Renting Poverty: Report Finds Housing Costs Leave Millions Without Enough Money for Other Needs
A new report finds the rising cost of housing is taking its toll on low wage earners across the U.S.
The National Low Income Housing Coalition’s new report finds that 20 million renter households cannot afford to meet their basic needs like food, medical care, and transportation after paying their rent.
That is because their rent exceeds 30 percent of their income, an amount the federal government uses to define how much a person can afford to pay on rent and still meet other needs.
Of course, that figure changes if a person has a higher income, but for people working at the federal minimum wage, that means many cities are simply unaffordable.
On average, a renter needs to make $21.21, or 2.9 times the federal minimum wage of $7.25, to rent a two-bedroom home in the United States and not pay more than 30 percent of their income on rent. For a one-bedroom home, they would need to make $17.14 or 2.4 times the minimum wage.
For a person who makes only minimum wage, that translates into working 117 hours a week (for a two bedroom) or 94.5 hours a week (for a one bedroom) in order to have enough for rent and still be able to pay for the other necessities of life.
While some cities like New York and San Francisco have dramatically more expensive housing, across the entire country, only 12 counties have rental rates low enough that a full-time minimum wage earner could afford a modest two-bedroom home.
As a result, over 11.2 million renter households are spending more than half their income on housing, leaving them without enough for other basic necessities, finds the report.
The report, titled Out of Reach 2017, recommends an overhaul of the tax system to address the issue.
Namely, the report recommends that the government reduce from $1,000,000 to $500,000, the amount of mortgage interest that homeowners can deduct from their federal taxable income, and converting the deduction to a tax credit.
This change would generate $241 billion over 10 years to invest in affordable housing, recommends the report.
“We have the resources to solve the affordable housing crisis in America by rebalancing federal housing expenditures to serve our country’s most vulnerable households. We lack only the political will to do so,” said NLIHC president and CEO Diane Yentel in a press release.
But the report may overstate the seriousness of the issue.
According to the Bureau of Labour Statistics, in 2015 only 3.3 percent of hourly paid workers made the federal minimum or below, and they tended to be under 25. Most were young workers in school, though a large portion were also older workers who left school.
But with wages not keeping pace with inflation and housing costs outpacing both, the problem is likely to grow.
The report notes that six of the seven occupations expected to add the greatest number of jobs by 2024 don’t pay enough to afford a modest one-bedroom rental home at 30 percent of income.