About the Report
Out of Reach documents the significant gap between renters’ wages and the cost of rental housing across the United States. The report’s central statistic, the Housing Wage, is an estimate of the hourly wage a full-time worker must earn to afford a modest rental home at HUD’s fair market rent (FMR) without spending more than 30% of their income on housing costs – the accepted standard of affordability. The FMR is an estimate of what a family moving today can expect to pay for a modestly priced rental home in a given area.
Housing Is Out of Reach
The harm caused by the phenomenal growth in median rents between January 2021 and June 2022 has taken a toll on low-income renters. Even amid slowing rent growth, renters are facing a troubling landscape: rents are still too high, emergency resources are depleting, pandemic-era benefit programs are being phased out, and housing instability is increasing, with eviction filings reaching or surpassing pre-pandemic levels and homelessness increasing in some communities. Only sustained, long-term federal investments in rental housing can ensure that the lowest-income renters have affordable homes.
In 2023, a full-time worker needs to earn an hourly wage of $28.58 on average to afford a modest, two-bedroom rental home in the U.S. This Housing Wage for a two-bedroom home is nearly four times higher than the federal minimum wage of $7.25. In 21 states and the District of Columbia, the two-bedroom Housing Wage is more than $25.00 per hour. A full-time worker needs to earn an hourly wage of $23.67 on average to afford a modest one-bedroom rental home in the U.S.
Renters with the lowest incomes face the greatest challenge in finding affordable housing. The average minimum wage worker must work nearly 104 hours per week (2.6 full-time jobs) to afford a two-bedroom rental home at the FMR, or 86 hours per week (just over two full-time jobs) to afford a one-bedroom rental home at the FMR. In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at the FMR by working a standard 40-hour work week. In only 7% of counties (228) nationwide, not including Puerto Rico, can a full-time minimum-wage worker afford a one-bedroom rental home at the FMR. These 228 counties are all located in states with minimum wages higher than the federal minimum wage of $7.25 per hour.
In most areas of the U.S., a family of four with poverty-level income can afford a monthly rent of no more than $750, and many cannot even afford that. An individual relying on federal Supplemental Security Income (SSI) can only afford a rent of $274 per month. The national average fair market rent for a one-bedroom home is $1,231 per month and $1,486 for a two-bedroom home, far from affordable for a family in poverty or a person relying on federal assistance.
The affordability of rental housing is a challenge not just for minimum-wage workers. Nearly 50% of wage earners cannot afford a modest one-bedroom rental home at the FMR while working one full-time job. More than 60% of wage earners cannot afford a modest two-bedroom rental home while working one full-time job. Of the nation’s 20 most common occupations, 10 of them pay median wages lower than the wage needed by a full-time worker to afford a modest one-bedroom apartment. These 10 occupations account for more than 49 million workers, or one-third of the workforce. For example, the median hourly wages of food servers and retail workers are $14.27 and $14.88, respectively — significantly less than the full-time wage of $23.67 needed to afford a one-bedroom apartment at the FMR.
The Federal Policies Needed to End the Housing Crisis
Addressing the roots of the housing affordability problem requires a sustained commitment to investing in new affordable housing, preserving affordable rental homes that already exist, bridging the gap between incomes and rent through universal rental assistance, providing emergency assistance to stabilize renters when they experience financial shocks, and establishing strong renter protections.
First, Congress must invest in solutions to expand and preserve the supply of affordable housing. This includes expanding the national Housing Trust Fund to build and preserve affordable housing, as well as investing directly in public housing capital repairs. Second, Congress should expand access to rental assistance to every eligible household in need. Universal rental assistance could be achieved by fully funding the Housing Choice Voucher program. Third, Congress needs to create a permanent national housing stabilization fund to provide financial assistance to families who experience a sudden and temporary financial setback. Fourth, Congress must strengthen and enforce renter protections. These protections include providing legal counsel to renters facing eviction, prohibiting the reporting of evictions and rental debt on consumer reports, establishing anti-rent gouging protections, eliminating arbitrary screening policies to ensure housing access for people exiting the criminal justice system, and supporting “just cause” eviction standards. Renter protections are also needed to protect renters from discrimination, including discrimination based on source of income, military or veteran status, sexual orientation, gender identity, and marital status.
As low-income renters face high rents and increasing housing instability without the supports provided by pandemic-era benefit programs, we must make bold and sustained investments to ensure that the lowest-income renters can find and maintain decent, accessible, and affordable housing.