High rents have forced a bleak ultimatum on minimum wage workers across the country seeking an affordable place to live: Get several roommates or several full-time jobs.
What the research says
Real-estate tech firm Zillow released a rent-affordability analysis this week that looks at the 50 largest cities in the U.S., comparing the local cost of rent for one- and two-bedroom units to the local minimum wage.
- Nationwide, it takes 3.3 full-time minimum wage workers to reasonably afford a one-bedroom unit and 3.8 workers to afford a two-bedroom unit.
- In other words, federal minimum wage workers need to find at least two other roommates to comfortably afford a one-bedroom apartment — or they would have to work 132 hours per week.
- That arrangement for a one-bedroom unit would exceed the Department of Housing and Urban Development’s guideline of a maximum of two people per bedroom.
On the other hand, the picture is less grim in many major cities that Zillow analyzed.
- Despite rent typically being higher than the national average in large cities, many have minimum wages much higher than the federal standard of $7.25.
- For example, in Baltimore — where the minimum wage is $13.25 — it requires 1.6 full-time workers to afford a one-bedroom rental.
- “Workers tend to fare better” in these cities, the Zillow report stated.
Where rent is most (and least) affordable
Here are the 10 most-affordable big cities cities for minimum wage workers renting one-bedroom units, according to Zillow:
- Tucson: 1.3 minimum wage jobs required
- Fresno: 1.4 minimum wage jobs required
- Minneapolis: 1.4 minimum wage jobs required
- Cleveland: 1.5 minimum wage jobs required
- Chicago: 1.5 minimum wage jobs required
- Detroit: 1.5 minimum wage jobs required
- Sacramento: 1.6 minimum wage jobs required
- Albuquerque: 1.6 minimum wage jobs required
- Baltimore: 1.6 minimum wage jobs required
- Kansas City: 1.7 minimum wage jobs required
And here are the 10 least-affordable cities for one-bedroom rentals:
- Atlanta: 4.3 minimum wage jobs required
- Austin: 4 minimum wage jobs required
- Charlotte: 3.8 minimum wage jobs required
- Nashville: 3.7 minimum wage jobs required
- Raleigh: 3.6 minimum wage jobs required
- Dallas: 3.3 minimum wage jobs required
- Fort Worth: 3.1 minimum wage jobs required
- San Antonio: 3.1 minimum wage jobs required
- Houston: 3 minimum wage jobs required
- Philadelphia: 3 minimum wage jobs required
All 10 of the least-affordable places feature the worst of both worlds: minimum wages that have been frozen at $7.25 paired with big-city rental prices.
Keep in mind
Zillow’s affordability analysis is based on the recommendation that rental payments should not exceed 30% of the worker’s monthly income. The 30% rule, as it’s often called, is a popular guideline touted by many academics and personal finance experts.
- The 30% rule can be traced back to legislation from 1969 led by housing-affordability advocate Senator Edward Brooke.
- Some experts argue that the rule no longer makes sense given that increases in housing costs have long outpaced wage gains.
- The rental-affordability crunch persists even though renting is more affordable than owning a home in most of the country right now.
Source: https://money.com/cities-rent-affordable-minimum-wage/
