Any list of basic necessities includes shelter—a roof over your head. But roofs, it turns out, are really expensive. In 2017, the federal minimum wage remains just $7.25/hour, although some states have gone as high as $11.50/hour. According to the National Low-Income Housing Coalition’s 2017 Out of Reach report, you’ll need to put in at least 51 hours at minimum wage in order to afford a one-bedroom apartment in South Dakota, the cheapest state.
If you wanted to rent a two-bedroom apartment, as many low-income families do, here’s the minimum hourly wage you’d need to earn if you were working a normal, 40-hour week (without vacation):
That said, I want to highlight two caveats that aren’t immediately obvious from the NLIHC report or the Denver Post article that has gone viral. In fact, I covered the 2015 version of the Out of Reach report and missed them. I don’t think the NLIHC is trying to be misleading. Its guide to the report (pdf) is quite straightforward. But these details aren’t immediately obvious from the headlines, either.
First, these numbers are based on the assumption that you shouldn’t spend more than 30% of your income on housing. That’s reasonable, since you’ll still need some money for the other two basic necessities, food and shelter. And that’s also how affordability is defined by U.S. Department of Housing and Urban Development:
Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.
But to be honest, it’s fairly arbitrary and doesn’t accurately represent how Americans—low-income or not—allocate money for rent.1
Second, the Denver Post article suggests that the fair-market rents used in the report are for “safe areas,” although I haven’t found that qualification in the NLIHC information. But that would skew the rent numbers upward.
Neither of which is to say that the housing market is totally fair and you can get by just fine on a minimum wage. It’s not and you can’t, and if we don’t figure out how to get more affordable housing onto the market or raise the minimum wage, we’re all going to feel the negative impact. But the reality is a bit less sensational than the headline.