Rent increases trump workers' income growth
Rents for two-bedroom homes have climbed sharply in past seven years, putting affordable housing further out of reach for many low- and median-wage workers.
NEW YORK (CNNMoney.com) -- The cost of affordable rental housing has risen 28 percent in the past seven years, far outpacing the wages of those who need it most, according to a new report released Tuesday.
"Out of Reach," the annual report of the National Low Income Housing Coalition (NLIHC), found that housing affordability is most difficult for minimum-wage earners but is also tough for those who earned the median hourly wage ($14.57) last year.
In 2006, what the NLIHC calls the "national housing wage" rose to $16.31 for a two-bedroom rental, from $15.78 last year. That is the hourly wage required to afford the rent and utilities of a modest market-rate rental home without having to spend more than 30 percent of one's gross income, a commonly accepted measure of housing affordability.
Housing is least affordable for minimum-wage earners, even those working in states that have higher minimum-wage levels than the federal minimum, which has been $5.15 an hour since 1997. Even proposals to raise that minimum to $7.25 would narrow but not close the affordability gap.
The report found that a minimum-wage earner making $10,712 a year cannot afford a one-bedroom home based on fair market rents anywhere in the country. To do that, he or she would need to earn at least $28,475, NLIHC calculated. And two-bedroom homes are out of reach even for families with two minimum-wage earners making $21,424 annually. For that, they'd need to make $33,925.
"Every year it is becoming more difficult for low-income families to find decent homes they can afford," said NLIHC president Sheila Crowley in a statement. "As we approach the holiday season with its intense focus on consumer spending, Out of Reach shows the difficulty that millions of low-income families face to even pay for their homes."
Congressman Barney Frank (D-MA), who is the incoming chair of the House Financial Services Committee, has worked with NLIHC and wrote the preface to the group's report, in which he noted, "I look forward to continuing that collaboration ... so that we can begin to put in place the public policies that are called for by the statistics set forth here."