Earning less, paying more for rent

The latest Out of Reach report, released yesterday by the National Low Income Housing Coalition, finds that rents are rising despite the recession while wages continue to fall across the country. This might seem counter-intuitive. If people are earning less, then you might expect to find a decrease in the demand for rental units which would result in stable or lower rents. However, these are not normal times. The foreclosure crisis means more people are entering the rental market at a time when fewer people are leaving rental units for homeownership.
 
Lack of affordability is the overarching theme of this report which contains grim news for lower-income renters. I guess that is to be expected of a report titled "Out of Reach". Here are some of the key findings:

• There is no county in the United States in which a full-time minimum wage worker can afford even a one-bedroom apartment at the Fair Market Rent (FMR).
• At the federal minimum wage of $7.25, a household would have to work 102 hours each week to afford the nation's average FMR for a two-bedroom home.
• The two-bedroom Housing Wage (the hourly wage a worker must earn to afford the FMR for a two-bedroom home) topped $20.00 in 10 states: HI, DC, CA, MD, NJ, NY, MA, CT, AK and FL.  
• In Minnesota:
• Monthly Supplemental Security Income (SSI) payments for an individual are $674. If SSI represents an individual's sole source of income, $202 in monthly rent is affordable, while the FMR for a one-bedroom is $658. 
• The Fair Market Rent (FMR) for a two-bedroom apartment is $806. In order to afford this level of rent and utilities, without paying more than 30% of income on housing, a household must earn $2,687 monthly or $32,247 annually.

The income/rent mismatch may lead many to think of this as an a wage problem - and it is. Yet no one is predicting high rates of employment any time soon and even in good economic times, housing affordability is a problem for lower income households. The solution to this problem is a housing policy that supports those at the bottom of the income spectrum.

About the National Low Income Housing Coalition:

Established in 1974 by Cushing N. Dolbeare, the National Low Income Housing Coalition is a membership organization dedicated solely to achieving socially just public policy that assures people with the lowest incomes in the United States have affordable and decent homes.