Written by Heidi Kurnaiwan, Policy Intern
There is no state, county, or city in the United States where a full-time worker earning the prevailing minimum wage could afford a modest two-bedroom apartment. Only twelve counties and one metropolitan area has a minimum wage sufficient enough to even afford a modest one-bedroom apartment.
These statistics are just a small part of the National Low Income Housing Coalition’s 2016 Out of Reach report, released to the public recently on May 25. The report seeks to answer how much someone has to earn in order to afford rent and utilities on a modest two-bedroom apartment at Fair Market Rent by calculating the hourly wage needed to earn and the number of hours needed to work, respectively, without exceeding the common benchmark of spending 30% of monthly income on housing.
How Michigan Stacks Up
“With the current minimum wage of $8.50, a household in Michigan would have to work 74 hours per week, 52 weeks per year in order to make rent.”
According to the data, Fair Market Rent for a two-bedroom apartment averages about $812 in Michigan. Assuming a 40-hour workweek, all 52 weeks of the year, a household would have to earn $2,708 monthly or $32,494 annually. This translates into an hourly wage of $15.62/hour. With the current minimum wage of $8.50, a household in Michigan would have to work 74 hours per week, 52 weeks per year in order to make rent (note that the average American works approximately 34.4 hours a week and typically takes 16 days of vacation). The most expensive counties to live in were Washtenaw, Grand Traverse, Livingston, Lapeer, and Macomb counties.
The Root of the Problem
“For every 100 ELI (extremely low-income) renter households, there are only 31 affordable rental units available.”
Wage stagnation and income inequality are part of the problem. In the last eight years, the bottom 10% of wage earners saw a mere 0.2% increase in real hourly wages, while the top 5% saw an 8.7% increase. Additionally, the demand for rental housing is currently at its highest since the 1960s, but the stock of rental housing units has been unable to keep up. For every 100 ELI (extremely low-income) renter households, there are only 31 affordable rental units available. Development costs are rising, which cause developers to target newly built rental units to the upper end of the market. Even older housing rarely becomes cheap enough for ELI renters.
This report reveals what many ELI renters already knew to be true: the affordable housing crisis is real, and it’s hurtful. Seniors, people with disabilities, and individuals and families with low-wage jobs constantly struggle to find decent and affordable housing in today’s economy. These minimum wage employees are childcare workers, nurse’s assistants, EMTs, cooks and servers in restaurants and more—people we interact with and rely on every day. Housing is one of the most basic needs we have, and our nation needs to invest in affordable housing for the lowest income households in America.
Find the report and read more online at www.nlihc.org/oor