Minimum wage, rent incompatible, study says
How many hours would the average minimum wage worker (at the federal hourly rate of $7.25) need to work each week to afford a modest two-bedroom apartment in this country? According to the latest study, 122.
That doesn’t bode well for new or returning workers, high school graduates, students, and singles. Not to mention others who, for hundreds of possible reasons, have limited earning potential.
According to the new report from the National Low Income Housing Coalition, affording the average two-bedroom rental requires earnings of $22.10 an hour (called “the housing wage”), or three times the federal minimum wage. The report starkly illustrates the gap between low-income wages and the high cost of rent throughout much of the United States.
What’s a “modest” two-bedroom? The number, based on each state and county’s market, comes from the U.S. Department of Housing and Urban Development’s calculation of fair market rent for each area. Then the wage is calculated so no more than a third of income is spent on rent, the widely accepted cap in both government and private budgeting formulas.
Each state is different; Idaho hardly compares with San Francisco, where a cheap one-bedroom goes for more than $2,000 a month. But even here rents are skyrocketing, and in Arkansas, where rentals are cheapest, a worker would need to earn $13.84 an hour to afford the $720 fair market rent. The minimum wage in Arkansas is $8.50.
Idaho’s minimum wage matches the federal $7.25. The study found that at that rate, an Idaho worker would need to work 85 pay-hours weekly to afford a two-bedroom at fair market rent of $803, and 66 hours for a one-bedroom at $621.
Those are statewide averages. According to the Census Bureau, the median rent in Kootenai County is $878; MSA rental data show the average Coeur d’Alene one-bedroom costs $641. Fair market rent values in Coeur d’Alene area are currently higher than the national average, and higher than 95 percent of other Idaho markets (see Rentdata.org).
So without overtime, the two-bedroom wage needed in Idaho is $15.44 (or more than $32,000 a year, before taxes); the average of all Idaho renters is actually $12.19 hourly. To afford a one-bedroom in Idaho on our current minimum wage, and still have enough for basic utilities, gas, food, taxes, etc., the rent would have to be almost half of current market rates — or $377.
There’s a big downside to this housing market and economic boom, without wages keeping up. According to HUD’s annual Point in Time report, the national rate of homelessness went up in 2017 for the first time since 2010, mostly in the western U.S., including veteran homelessness, and not counting all who live with parents or friends. Rents are soaring beyond affordability, and a college degree doesn’t guarantee affordable wages, as too many locals well know.
For Idaho’s full report see http://nlihc.org/oor/idaho.
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Sholeh Patrick, J.D. is a columnist for the Hagadone News Network. Contact her at Sholeh@cdapress.com