Minimum wage workers can't afford their rent

Published: Wednesday, March 20 2013 5:45 p.m. MDT

National Low Income Housing Coalition

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Around the country, rental prices have skyrocketed. For example, the median rent for a one-bedroom apartment in the District of Columbia has gone up nearly 50 percent since 2000, according to a report from the D.C. Fiscal Policy Institute. According to the report, the price for a one-bedroom unit in the district went from $735 in 2000 to $1,100 in 2010, a 49.7 percent increase. They also note that during the same period the number of low-income units fell from more than 70,000 to 34,500.

The impact of these rising rents has a disproportionate impact on lower-income families. About 50 percent of renter-occupied households earn less than $50,000, according to the National Multi-Housing Council. At least one out of every four renter households is extremely low income, meaning they earn less than 30 percent of the area median income, according to a report from the National Low-Income Housing Coalition.

Extremely low-income households earn roughly $20,210 per year, according to the National Low Income Housing Coalition. If these households were to spend the financially recommended 30 percent of their income on rent, they would be able to spend $505 on rent. However, many extremely low-income households can't find homes in their price range.

Statistics from the National Low Income Housing Coalition show that this year the national average for a two-bedroom rental is $949, a one bedroom is $797, both far more than these households are able to pay.

A new report from the National Low Income Housing Coalition shows how many hours low-income workers need to work to rent a two bedroom apartment in each state.

Analyzing these findings, Slate's economic correspondent Matthew Yglesias notes an interesting finding. From his report:

"More liberal states typically have higher minimum wages, but it's not generally the case that liberal states have a better housing affordability picture for low-wage workers. The least-affordable states — New York, New Jersey, Maryland, D.C., California, Massachusetts, Delaware, Virginia, Connecticut, New Hampshire — are a very disproportionately blue bunch. And the problem is that the impact of high regulatory minimum wages in many of these states is swamped by the impact of excessive restrictions on housing supply."

He continues:

"Now that's not to say that Kentucky is necessarily a better place for low-income workers than Massachusetts, since Massachusetts offers more generous benefits of various kinds and has a higher-performing public school system. But it's a reminder that prices do matter, and on the crucial question of housing, California and the Northeast have high-price policies that ill-serve the poor."

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