Gallery: Rental prices are outpacing minimum wages, especially in these 10 metro areas

In communities across the United States, rental prices are outpacing wage increases. Between 2001 and 2021, median rents increased by nearly 18% while the household income only went up by about 3%. The pandemic accelerated the trend, pushing rent prices up another 25% between January 2021 and June 2022. The impact has been borne mostly by lower-income renters. 

“Even significant wage gains by low-wage workers in recent years have not been sufficient to counteract this trend,” reads the latest Out of Reach report on the cost of living from the National Low Income Housing Coalition. “Between 2019 and 2022, wages for workers in the bottom 10th percentile increased 9%—the highest increase for any income group. However, that 9% increase resultss in an hourly wage of $12.57, which is an increase of only $1.04 more per hour, a level of growth that cannot make up for the significant gap between rent and wages.”

For a modest two-bedroom rental home, the report estimates an average income nationally of $28.58 per hour is needed. A one-bedroom rental home requires $23.67 per hour. Comparatively, the federal minimum wage is $7.25 per hour, having been last updated 2009. Even for those who’ve found an affordable home, the dramatic gap between wages and rental costs jeapordizes long-term stability. One missed paycheck or an unexpected expense can offset the balance.

“Nearly 50% of workers earn an hourly wage that is less than the one-bedroom Housing Wage. People of color are disproportionately impacted by the gap between low wages and high rents because they disproportionately work in low-wage jobs and rent their homes,” the report continues. 

Nationwide, only 7% of counties—not including Puerto Rico—have rental housing costs low enough that those making minimum wage can afford a one-bedroom rental at fair market rate. All of those counties are in states that have a minimum wage requirement that’s higher than the federal limit. 

“Sixty-six counties and municipalities have minimum wages higher than the federal or, where applicable, state minimum wage, but in each of these jurisdictions, the local minimum wage falls short of the local one-bedroom and two-bedroom Housing Wages,” the report continues. Thirty states, the District of Columbie, and Puerto Rico have minimum wages higher than the federal minimum.

While there’s a need to increase wages to offset inflation, the high cost of housing also needs to be addressed.

Currently, the United States has an affordable rental shortage available to lower income people of about 7.3 million. And the shortfall is widening, having grown by about 500,000 between 2019 and 2021 due to a loss of affordable rental homes, and an increase in the number of lower income renters. This gap highlights a need for government to step in. There isn’t enough incentive for landlords to work with lower income renters. When rents fall below operating costs, private landlords are incentivized to either leave them empty or find another use for the buildings. In stronger markets, they’re incentivized to renovate them in order to capture higher rents.

“The private market cannot provide a sufficient supply of affordable housing for the lowestincome renters, because what extremely lowincome renters can afford to pay in rent often does not cover the costs of maintaining older rental properties,” the report says. “Not only does the private market fail to serve the lowest-income renters, but three out of every four eligible households do not receive federal housing assistance due to severe underfunding.”

The 10 most expensive jurisdictions based on the wage-rental cost metrics used for the report are: Santa Cruz-Watson, Calif. ($63.33 per hour house wage required for a two-bedroom rental), San Francisco, Calif. ($61.31), San Jose-Sunnyvale-Santa Clara, Calif. ($56.56), Salinas, Calif. ($51.44), Santa Maria-Santa Barbara, Calif. ($51.29), Boston-Cambridge-Quincy, Mass. ($50.56), Samford-Norwalk, Conn. ($49.29), Santa Ana-Anaheim-Irvine, Calif. ($48.83), Seattle-Bellevue, Wash. ($47.21), and New York, N.Y. ($47.13). Overall, the top three most expensive states were California, Hawaii, and Massachusetts.

To help low income households overcome the crisis facing them, the report stresses a need for more federal resources and assistance. Instead of cutting funding, “Congress must significantly increase funding for rental assistance through the Housing Choice Voucher program, which enables many renters to afford housing in the private market,” the report says, also highlighting initiatives like the Ending Homelessness Act of 2021, among other federal initiatives.

For more information and the view a complete map of U.S. cities and their median wage/rental rates, visit the National Low Income Housing Coalition’s website.