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economic justice | homelessness | social services

Average rent out of reach for minimum wage earners

WASHINGTON - In only four of the nation's 3,066 counties can someone working full time and earning federal minimum wage afford to pay rent and utilities on a one-bedroom apartment, an advocacy group on low-income housing reported Monday.
Register-Guard
December 21, 2004
 http://www.registerguard.com/news/2004/12/21/a1.rent.1221.html


A two-bedroom rental is even more of a burden - the typical worker must earn at least $15.37 an hour to pay rent and utilities, the National Low Income Housing Coalition said in its annual ``Out of Reach'' report. That's nearly three times the federal minimum wage of $5.15 an hour.

``You get pushed into a situation where some necessities don't get paid for'' because more salary must be devoted to housing, said Sheila Crowley, the coalition's executive director. "For people on low-wage fixed incomes, that's a chronic way of life.''

About 36 million homes in th U.S. are rented. About 80 percent of renter homes are located in nearly 1,000 counties in which a family must work more than 80 hours a week - or more than two full-time jobs - at minimum wage to afford the typical two-bedroom apartment, the coalition said.

The coalition's ``housing wage'' assumes that a family spends no more than 30 percent of its gross income on rent and utilities, since anything more is generally considered unaffordable by the government.

In Oregon, the typical two-bedroom unit rents for $670 a month. That means workers must earn $12.89 an hour to cover rent and utilities without spending more than 30 percent of their income on housing.

An Oregon worker earning the state's minimum wage of $7.05 an hour would have to work 73 hours each week to cover housing costs.

In Lane County, 38 percent of households are renter households. Rents are slightly more expensive here than statewide, with the typical two-bedroom unit costing $687 a month. So a local worker must earn an hourly wage of $13.21 to cover those costs, or work 75 hours a week at minimum wage.

The national report quoted federal Bureau of Labor Statistics data that showed hourly wages rising about 2.6 percent over the past year, slower than the 2.9 percent rise in rents recorded in the Consumer Price Index.

To close the gap, the government must pour money into programs that help poor people pay rent, and must preserve and build more affordable housing units, Crowley said.

Data from the Census Bureau and the Department of Housing and Urban Development were analyzed to derive housing wage figures. The report also factored in areas in which state minimum wages are, or may soon be, higher than the federal standard.

A one-bedroom apartment was considered affordable for minimum wage workers in Crawford, Lawrence and Wayne counties in Illinois, where the housing wage was less than $6.29 an hour. The state minimum wage for most employees is $5.50 an hour, but will rise to $6.50 an hour on Jan. 1.

Washington County, Fla., was the fourth county listed as affordable for minimum wage earners renting a one-bedroom apartment. Its housing wage was listed at $6.06 an hour. Florida voters in November approved raising the state minimum wage by $1 to $6.15 an hour, though the vote results are being contested.

The coalition listed the housing wage for a one-bedroom rental in Clay County, Ill., at $6.52 an hour, just above the state minimum wage about to go into effect. A typical one-bedroom apartment there rents for $250 a month, said William Herrick, executive director of the county's housing authority.

The cost of rent and utilities is manageable for someone earning the minimum, ``but of course, they wouldn't have any extra money to afford anything else,'' Herrick said.

Least affordable was the San Francisco metropolitan area; rent and utilities for a one-bedroom apartment in Marin, San Francisco or San Mateo counties in California required a wage of least $22.63 an hour.

The same three counties also led in the wage needed to afford a two-bedroom rental, at $29.60 an hour.

California topped all states in the hourly wage needed to afford a two-bedroom apartment, at $21.24, followed by Massachusetts, New Jersey, Maryland and New York.

States with more residents in rural areas were generally the most affordable, although no state's housing wage was lower than the federal hourly minimum wage of $5.15, which has not changed since 1997.

West Virginia's housing wage was the lowest at $9.31 an hour for a two-bedroom rental, followed by North Dakota, Arkansas, Mississippi and Alabama.

The coalition said its 2004 data could not be compared with previous years because of changes in the way HUD calculated ``fair market rent,'' which is the cost of rent and most utilities for a typical apartment. The fair market rent varies widely by metropolitan area.


Register-Guard reporter Rebecca Nolan contributed to this report.
and everything is only going to get more expensive... 21.Dec.2004 16:29

this thing here

add to that car payments, such as insurance, repairs, and gas. and health care. and food....

food? 21.Dec.2004 16:37

who needs FOOD!

Interesting facts about housing presented here, and very depressing. Meanwhile, the very wealthy own two or more homes (one in the mountains, one at the coast, an apartment in New York City, blah, blah, blah), and think they deserve it.
Isn't capitalism great?

Organize 21.Dec.2004 16:42

George Bender

Poor people need to organize to defend their interests. We should have a higher minimum wage, rent controls and more subsidized housing for low-income people.

not to be too picky 21.Dec.2004 22:17

math can be FUN

The "30% of income" condition must be based on the assumption that everyone must have an automobile, maintain their cable subscription, and heat the place to 72 degrees in the winter and cool it to 68 degrees in the summer.

YOU DON'T NEED ALL THAT CRAP.

Most people who REALLY are only buying "the necessities" can get by paying more than half their income in rent/utilities. Strangely, many of the people who would benefit most from the savings of smart grocery shopping don't buy food in bulk, and spend most of their grocery money on packaged "convenience" food.

Math 22.Dec.2004 00:23

George Bender

And you know all this about poor people how? Well you just made it up, right?

Fuck off.

It used to 25 per cent 22.Dec.2004 10:50

Bu5ch

I got a G.I. mortgage back in the late 70's and sold the house in the 90's such things attract your attention. In the 80's the Federal Guideline for mortgage approval was that you shouldn't apy any more than 25 per cent of your gross income per month for housing, rent or mortgage. An acquaintance has told me the allowable limit has gone up to 40 per cent proably like car loans just to move money around.

The numbers should add up in MATH 23.Dec.2004 13:01

-

How do you buy your groceries in bulk when you don't own a car, Mr. Smarty Pants?

It's true, lower income people often don't buy in bulk, because it's too difficult to carry bulk purchases onto the bus, and or their living spaces aren't large enough to store said bulk purchases. The best vehicle for transporting bulk goods is an SUV. And the best kind of house to store bulk groceries in is one with a large pantry and storage room. Let's see, do we have those things in our tiny "affordable" apts? We live in apts. see because we can't afford to buy houses...

Yes it's true, rich people buy in bulk, therefore pay less per unit than most poor people. Funny how the system works, eh?

Percentage Figures are Unrealistic 23.Dec.2004 15:45

Casbah

25% - 30% - 40%? Get real . . . these figures are as about as realistic as the minimum wage being a "living income". Maybe upper middle and high income people pay this percentage but most people I know pay at least 50% and, sometimes 75% of their income in rent alone. When you add the soaring cost of winter electric and gas bills, there's precious little left in a one income household for anything else. That's why so many people are working two jobs or both parents are working full time - which is also problematic when the cost of child care is factored in.

And I haven't even touched on the cost of private insurance, car payments, gas, car repair, clothing, etc. etc.

48 percent 23.Dec.2004 17:13

George Bender

I'm retired on $574 per month in Social Security (that's what you get for working at low-income jobs during your "career") plus $51 in food stamps, for a total monthly income of $625. I pay $300 a month for a quint (5 apartments share a kitchen), which includes utilities. Which means I pay 48 percent of my income for rent & utilities. I survive by being very careful, not having a car and depending on the Oregon Health Plan-Standard for medical care.

I hope when you retire you have a better deal. The rule of thumb is that your retirement income will be about half of what you made when you were working. So if you're making less than $10 an hour, well, do the math. Ralph Nader says a third of American workers make less than $10 an hour, which he considers a living wage, so we're "poor." A whole lot of low-income baby boomers are going to be retiring in the next few years, and there isn't going to be enough social support for them, especially affordable housing.

I agree with the statement above about buying in bulk. Without a car I can't do it. I walk to Safeway with a metal cart on wheels. If I had a car I would shop at a cheaper supermarket like Fred Meyers.

I wish poor people would get together to defend their interests, but no one seems to be organizing them. Maybe they're just too beaten down to fight back. Our main political priorities should be: (1) a higher minimum wage; and (2) protect the safety net programs, such as the Oregon Health Plan, from being cut.


Add to this... 23.Dec.2004 18:39

ranger

...the fact that those who are struggling with their bank accounts because their unintended expenses exceed their income have their lives even made more difficult through higher interests rates as a result of less than perfect credit, impossible loan requirements, $28 overdraft fees for a 25 cent purchase, loan shark interest rates for emergency cash loans, and the list can continue. The wealthy, of course, will complain how these people are not budgeting their money, but the wealthy will never understand what it is like to be unable to buy your children xmas gifts, to drive in a jalopy or to continuously have your services terminated. They receive corporate privileges that the poor will never realize.

Never Enough To Cover the Bills 23.Dec.2004 20:56

Harmony

More power to you, George. You are extremely fortunate to have found a place to rent for $300 a month, even if you have to share a kitchen. And utilities included? Incredible!

I don't own a car either. Just after I sold it, I noticed the difference in not having to pay for gas, insurance, and upkeep. Then the rest of the utility, insurance and other bills crept up and ate away the savings so I'm pretty much back where I started. I don't know how other people do it unless they are deeply in debt or making a hell of a lot more than I do.

I pay $10 a month to a food bank for most of what I eat, and I volunteer there once a week. But there are things you can't get at a food bank. It all adds up so quickly.

The absolutely worst thing is that, until I was laid off, I had to keep a credit card for business travel, eBay sales, and a couple of other things that were very difficult to handle in any other way. I have not been able to bring that balance down very much, what with the high percentage of my freelance income going to rent and utilities and the interest is killing me. I cannot see, realistically, how to get out from under this anytime in the near future even though I never use the card anymore except as a last resort. Despite being unable to bring the balance down much, other credit card companies keep sending me invitations for more "pre-approved" cards and my own CC company sends announcements that they have "added muscle" to my account and raised my credit limit just about every other month. These people are predators and should be ashamed of themselves. The last time I paid down the bill two years ago, I negotiated a very low interest rate. It's crept up to what it was before and now I have no leverage to demand that it be lowered again because I can't pay it off and leave.

People who are well off do not understand that in order to "make" and "save" money you first need to HAVE money. If you don't have enough money, you don't have choices, you can't invest, you can't start up a business, you can't pay off debts on essential items the month you buy them (and who can afford to buy frivolous stuff anyway?).

IMO, most American citizens don't understand money, finance, or budgeting. It should be a required class taught in every grade and high school.

BUY A HOUSE! 23.Dec.2004 20:59

mE

Alot of people who dont realize they can buy houses all the time. It worked for me.

Harmony 23.Dec.2004 22:24

George Bender

Yes I'm fortunate, but I had to move from Portland to Eugene to do it. I'm living like a college student in a tiny apartment, but it's within walking distance of the library and downtown, and I get by. Eugene is a college town, so the time to look for cheap housing is in the summer when the students are gone. Even in December when I moved in here there were several vacancies, don't know if there are any now. I think you get the best deal if you're not in a hurry to move and have time to look around. My nephew told me about this place.

I've never had a credit card. I remember a Tom Tomorrow cartoon about someone being called with a credit card offer:

"Hello, is this a carbon-based life form?"
"Uh yeah, I guess so."

Occasionally I get a credit card offer in the mail. Unbelievable. Tiny income, unemployed (retired), no credit history. Of course if I filled it out they would probably turn me down. Apparently they just mail their applications to everyone. Truly a trap.