Nearly half of American workers don’t earn enough to afford a one-bedroom rental

Nearly half of American workers do not earn enough to rent a one-bedroom apartment, according to new data.

Rents in the US continued to increase through the pandemic, and a worker now needs to earn about $20.40 an hour to afford a modest one-bedroom rental. The median wage in the US is about $21 an hour.

The data, from the National Low Income Housing Coalition, shows that millions of Americans – from Amazon warehouse workers to cab drivers to public school teachers – are struggling to pay rent. For the poorest Americans, market-rate housing is out of reach in virtually all of the country.

About 14% of Americans fell behind on rent payments during the pandemic – roughly double the figure before the pandemic. A federal moratorium on evictions has kept renters from being kicked out of their homes, but the moratorium lapsed last month, only to be extended into early October for those in regions hardest hit by the pandemic.

And it’s not just big cities skewing the data. A two-bedroom rental – a reasonable size for a family – would stretch the budgets of renters in most US counties:

The federal government has long used 30% of income as a threshold for affordable rent. For affluent households, this still leaves plenty of money for essential purchases, but research has found that low-income families begin to cut back on necessities when housing costs exceed the 30% threshold.

“The kind of tight budgets that especially low-income renters face when they’re cost-burdened can lead to serious harms,” said Daniel Threet, a research analyst at the National Low Income Housing Coalition.

Threet pointed to a recent door-todoor survey in South and Central Los Angeles that found that low-income families were forced to cut spending on things like food, healthcare and education in order to cover their rent. Given current housing costs, the lowest earning 10% of Americans would need to spend about 55% of their income to pay for a one-bedroom rental.

Housing affordability is an even bigger problem for Black and Latinx workers, who earn significantly less than white workers.

The majority of white Americans can afford a one-bedroom rental, earning on average $23.31 an hour.

But the average Black worker earns about $17.81 an hour – well short of what it would take to comfortably afford a one-bedroom apartment. Latinx workers are even further behind, earning on average $17.24 an hour.

This disparity is reflected in the most recent census surveys, which show more than one in three Black and Latinx Americans say they have no confidence or only slight confidence that they’ll be able to afford rent next month, compared with about one in six white Americans.

Minimum wage isn’t enough to afford a two-bedroom rental anywhere in the US

For those earning the lowest wages, the housing situation is even more dire.

The federal minimum wage is $7.25 an hour, but some states, counties and cities have established higher minimum wages – the highest being $16.32 an hour in San Francisco.

Still, there isn’t a single US county where a full-time minimum wage worker can afford a modest two-bedroom rental.

It’s worth noting that relatively few Americans – about 250,000 – earn the federal minimum wage. Another 865,000 workers earn less than that amount, largely because this group includes tipped workers who can legally be paid less than the minimum wage (their tips are supposed to make up the difference).

But this data shows that even considering places with a higher minimum wage, the legal wage floor in every US county is not enough to afford a modest two-bedroom.

A higher minimum wage does make a difference for housing affordability.

In Missouri, Arkansas and Illinois, higher minimum wages make housing costs relatively manageable compared with neighboring states that have not raised the minimum wage above federal levels.

For example, in Sunflower county, Mississippi, the minimum is $7.25, which means a worker would need to spend about 54% of their income on a two-bedroom rental – about $684 a month. Just 125 miles away in Arkansas county, Arkansas, the minimum wage is $11, which means a worker would spend only about 36% of their income on a similar rental.

Rent in most US metros has increased since the pandemic

Even as the pandemic threatened many Americans’ ability to find work, the cost of housing continues to increase.

Average rents decreased in many places early in the pandemic, but in May 2021 prices increased by 0.46% – the largest monthly increase since 2014, when the real estate site Zillow started tracking this data. These recent increases are catching up the market to where it would have been had prepandemic trends continued, said Zillow market analyst Nicole Bachaud.

A handful of metropolitan areas remain below their pre-pandemic pace, mostly held back by the slower recovery for pricey rentals. San Francisco (-7%), New York (-7%), Boston (-3%) and Seattle (-1%) are not fully back to prepandemic prices.

But since February 2020, average prices in 82 of 101 of the top US metro areas increased more than 5%. Among the cities with the largest increases are Boise, Idaho, (+21%), Riverside, California, (+17%), and Phoenix, Arizona (+17%).