. Supply is the other key component. The preservation of public housing and Sec. 8 project-based housing is critical, she said, as well as expanding the nation’s affordable housing stock. The National Housing Trust Fund (NHTF), which is to be implemented in 2016, was established to provide additional affordable housing, and the NLIHC is committed to bringing the NHTF to scale.
Crowley also added that housing choice vouchers have been very successful in helping people to bridge the gap of what they earn and where they can afford to live, but vouchers continue to be lost. “It’s a program that is losing ground in the current budget climate in Washington, D.C., and that needs to be reversed,” she said.
