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Affordable housing for minimum wage workers doesn’t exist

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In 99 percent of U.S. counties, minimum wage can’t get you an affordable one-bedroom rental

An apartment complex facade. Getty Images

The affordable housing crisis for low-income workers in the United States was put in stark terms by the National Low Income Housing Coalition’s (NLIHC) annual Out of Reach report on Tuesday.

According to the report, fair market rent for one-bedroom rentals in 99 percent of counties in the U.S. are not affordable—with affordable defined as 30 percent or less of a renter’s income—for a full-time minimum wage worker; there are currently 1.8 million people making minimum wage or less. While the federal minimum wage has remained stuck at $7.25 since the aftermath of the financial crisis, rents have risen at a steady clip between 2.5 and 4 percent since 2012, according to Harvard’s Joint Center for Housing Studies.

On the national level, affordable rent for someone living on Social Security income—roughly 8 million people—would be just $231 per month. For someone living on minimum wage it’s $377, and for someone making the average renter wage, it’s $913. These amounts are all lower than the national average fair market rent for a one-bedroom—$970.

With Americans feeling the pinch across the country, housing has become a national issue that’s picking up steam among 2020 presidential candidates. Elizabeth Warren, Cory Booker, and Kamala Harris have all released housing plans, and NLIHC president and CEO Diane Yentel believes the report shows that the federal government needs to act.

“We now have a tremendous opportunity to implement federal housing policy solutions to fund affordable housing programs at the scale necessary,” Yentel said in a statement about the report. “We must use tools like Out of Reach to build the political will.”

In the report, the NLIHC calls for increased funding to a handful of federal programs—the Housing Trust Fund, the Housing Choice Voucher program, and the Low-Income Housing Tax Credit (LIHTC) program. It also calls for a renters tax credit worth the difference between 30 percent of a renter’s income and what they pay in rent. The renters tax credit is a staple of Booker and Harris’s housing plans.

The Housing Trust Fund is an affordable housing production and preservation program run by the Department Housing and Urban Development. Warren’s housing plan calls for a $445 billion investment in the Housing Trust Fund. The LIHTC program gives real estate developers tax credits for reserving a portion of new developments for affordable housing. The Housing Choice Voucher program subsidizes rent for low-income earners.

The NLIHC report also analyzed the wages of different professions and compares them to the national fair market rent. For a one-bedroom to be affordable, one has to earn $18.65 an hour. But many common occupations pay less than that, according to the Bureau of Labor Statistics. A medical assistant earns $16.38, janitors and cleaners earn $12.73 an hour. Home health aides, personal care aids, and food service workers all make less than $12 an hour.

But it’s not just people earning minimum wage who are struggling. The report looks at the average renter wage in each state and compares it to the fair market rent for a two-bedroom. The states with the biggest gap in affordability are Hawaii ($20.13), Massachusetts ($13.09), California ($11.91), New Jersey ($10.18), Maryland ($9.64), and Vermont ($9.37).

The affordable housing crisis among low-income earners is a systemic issue caused by slow growth in wages and fast growth in rent. And when people have to spend more on rent, they’re spending less on other needs like food and healthcare. So while the problem is often framed as a housing issue, it affects every aspect of the lives of those struggling to afford a home.