
Minimum wage workers cannot afford rent in any U.S. state - MindGods
https://www.cnbc.com/2020/07/14/minimum-wage-workers-cannot-afford-rent-in-any-us-state.html
======
rayiner
Is minimum wage workers affording an average 1-2 bedroom apartment with no
other householders a goal we have set? The French minimum wage is 1,521 euro
per month. 30% of that is 456 euros, or about $513. According to the
underlying study, the average 1BR in Alabama is $665. Is housing in France, on
average, really that much cheaper than Alabama?

I don’t think these abstract targets are very helpful. According to the OECD,
the US has some of the most affordable housing in the world:
[https://read.oecd-ilibrary.org/economics/the-average-oecd-
ho...](https://read.oecd-ilibrary.org/economics/the-average-oecd-household-
has-79-of-disposable-income-left-after-housing-costs_21f178bd-en) (showing
percentage of disposable income left after housing costs).

Also, the demand for a “federal affordable housing policy” is pretty
breathtaking. Look at the list of states that have the least affordable
housing: New York, Massachusetts, etc. A federal program would basically mean
bureaucrats from these states would be imposing housing policy on the whole
country. That sounds like a great idea!

~~~
standardUser
Look at it from the other direction.

Is working 40 hours per week but not being able to afford a 1 or 2 bedroom
apartment a goal we want to set? If so, we have achieved it!

I think most of us like the idea that if you put in 40 hours of work every
week, regardless of the specific job, you are able to afford a basic standard
of living.

~~~
rayiner
You’re begging the question. Is having your own 1BR apartment a “basic
standard of living”? When did we decide that? Is that a goal other developed
countries have set and achieved? Those are the pertinent questions, not what
ideas “we like.”

According to the study, that standard would require a $30-40 minimum wage in
places like New York. Is that something any country has done?

~~~
eggsmediumrare
Why wouldn't we want that? Isn't the point of progress to improve life for
everyone?

~~~
ProfessorLayton
This is completely subjective. In many countries it's very common to have
multiple generations living under one roof all supporting each other.

------
falcolas
There's an important caveat, before everyone jumps on the title by itself:

> The report, released Tuesday, defines “affordable” as spending no more than
> 30% of monthly income on rent, in line with what most budgeting experts
> recommend.

The second caveat is this is rent for a 2 bedroom apartment; though they do
say that it's also ~95% of 1 bedroom apartments. No comment is made on studio
apartments or having roommates.

EDIT: The full report this article is based upon:
[https://reports.nlihc.org/sites/default/files/oor/OOR_BOOK_2...](https://reports.nlihc.org/sites/default/files/oor/OOR_BOOK_2020.pdf)

~~~
eikenberry
> No comment is made on studio apartments or having roommates.

To me this is the most telling part. When you are poor you need to have one or
more roommates to afford housing and this is not new. What is wrong with
roommates?

I do think the US could use more small/studio apartment options for those who
have a bit more money and prefer to live alone. I lived in a small studio once
and enjoyed it, though I usually had roommates.

~~~
dumbfoundded
It depends on what the goal should be. Having roommates is fun when you're 20
something. Not when you're trying to support a family.

~~~
eikenberry
Minimum wage is not designed to provide enough income to support a family. It
it intended to prevent labor abuse.

~~~
Frost1x
It's interesting that our economy has so many positions compensating at a rate
designed to prevent labor abuse.

~~~
eikenberry
Unintended consequences.

------
warmfuzzykitten
And yet, almost all workers live somewhere. Common strategies not mentioned in
the article:

1\. They live in areas with below average rents.

2\. They allocate more than 30% of income to rent.

3\. They find other workers to share rent with.

4\. They live in studio apartments instead of 1-2 bedroom.

5\. They live in rooms instead of whole apartments.

6\. They live with family.

7\. They live in an inherited home.

------
albatross
I feel like a lot of the debates going on in the comments here are missing the
forest for the trees here:

Those with much money have too much of it, and those with little have too
little. The issue here isn't "the poor need more handouts," but rather, "the
richer need fewer."

And on that note, I have heard the arguments "hard work will take you far" and
"startup CEOs are the hardest working people I know" too many times to count,
almost always from people in tech. Single parents working two or more minimum
wage (or potentially less if you happen to be undocumented) jobs to feed their
children work as hard or harder than any CEO just to get by with the bare
minimum. I don't disagree that those who work harder should be rewarded more
than those who choose not to, but in what world is the system we all exist in
an actual meritocracy?

------
scarface74
I’ve got a better idea than worrying about the minimum wage. At least for
people who are working - get rid of food stamps, get rid of housing subsidies
and don’t raise the minimum wage to make it a “Livable wage”. What a livable
wage is to my teenage son staying at home is not a livable wage for a single
mother of two.

It’s no more should be the private sectors responsible to provide a wage that
is far beyond market value than it should be the private sector’s
responsibility to provide health insurance.

Just like we should have universal healthcare to take that responsibility out
of the hands of private industry, we should also expand the Earned Income Tax
Credit to provide a “livable wage” because it already makes a distinction
between my son staying at home and the single mother of two. If we just gave
people cash through the EITC and expanded it to encompass food stamps and
housing subsidies, it would both ease the administrative burdens on the
government and get rid of the nanny state that tells recipients who can live
with them and what type of food they should buy.

Of course business taxes would have to be raised to support it - maybe. It
might be the case where demand side economics would make the entire pie
bigger.

------
js2
A backgrounder on minimum wage, citing several studies, giving pros and cons,
along with a mention of the EITC:

[https://old.reddit.com/r/Economics/wiki/faq_minwage](https://old.reddit.com/r/Economics/wiki/faq_minwage)

------
anm89
The imprecision in the title here is insane. This is is a fully formed
sentence which makes an unambiguous claim which is obviously not true, the
implicit assumption apparently being that all readers in all cases will be
able to properly read between the lines to reparse the title into not being a
lie.

Minimum wage workers cannot afford some qualified subjective standard rent in
any US state.

I don't understand how people don't have a major problem with a large news
source making blatantly untrue claims.

------
DeonPenny
Minimum wage workers shouldn't be able to afford rent unless you think every
job should automatically align with the ability to be able to rent an
apartment minimum.

That would necessitate the fact that a medium wage worker would have the
ability to rent multiple places.

We'd need to build infrastructure and housing so that those medium range
workers would and could rent multiple places.

Because right now the idea is if you have a medium income you can afford to
rent and maybe own a place. Theres not much waste in terms of each medium wage
person be allowed a home.

------
harryh
The title for this post is misleading and should be changed. Minimum wage
works _can_ afford rent, just not at the (quite high) standards set in this
study:

\- no more than 30% of income on rent

\- 40th percentile for rental prices in the location (a mere 10% away from the
lake wobegon standard of making everyone above average)

------
kingrazor
Just doing some napkin calculations, the cheapest apartment I can find right
now online in my city is $900 per month. This is including studios. The
minimum wage in my state is $11.25 per hour. So working full time at minimum
wage, that apartment would be over 46% of your gross income.

------
NovemberWhiskey
Am I misreading this: the conclusion is that the lowest earners cannot afford
40th percentile rents?

~~~
deathanatos
Yes, and no. Directly yes. But no, because the numbers are so insanely over I
question whether they can afford 30th or 20th percentile too.

It smells like the 40th-%tile is the number that the data exists for. I would
welcome graphs showing this data at other %-tiles, and whether that changes
the outlook significantly.

But the report puts ~50% of the workforce below the national housing wage for
a 1-bed. 50% of the workforce cannot all obtain better than 40th %-tile rents.

~~~
NovemberWhiskey
N.B. that the "fair market rent" also excludes public housing rents. Would it
be reasonable to suggest that we could expect people earning only minimum wage
to be consumers of public housing?

------
ponker
Yet, the vast majority of minimum wage workers have found somewhere to live.

~~~
wasdfff
Sometimes in their cars.

------
mjevans
Due to how much it cost and also a glut of Federally insured mortgages,
housing became a defacto investment for baby boomers.

Housing should be a liability, owning land should be a liability. Neither of
these should be investments. That's the true solution to spiraling prices.

~~~
autokad
No. Housing should be an asset. If all housing and land were liabilities, then
they would all be owned by the government (we tried that, most people didn't
like it). The fact that homes are assets are not stopping people from owning
homes (and why the f would someone want to own one if they were a liability in
the first place?!?!).

the median income in the US is about 60k and median home price is about 200k.
you only need 3.5% to qualify for a FHA loan. I managed to save that when I
was making less than half of the median income.

We dont have a problem of people investing in homes, we have a problem of
people not having good financial health (do to their own bad financial
decisions).

in 2013, home prices were falling and interest rates were at a then all time
low of 3.25%. I told people 'go buy a home, any home!' people were like 'but
home prices are going down' 'interest rates may drop further'. or people were
proud and smug that they didnt own a home, as if they achieved something
because of the 'losers' that bought homes had their home values go down. but
they didnt buy, now those same people are complaining that prices are too
high, yet they dont have 7k saved for a down payment.

~~~
mjevans
You're using averages from a statistically highly invariant sample range.

If a mean average is taken of everyone in society and all of the places in
society, some fit that might sound reasonable is very likely.

However like the article what matters are prices within actual places that
people want to live. Like a city they grew up in, a city that actually has
jobs, a place with a functional educational system for their children.

I assume you and everyone else would like to have service workers inside of
big cities? Where should they live? Where should everyone else that isn't in
the top 10% of income earners live?

How can owning a home close to a job, and actually being able to put down
roots and build a community be incentivized? In my mind that is logically
divorced from renting and serfdom, and thus housing should be a liability
rather than an asset.

------
apsec112
SlateStarCodex on why this is deceptive:

[https://web.archive.org/web/20200303232829/https://slatestar...](https://web.archive.org/web/20200303232829/https://slatestarcodex.com/2013/04/04/lies-
damned-lies-and-facebook-part-1-of-%E2%88%9E/)

~~~
Havoc
That appears to be debunking an entirely separate graph with different numbers
and likely different flaws.

~~~
ikeboy
The source of the data is ultimately calculated using similar methodology. The
flaws described generally apply here as well.

------
roenxi
The capitalist strategy is generally to have so much wealth sloshing around
that nobody is paid the minimum wage anyway. Fixating on the situation of
minimum wage workers is ok and we don't want anyone to be structurally
suffering - but a far better strategy than "affordable rental housing and
emergency rental assistance" is to work on increasing the economic prosperity
of workers so that the legal minimum wage is just a theoretical thing for
underpaid children. If only 2% of people are paid the minimum wage it doesn't
matter that only 5% of the housing is available to them.

It has been something like 50 years since workers say a real improvement in
their wage position. The system keeps encouraging people to play shell games
with debt and that really hurts over the long term.

Less mortgages. More savings. Cheaper houses. Shorter slogans.

------
centimeter
More accurate: “Minimum wage workers can’t rent a two bedroom and have 70% of
their income left over.” Ok; rent a one-bedroom, have a roommate, whatever.
Having your own apartment with a guest room isn’t a reasonable thing to expect
on the lowest tier of work available.

The lowest-value labor in the market being able to support a middle-class
lifestyle isn’t a sane thing to expect, by definition. It’s tautologically
impossible, unless you collapse middle-class and low-class lifestyle into the
same thing.

~~~
anm89
This is not true. There is no law of physics guaranteeing some standard income
distribution over a society. There at least hypothetically exists societies
with very minimal or no income inequality although in practice this is
extremely unlikely.

The idea however that the bottom n% of some society have to skew with x
deviation from the mean or median is not exactly correct. And the idea that
some segment of society will always not be able to afford some amount
nominally denominated in that society's currency is explicitly wrong.

~~~
centimeter
A power law distribution is the expected organic distribution of income and
wealth, due to the nature of scale free networks. Only in the presence of
massive distortion is that distribution likely to collapse at current
technology levels.

------
tathougies
Minimum wage workers should mainly be teenagers, young single people, and
other dependents who don't need to live alone or for a family, and for whom
minimum wage makes sense while they advance in careers. I honestly don't care
if minimum wage means you can afford rent.

I'm most interested in what percentage of those _with dependents_ are working
minimum wage jobs and what percentage of those that started out with minimum
wage jobs have been unable to increase their earnings. MY guess is that these
numbers are also terrible, but this is the thing to get down.

We need to remove minimum wage laws and instead focus on making sure those
with dependents and a need to live by themselves have wage growth through
their lifetimes. It is no scandal if a young person makes little money at a
time in their life when it is okay to live with family or with roommates.

~~~
fbanon9876
Australia does something interesting - minimum wage scales with how old the
person is. Say it's $15/hr for 18 year olds; 19 year olds get $16 as a
minimum, and so forth.

Curious what you think about that idea.

~~~
standardUser
There are some laws like this in the US. Some are state based, but some are
federal...

"...a special minimum wage of $4.25 per hour applies to employees under the
age of 20 during their first 90 consecutive calendar days of employment with
an employer"

"Other programs that allow for payment of less than the full Federal minimum
wage apply to workers with disabilities, full-time students, and student-
learners employed pursuant to sub-minimum wage certificates. These programs
are not limited to the employment of young workers."

[https://webapps.dol.gov/elaws/faq/esa/flsa/003.htm?_ga=2.219...](https://webapps.dol.gov/elaws/faq/esa/flsa/003.htm?_ga=2.219855257.1435773351.1594937977-303448650.1594937977)

