
Minimum-wage worker needs 2.5 full-time jobs to afford a one-bedroom apartment - pseudolus
https://www.businessinsider.com/minimum-wage-worker-cant-afford-one-bedroom-rent-us-2018-6
======
hirundo
If you believe that labor is not an exception to the law of supply and demand,
then it follows that raising the minimum wage will reduce the demand for
labor, and increase unemployment among those with the least productivity. The
net affect of that could well increase poverty, working against the good
intentions of minimum wage advocates.

If so, if we raise the minimum wage 2.5 times, so that every full time worker
can afford a one-bedroom apartment, there would be a greater number of
unemployed workers than before who cannot afford housing.

If, again, the law of supply and demand applies here, a better approach would
be to increase the supply of both jobs and housing by reducing the regulatory
burden on each. Less regulation on business means more and more profitable
businesses competing for an inelastic supply of labor, raising labor prices.
Less regulation on housing means more of it at lower prices. Lower quality
housing that would otherwise be illegal is made available to people who could
otherwise afford none at all.

If you're an unemployed person living in an illegal shanty town, subject to
continual law enforcement harassment, even becoming a poorly employed person
living in a legal shanty town is an improvement, where an increased minimum
wage is not if you can't get a minimum wage job.

~~~
bagacrap
Supply and demand are not linearly correlated even if you do subscribe to this
"law", so increasing the minimum wage may have a disproportionately small
impact on overall job numbers, meaning greater total wealth held by minimum
wage workers in aggregate. Do you really think Subway franchises are running
on such razor thin margins that they'd be forced to shutter stores if they had
to pay their workforce marginally more?

~~~
zeroname
> Supply and demand are not linearly correlated even if you do subscribe to
> this "law", so increasing the minimum wage may have a disproportionately
> small impact on overall job numbers, meaning greater total wealth held by
> minimum wage workers in aggregate.

The effect of not ever getting into the workforce _at all_ is devastating to
those few that don't make the cut. Meanwhile, the effect of a couple of
dollars extra to those already in the workforce is comparably small.

Consider that minimum wage _could_ be raised arbitrarily. If 10$ is too low
and 15$ is better why isn't 20$ even better? Why not 30$? The argument for
which cutoff to choose can't be based on some basket on what people need to
live a certain standard (i.e. a one-bedroom apartment in some urban area).

> Do you really think Subway franchises are running on such razor thin margins
> that they'd be forced to shutter stores if they had to pay their workforce
> marginally more?

Some of them certainly do. Subway is in decline:

[https://www.businessinsider.de/subway-closes-over-900-us-
loc...](https://www.businessinsider.de/subway-closes-over-900-us-
locations-2017-12?r=US&IR=T)

Lots of low to minimum wage employers indeed do have razor thin margins. For
example, Wal-Mart only has about 4000$ of profit per employee. Companies like
Amazon only lose money on their fulfillment centers.

~~~
hellllllllooo
> The effect of not ever getting into the workforce at all is devastating to
> those few that don't make the cut.

This devistation is a societal choice made by having a non-existent social
safety net in the US. In other countries it's less devastating due to
government programs and universal healthcare that protect people while still
incentivising them to search for work.

You are using the lack of protections and support for the poorest in our
society as an argument against paying them more.

~~~
zeroname
> This devistation is a societal choice made by having a non-existent social
> safety net in the US. In other countries it's less devastating due to
> government programs and universal healthcare that protect people while still
> incentivising them to search for work.

First of all, I agree that raising minimum wage without a proper social safety
net is completely irresponsible.

However, if you look at countries like France with "free" education,
relatively high minimum wage, lots of labor protection and a strong social
safety net, you will find massive youth unemployment. The social safety net is
supposed to _catch you from falling_ off the rope. If you're never allowed to
get on that rope because you're not employable even at minimum wage, you're
likely to stay in the net forever. Soon enough most people around you _rely_
on the safety net and it becomes the social norm.

~~~
hellllllllooo
The US is so far away from that I wouldn't worry too much. See original
article. People often seem to hypothesise and focus on bad things that could
happen at the expense of bad things that are happening. The is plenty of room
in between the two extremes of US and France.

------
Octoth0rpe
This article seems to _repeatedly_ misuse the metric 'per hour', or assume
that the posited worker was able to work two jobs as the same time. Example:

> If a worker holds two full-time minimum wage jobs, they'd be earning $14.50
> an hour total

No. They'd be making $7.25 per hour, and working 80 hours per week. Unless
again they're able to work both jobs simultaneously, which very, very few
people are (I've seen parking garage attendants manage this).

I wish the author would rewrite the article in terms of monthly income / hours
worked per month.

~~~
analog31
Measuring income as a multiple of a minimum wage job is something most of us
can understand, and it brings into relief the inadequacy of the minimum wage.

It's like reporting distance in football fields.

------
scarface74
The purpose of a minimum wage job should not be to live on your own and
support a family. Some jobs aren’t worth $17/hour

Instead of increasing the minimum wage, why not offer job training, universal
health care, have reasonable zoning laws that make affordable housing
possible, get rid of regulatory capture that forces undue licensing to do
things like braid hair, make the Earned Income Tax Credit easier for employers
to distribute during the year, make child care more affordable?

Why put the burden of social policy on private businesses instead of society
through the government where it belongs?

~~~
Octoth0rpe
> Why put the burden of social policy on private businesses instead of society
> through the government where it belongs?

Because 1) Businesses just like people benefit from the conditions created
through government spending, and therefore have some degree of obligation to
support that spending via taxation, 2) businesses are in some way a part of
society, and 3) I'm not sure how you're distinguishing 'through the
government' vs something else.

~~~
scarface74
I never said that business shouldn’t pay taxes. But what do you think is going
to happen to the local pizza shop that my 16 year old son and his two friends
work at that probably is only making his owner $50K a year once they have to
pay them a “livable wage” of $17/hour?

[https://www.entrepreneur.com/article/228698](https://www.entrepreneur.com/article/228698)

It’s amazing that HN posters, many working at unprofitable companies funded by
VCs are more than willing to tell other companies how much they should be
paying their employees when they actually have to do the unheard of business
move of running a profitable business instead of losing money year after year
hoping for an “exit strategy”.

~~~
Octoth0rpe
> I never said that business shouldn’t pay taxes. But what do you think is
> going to happen to the local pizza shop that my 16 year old son and his two
> friends work at that probably is only making his owner $50K a year once they
> have to pay them a “livable wage” of $17/hour

I dunno, the same thing that happens in other countries with significantly
higher minimum wages? Some prices go up, some people in the economy make a
little less, and overall the floor rises.

I would note that there is more than one way of looking at the problem than
just "raise the min wage to $17". Another way would be that we need to lower
the price of entry level apartment rentals; or a mix of raising wages by some
amount and lower rental prices till we achieve a middle ground that we as a
society find ethical.

> It’s amazing that HN posters, many working at unprofitable companies funded
> by VCs are more than willing to tell other companies how much they should be
> paying their employees when they actually have to do the unheard of business
> move of running a profitable business instead of losing money year after
> year hoping for an “exit strategy”.

Please don't make assumptions. None of that describes me.

~~~
scarface74
_Please don 't make assumptions. None of that describes me._

Seeing that HN is completely supported by a VC and serves an advertisement for
YC, I think it is relevant.

------
atemerev
Quite normal everywhere in the world. It almost sounds like a contradiction in
terms: “minimum wage” and “own apartment”. Here in Switzerland, I probably
won’t be able to ever afford my own apartment, despite earning about
$100k/year (and with “minimum wage”, it is solidly in a realm of fantasy).
Were things different in the United States at some point?

~~~
maratd
> Were things different in the United States at some point?

No, but there is a political movement in the United States toward a universal
income upon which anyone can live comfortably and this is a symptom of that.
Jobs that were previously considered in the realm of "teenager jobs" are now
perceived as actual career tracks and a means toward a living. I'm not sure
how flipping burgers is a career, but to each his own. On the other side,
those same jobs are also being heavily assaulted by automation.

~~~
ceejayoz
> Jobs that were previously considered in the realm of "teenager jobs" are now
> perceived as actual career tracks and a means toward a living.

This is a funny way of writing "previously lucrative careers available to
blue-collar workers have largely evaporated".

~~~
hedvig
> "previously lucrative careers available to blue-collar workers have largely
> evaporated".

This is a funny way of writing "citizens should just accept any scraps they
get"

------
300bps
Article didn’t seem to spell out the math on the methodology being reported
on.

Essentially they’re saying someone would need to earn $17.90 per hour to
afford a one bedroom apartment. This is apparently calculated by taking the
number $930.80 (presumably the average one bedroom monthly rental) and
dividing it by .30 (the article states this is a common measure of
affordability to spend 30% of your income on housing costs) which equates to
$3,102.67 monthly income. They then multiply this by 12 to get a yearly income
of $37,232 which works out to $17.90 per hours for 40 hours per week.

So the most important number seems to be they’re saying a 1 bedroom apartment
costs $930.80 and they don’t take into account the fact that people often live
with either a significant other or a roommate and that multi-bedroom
apartments cost less per resident on average.

~~~
zokier
> they don’t take into account the fact that people often live with either a
> significant other or a roommate and that multi-bedroom apartments cost less
> per resident on average

If the wage:rent ratio is so that you need 2.5x full-time jobs for one-bedroom
apartment, then it naturally follows that even two persons doing full-time
jobs will not afford even a one-bedroom apartment, never mind a two-bedroom
one.

------
jandrewrogers
It is misleading to compare the minimum wage to the 40th percentile rent. Who
do they thinking is renting places below the 40th percentile? The 40th
percentile income is $30k.

When I was poor, I wasn't renting at the 40th percentile. And I split the rent
with others as is common when you are poor. Trying to survive on minimum wage
sucks but this study is exaggerating the reality to make their point.

------
jeffbax
The minimum wage dominates so much of our discourse considering it is such a
small ~1% of total US labor with the bulk of actual minimum wage earners being
people who are likely in college or still living with their parents.

Sorry, but even high income earners in expensive cities generally go the route
of having roommates. Those are the breaks until we can build more housing
stock, and even then it wouldn't likely be wise even if you could squeeze by.

Articles like this are pointless, the fact of the matter is that a 1BR is not
some kind of entitlement and most people earning minimum wage don't tend to
stay there all that long.

------
thex10
One thing usually absent from these threads is the idea that there should be
more variation in the housing options available.

So while we could argue over raising the minimum wage 2.5 times... I think
it'd be much more useful to consider the thought exercise of creating a wider
set of housing options. Perhaps full time minimum wage work could reliably
afford a single person some sort of minimum viable apartment or room - small,
no frills shelter. But this would require more alternatives than lots of
"luxury" apartments and a constrained supply of existing "normal" apartments.

~~~
iguy
Many well-intended regulations push against the creation of small apartments.
Changing the plan to have two 300 sq.ft. units instead of one 600 sq. would
cost nothing in building material, but both those flats need two exits (for
good fire reasons!) so you add another staircase, and both may need parking
(by local law) so you add another 200 sq. ft. outside (per floor), and maybe
they all need to be wheelchair accessible (ADA) so maybe you need a second
lift, or extra corridors... and suddenly the small units aren't 50% the rent,
but 80%, and so they don't get built.

------
TheLoneAdmin
Sure, there is a wage problem. My issue with the way the cost of one-bedroom
apartment is calculated. It is based on the HUD fair market rents (FMRs) at
the "40th percentile of rents that a family can be expected to pay". That
means that 39% of one-bedroom apartments are cheaper than the rate given. If
minimum wage people are supposed to have a 40% apartment, who is supposed to
live in the 1-39% apartments, middle class?

I expect the lowest 10% of wage earners to live in the lowest 10% apartments.
I'd like to see what these numbers would show then.

------
waynecochran
The are many well paying jobs available that are _not_ getting filled. Go
learn to weld, operate heavy equipment, plumb, etc... The real question is why
anyone older than a teenager works for minimum wage (at least more than
temporarily).

[https://mrwf.jobboard.io](https://mrwf.jobboard.io)

------
robomartin
All of these discussions ignore a reality: In a global economy both capital
and industries are mobile.

If the business equation is made unsolvable at location A and a solution can
be had at location B, both capital and, eventually, industries, will migrate.
And people will lose their jobs.

I am surprised this is even an argument today. How much more evidence does
anyone need than China? Try to buy a bath tub or a computer made in the US or
Europe and see how well that goes.

Those jobs evaporated along with the corresponding industries and the
ecosystems that supported them.

It’s a combination of labor, regulatory and tax policies that continue to
drive nail after nail into more and more coffins. I say this as a manufacturer
with over thirty years of entrepreneurial experience in the US and Europe.

Those who support these policies love the poor so much that they make more of
them every day.

------
esotericn
Minimum wage jobs are not intended to be full time permanent work.

The problem is that a ton of people end up treating them as such because they
don't feel they can do any better.

That's what needs to be fixed, really. The idea that stuff like cycling about
doing food delivery is going to pay for a nice flat in city like London is
absurd.

It's a job for kids to do whilst they learn how employment works.

In smaller towns in the UK you can buy a small terraced house with two min
wage earners.

~~~
gbear605
It’s not that they don’t _feel_ they can do any better, it’s that they
actually cannot get any better paying job.

------
hackeraccount
The real question to my mind is why people need multiple part time jobs
instead of a single full time job.

My assumption is that the fixed cost for a full time job is high enough that
paying someone less then some amount doesn't make financial sense. Further
there's a group of people out there getting part time jobs because the pay
they'd get is less then that amount.

~~~
tropo
We mandated expensive benefits (healthcare for example) for full-time workers.

Now those workers must take multiple part-time jobs, with extra commute costs,
and of course they still don't get those expensive benefits.

------
anovikov
How is it possible that rents are rising while incomes aren't? Is the housing
stock shrinking, or growing slower than population? OK there maybe some
banking/Fed/investment related trickery moving housing prices (to buy)
irrespective of "organic" demand, but not rents, right?

~~~
rectang
Business is innovating through extraction of ever greater wealth from its
workforce. Commercial entities are organisms evolving in a savage environment,
doing what it ever takes to survive. Labor, in contrast, does not innovate as
quickly in response and is being eaten.

~~~
anovikov
Come on, it is supply and demand. Rents can't be raised unless demand is
rising or supply is falling. Neither seems to be the case.

------
bellerose
Too many people exist compared to the past. Optimization has made it where
less employees can cater compared to the past. People used to die earlier in
life and inheritance was more of an impact upon spending. I doubt we're even
seeing the worst situations from people living off minimum wage. Give it 20
more years and people will riot (if not already) or universal income will have
rolled out by then.

I live close to my employer and take Uber when I rarely need to go somewhere
far. A good amount of the drivers I've spoken to, have a middle class job and
they're driving on the side. They do it for a few hours after work or on
weekends and typically are raising a family. Minimum & even middle wage isn't
what it used to be. A stay at home parent used to be possible for middle class
and not only if you're in the upper range is when it can be feasible. Unless
the stay at home parent can do work at home on the side it's not possible
anymore for the low tiers.

------
biggio
It bugs me a lot that humanity cannot make shelter a basic human right, rather
it's something you have to work for and most likely work for a lender to pay
of your debt while juice running with excessive rates.

~~~
ringaroll
Why are people entitled to many things just because they are born?

~~~
biggio
Is it their fault that they are born?

