Affordable Rent, Homeownership Out of Reach for Minimum Wage Workers, Lending Tree Report Says

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A new report from Lending Tree says affordable housing is not available to minimum wage workers in any state in the United States. Policymakers and advocates have called for a minimum wage of $ 15, but that would not be enough. That wage, twice the federal minimum wage, would not offset skyrocketing rent and home ownership costs.

The report comes as New York City tries to distribute rent relief more quickly to struggling tenants in response to the coronavirus pandemic. The Cuomo administration has been criticized for slowly rolling out the billions of dollars made available for the effort in New York – and weeks after Governor Kathy Hochul took office – less than $ 400 million had been distributed to tenants.

“The reality is that in much of the country, the gap between the minimum wage and what it really takes to live is huge,” David Cooper of the Economic Policy Institute told Yahoo. He’s a senior analyst there. “Even big enough goals like $ 15 will fail in a lot of places.”

The federal minimum wage has been $ 7.25 since 2009. There are 30 states with higher minimum wages, but even these do not cover the gap created by rising housing costs. For example, in New York, the minimum wage is $ 12.50. This would make the maximum amount payable for housing $ 600 per month – assuming someone earning minimum wage works 40 hours per week.

For the study, the researchers based 40 hours of work per week, for 52 weeks of the year at minimum wage. Next, let’s take a look at the costs of renting and owning a home.

Can minimum wage workers afford housing?

Researchers have found that since 2000, owning and renting has become less affordable. Although it was a huge problem. For example, the owner’s median monthly costs in 200 were $ 771 higher than this true 30% of gross minimum wage income. Likewise, the rent was $ 296 higher than what a minimum wage worker could afford.

Fast forward to 2019 and the researchers found that the gap for each increased to $ 1,072 and $ 423, respectively.

Taking this point a step further, the report found that on average across the 50 states, a monthly affordable housing payment for minimum-wage workers is $ 1,074 less than the median monthly housing costs paid by workers. owners with a mortgage.

Lending Tree found that the average difference between a monthly affordable housing payment and a median gross rent is $ 533. The report found that there are cheaper states in which to live for minimum wage workers – like Arkansas, Maine and West Virginia – but even then the median rent is still around $ 300. more than they can afford.

What does this mean for workers and housing?

“The cost of everything keeps going up,” Reginald Torro told FingerLakes1.com. “You can raise wages by a dollar or two, but it won’t make any difference when the cost of these things continues to rise like it has. “

The recent college graduate works with an engineering company based in Cleveland. Torro went to college in New York. He said many of his peers who graduated at the same time are struggling – or have given up on owning a home. “Forget about renting for a minute,” he told FingerLakes1.com. “We’ve heard for a long time that if we go to college, if we get a good job, if we do everything you’re supposed to do, it would be possible to own a house. This is not possible for minimum wage workers – or those earning several dollars more per hour than minimum wage.

Renting and homeownership are inevitably linked. As homeownership becomes less accessible for those not earning much more than minimum wage, this has acted as an additional driver of median rent.

A higher minimum wage is not the answer to affordable housing problems

Margo Heggler, originally from Buffalo, told FingerLakes1.com that rent increases over the past five years have “deflated.” “You definitely feel defeated,” she said, after seeing her own rent go up four times in the past five years to over $ 20. “It doesn’t sound like a lot at once, but it doesn’t encourage anyone to stay put or rent long term.”

Heggler is a nurse earning $ 20 an hour now. She was making around $ 18 when she started three years ago. “I was able to absorb the first rent increase of $ 20 with the new job at the time,” she recalls. “The next three were a little harder to swallow, and in between all the extra services the owners charge at the moment – like snow removal, garbage collection, etc.” – that chipped away most of my raises. It’s like I haven’t had a raise.

To be clear, Heggler is not a minimum wage worker – but soaring housing costs – especially in high demand markets, make housing difficult for everyone. Even those earning what some might consider a “living wage” face a number of challenges.

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