About the Report
Out of Reach documents the significant gap between renters’ wages and the cost of rental housing across the United States. The report’s central statistic, the Housing Wage, is an estimate of the hourly wage a full-time worker must earn to afford a modest rental home at HUD’s fair market rent (FMR) without spending more than 30% of his or her income on housing costs, the accepted standard of affordability. The FMR is an estimate of what a family moving today can expect to pay for a modestly priced rental home in a given area.
Housing is Out of Reach
A full-time worker needs to earn an hourly wage of $22.96 on average to afford a modest, two-bedroom rental home in the U.S. This Housing Wage for a two-bedroom home is $15.71 higher than the federal minimum wage of $7.25, and $5.39 higher than the national average hourly wage of $17.57 earned by renters. In nine states and the District of Columbia, the two-bedroom Housing Wage is more than $25.00 per hour.
Renters with the lowest incomes face the greatest challenge in finding affordable housing. A renter earning the federal minimum wage would need to work 127 hours per week to afford a two-bedroom rental home at the Fair Market Rent and 103 hours per week to afford a one-bedroom. In no state can a person working full-time at the federal minimum wage afford a two-bedroom apartment at the Fair Market Rent. In only 28 counties can a full-time worker earning the minimum wage afford a one-bedroom rental home at the Fair Market Rent.
In most areas of the U.S., a family of four with poverty-level income earns no more than $25,750 and can afford monthly rent of no more than $644. The national average fair market rent for a one-bedroom home is $970 per month and $1,194 for a two-bedroom home, far from affordable for a family in poverty.
Minimum wage workers are not the only workers who struggle to pay the rent. Seven of the ten occupations projected to grow the most by 2026 pay a median wage too low for a full-time worker to afford a modest one-bedroom apartment. These occupations include food service workers, personal care aides, home health aides, and medical assistants.
It is Time to Solve the Crisis
Millions of renters with extremely low incomes, including low-wage workers, cannot afford their housing. Yet, only one in four households who qualify for housing assistance receives it. The American public recognizes the need for change. A recent poll found that the majority of Americans across the political spectrum believe elected officials should take action to make housing more affordable for people with low incomes.
Congress must by fully fund key federal housing programs that serve the nation’s lowest income renters. These programs include the national Housing Trust Fund, Housing Choice Vouchers, public housing, project-based rental assistance, and other rental housing programs. A fully-refundable renters’ tax credit for housing cost-burdened renters would also help struggling families afford their rent.
Affordable homes provide a foundation for positive health outcomes for families, correlate with better cognitive development and academic achievement for children, and lower public expenditures on other services like healthcare. And affordable homes in high opportunity neighborhoods with good schools can have long-term impacts on earnings and economic mobility of future generations. A sustained commitment to federal programs that improve housing affordability for the lowest-income renters in the U.S. will provide profound benefits to millions of people and their families, as well as to local communities.