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
Few events in history highlight as clearly as the COVID-19 public health crisis that housing is healthcare. Governments at all levels have told residents to stay home. Not everyone, unfortunately, is stably housed in a safe and adequate environment, and government action to help secure that environment is both morally vital and prudent from a public-health standpoint. In the first six months of 2020, the economic situation for low-wage workers has precipitously worsened: in June the Department of Labor reported that over 34 million people were receiving or had applied for unemployment insurance. More than half of all low-income households experienced job or income loss because of the pandemic. Many low-wage workers could not afford their housing before the crisis, and they will need even more help now.
A full-time worker needs to earn an hourly wage of $23.96 on average to afford a modest, two-bedroom rental home in the U.S. This Housing Wage for a two-bedroom home is $16.71 higher than the federal minimum wage of $7.25, and $5.74 higher than the national average hourly wage of $18.22 earned by renters. In 11 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. The average minimum wage worker must work nearly 97 hours per week to afford a two-bedroom rental home or 79 hours per week to afford a one-bedroom rental home at the average fair market rent. 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 145 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 $26,200 and can afford monthly rent of no more than $655. The national average fair market rent for a one-bedroom home is $1,017 per month and $1,246 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. The two-bedroom housing wage of $23.96 is more than what 60% of all wage and salary workers earn. The median hourly wage of $19.68 is just barely sufficient to afford a one-bedroom apartment, and nearly half of all workers earn less than that.
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. There has never been a more urgent time to expand rental assistance and protect those facing housing insecurity.
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.
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.