Why a $15 Minimum Wage Can’t Fix America’s Affordable Rent Crisis
It’s been 30 years since R&B star Gwen Guthrie released her smash hit “Ain’t Nothin’ Goin’ On but the Rent”—and it seems the song is more relevant than ever.
It’s impossible for workers earning $15 an hour or less to afford a modest two-bedroom apartment in any metropolitan area, county, or state in the nation, according to a study of the gap between wages and the price of housing by the nonprofit National Low Income Housing Coalition.
Don’t need a two-bedroom? You’re still out of luck, because there are only 12 counties and one metro area in the nation—all either in West Virginia or Washington state—where people earning the local minimum wage can afford a one-bedroom pad. Despite numerous recent victories by the Fight for $15 movement, which champions boosting the minimum wage beyond the federal minimum wage of $7.25 per hour, 20 states still mandate minimums that are the same as the federal minimum.
“Raising the minimum wage is a critical part of addressing the housing affordability,” Dan Emmanuel, a research analyst with the National Low Income Housing Coalition, wrote in an email to TakePart. “However, there is another part to this problem, which is the shortage of affordable housing. Specifically, there is a shortage of 7.2 million rental units affordable and available to the lowest-income households. We need to address both issues in order to tackle the affordable housing crisis.”
Twenty-nine states and the District of Columbia have a minimum wage higher than the federal floor. But the coalition’s report, Out of Reach 2016: No Refuge for Low Income Renters, found an unrelenting rise in what’s called the housing wage. That’s simply the amount full-time workers would have to earn per hour to afford HUD’s estimate of a fair market rent apartment in their area without spending more than 30 percent of their household income. You know, so folks can still afford to get to work, eat something healthier than the dollar menu at their local fast-food joint, buy medication, and save for financial emergencies.
Last year workers needed to earn a national average of $15.50 to afford a modest one-bedroom apartment or $19.35 to afford a two-bedroom place. This year, child care workers, home health care aids, and other minimum wage earners need to take home $16.35 per hour for a one-bedroom or $20.30 per hour for a two-bedroom apartment, according to the report. The reality is even more sobering in some of the nation’s biggest metro areas.
In booming San Francisco, where the minimum wage is $12.25 per hour, $5 above the federal minimum wage, workers would need to earn $34.88 per hour to afford a one-bedroom apartment and $44.02 for a two-bedroom. It’s no wonder, then, that even tech workers are getting priced out of the City by the Bay’s rental market.
The minimum wage in the District of Columbia will jump to $10.50 per hour on July 1. But a worker living there would need to earn $31.21 per hour to afford a two-bedroom apartment.
“You know, I just want an affordable place. I’ve been homeless a number of times. I’ve slept in cars, I’ve been in abandoned houses,” Helen Cheeks, a worker earning $9 at nearby Reagan National Airport in Arlington, Virginia, told NPR in May, explaining why she’s supporting the Fight for 15 movement. “Raising the minimum wage up to $15 an hour would give me a better chance, but if we’re talking about the District, the only way you’d be able to live in the District is that you have affordable housing.”
Cheeks isn’t alone, and cities such as Honolulu, Los Angeles, and Portland, Oregon, have declared states of emergency because of surges in homelessness.
“It’s already a worst-case scenario for over half a million homeless people in this country. The 75 percent of extremely low income renters paying over half of their income on rent and utilities aren’t far behind either,” wrote Emmanuel.
According to the report, the demand for rental housing is the highest it has been since the 1960s, and at the same time rents have jumped at an annual rate of 3.5 percent, the fastest pace in 30 years. Meanwhile, between 2007 and 2015, the hourly wage for the bottom 10 percent of workers increased 0.2 percent. That means people outside major metropolitan areas are feeling the pinch too.
“Absent public subsidy, the private market does little to produce new rental housing affordable to the lowest income households,” wrote the report’s authors. “Because of high development costs, developers target new rental units to the upper end of the rental market where rents are higher.”
Emmanuel wrote that we can end the rental “crisis with better housing policies like increased funding for the National Housing Trust Fund.” The coalition’s nearly $174 million fund, which launches this summer, is the first new federal housing program in a generation to address the shortage of affordable rental housing.
As for what the average person should do about the lack of affordable housing in the community, Emmanuel wrote that it’s important to remember that the housing crisis largely stems from choices being made at the federal level, which means putting pressure on your member of Congress. “You don’t need to be a federal housing policy expert to make a difference,” Emmanuel said. “In fact, in many ways, your voice as a constituent is more important.”
This post has been revised to reflect the following correction:
Correction: June 2, 2016
An earlier version of this article attributed email responses to the National Low Income Housing Coalition’s communications specialist, Malik Siraj Akbar instead of Dan Emmanuel, a research analyst at NLIHC.