Can One Salary Pay the Rent? Probably Not

If you live in Oakland, California, you need to earn $40.44 an hour to reasonably afford the rent on a a two-bedroom apartment. In Danbury, Connecticut, you have to earn $34.13. In New York’s Nassau County, you have to make $30.92.

“Our nation can’t fulfill any of our major goals — whether it’s tackling inequality, improving healthcare, keeping neighborhoods safe, or making sure every child gets a good education — unless we also focus on housing,” wrote Housing and Urban Development Secretary Julian Castro in the foreward of a new report by the National Low-Income Housing Coalition.

The report, titled “Out of Reach,” documents the gap between wages and rents throughout the country. Nowhere in the country -- even in places that have raised the minimum wage above what's required by federal law -- can a full-time minimum-wage worker afford a modest two-bedroom apartment. Rents are outpacing inflation -- and wages.

The report creates a figure the authors call a “housing wage,” which is an estimate of the hourly wage a full-time worker has to earn to afford a modest and safe
 rental home without spending more than 30 percent of his or her income on rent and utility costs. That’s the federal standard for affordability.

The report says:

In 2016, the national Housing Wage 
is $20.30 for a two-bedroom rental unit and $16.35 for a one-bedroom rental unit. A worker earning the federal minimum wage of $7.25 per hour would need to work 2.8 full time jobs, or approximately 112 hours per week for all 52 weeks of the year, in order to afford a two-bedroom apartment.

To make matters worse, real wages fell 5.3 percent between 1979 and 2013 while housing costs have skyrocketed. Vacancy rates are at their lowest levels since 1985. Landlords would rather upgrade their units to appeal to the higher end of the market than keep the rent reasonable. On the other end of the spectrum, they have no incentive to keep units even habitable, because low-income tenants have no other place to go.

Federal housing programs only reach about one-quarter of the people who are eligible for them. “Those receiving affordable housing subsidies are in many ways the lucky ones who very often literally won a housing lottery to receive that assistance,” said Diane Yentel, president and CEO of NLIHC.

“What it means is that low-income unassisted households face homelessness and housing instability,” Yentel said in a call Wednesday with reporters. “When they do have a home, they are often one illness, one divorce, one paycheck away from homelessness. They face threats of eviction, poor housing conditions, and are severely cost-burdened, paying 60, 70, 80 percent of their income toward rent each month.”

HUD recently established a Housing Trust Fund that will be used to build, preserve, or rehabilitate
 rental housing affordable even for people at the very lowest income levels. It’s getting its first infusion of money this summer -- $174 million, not nearly enough to tackle the problem. A few pieces of legislation have tried to increase that amount, but nothing has happened yet.

NLIHC has an idea for bringing more money into that fund. It’s a pretty simple redistribution of wealth, cutting a tax break to the rich and using the proceeds for the poor. It would cap the amount eligible for the mortgage interest tax deduction at $500,000 instead of $1 million and convert the deduction to a 15 percent non-refundable tax credit. Those changes could save $213 billion over the next 10 years.

There are other creative things communities can do to make housing more affordable, and they all involve building more of it. They can change zoning codes to allow for more density and taller buildings. They can stop building so much parking and use land to house people instead of cars. One way or another, a lot more housing needs to get built to keep families out of homelessness.