Rent Unaffordable for Average Worker in RI

By PATRICK LUCE (Patch Staff)

While the economy has improved and the unemployment rate has dropped in most states across the country, many people are still struggling to pay the bills, especially when it comes to rental housing, a National Low Income Housing Coalition study shows.

The problem is that while jobs have increased, wages have not, forcing roughly 21 million working Americans to scrape by on a near minimum wage salary, according to the Pew Research Center. At the same time, rents keep rising because the demand for rental units has increased across the country as the home ownership rate has dropped to its lowest point since 1989.

The result is that people are being priced out of the rental market, and it’s worse in Rhode Island than most parts of the country, according to The Atlantic’s City Lab.

Most economists advise renters to pay no more than 30 percent of their annual income on housing. Anything more is unaffordable. Nationally, the average worker needs to make $19.35 an hour to afford the rent on an average two-bedroom home, about $4 an hour more than the average renter’s income of $15.16. In Rhode Island, the gap is wider. A renter needs to make $18.49 an hour. That’s $6.01 an hour more than the average renter makes, the tenth largest wage gap in the country, the study has found. Hawaii tops the lost with a whopping $17.12 wage/rent gap.

It gets worse for people in Rhode Island working for near minimum wage — even though the state’s $9 minimum wage is higher than the $7.25 national average. Those toward the bottom of the income scale in Rhode Island must work 67 hours a week just to afford just a one-bedroom apartment in the state. A two-bedroom home requires renters at minimum wage to work nearly 100 hours a week.

The problem continues to grow as potential homeowners are increasingly priced out of the market, instead turning to rentals, further limiting the rental stock and driving prices higher.

“The tightening rental market has the most significant impact on low income renters,” the report concludes. “Many higher and middle income renters occupy units that are affordable to lower income groups, reducing the supply of affordable and available decent apartments for the lowest income renters. As a result, for every 100 extremely low income (ELI) renter households, there were just 31 affordable and available units.”