Minimum Wage Still Can’t Pay For A Two-Bedroom Apartment Anywhere
citylab.com
citylab.com
A minimum wage earner is not and should not be in the market for a median priced home.
A median wage earner would pursue a median priced home.
A bottom quartile earner would pursue homes priced in the bottom quartile. Not the median.
The title of this article is false. Minimum wage earners can often afford two bedroom homes priced at the lower end.
[citation needed]
Looking around the bay they appear to simply become homeless, especially if there's any interruption in work, and if they're lucky they're able to move away before this happens.
But homes are cheaper almost everywhere else in the US.
Supply and demand is basically the fundamental law of economics.
https://www.propertyguru.com.sg/property-management-news/201...
"House prices in Singapore are considered “seriously unaffordable”, with a median multiple of 4.6, which means that the median house price is 4.6 times the city-state’s median household income, according to an annual survey."
This is how you preserve existing communities--it should be harder to move into a city than to stay there.
Anyway it’s somewhat of a moot point because you can preserve communities and still build—just not with market-driven rents and landlord-owned cities. And not everyone can have what they want and live where they want. It’s worth it.
Tell that to the homeless, I dare you. It's certainly the attitude of a sheltered existence.
Try visiting shelters, especially in the south bay. There are plenty of families without the problems you mentioned.
This attitude is intentional neglect of reality, and its prevalence is literally killing people.
(Note, between the time I wrote the earlier comment and this I discovered new information on California's homeless situation - shelters near me the homeless are either mentally ill or victims of domestic violence - the first are forever a problem and the latter will be out in a couple weeks)
The whole situation is being drastically oversimplified, though. Whether or not we expect minimum wage to support a family depends on whether there are other alternatives, like higher (and adequate) wage jobs that individuals can reasonably obtain when they do have to support a family. Is that happening? My sense is no -- we have a big step function where you're either mostly screwed (working several jobs, driving Uber, etc. barely making it if at all), or you're making 6 figures after getting a 4 year degree in some technical or professional field.
They don't seem to qualify it - they simply say 'there is not one U.S. state, metropolitan area, or county in which a minimum wage worker who clocks 40 hours a week can afford a two-bedroom apartment'. They don't use the term 'median' anywhere apart from talking about other articles. The report they link to talks about 'fair market rate' - not sure who decides what's fair and what isn't.
There are many counties across America where a low-end two bedroom can be found for substantially less than that $377. These claims only make sense if they refer to median prices.
For example:
https://joplin.craigslist.org/apa/d/joplin-2br-1bath-apartme...
https://seks.craigslist.org/apa/d/pittsburg-1913-elm-complex...
The claim 'there is not one U.S. state, metropolitan area, or county in which a minimum wage worker who clocks 40 hours a week can afford a two-bedroom apartment' is simply incorrect.
> In 2019, the affordability crisis has plunged to new depths. Last year, the average worker making the federal wage minimum of $7.25 per hour had to work 122 hours a week, every single week, to afford an average two-bedroom apartment.
The point being made earlier in the thread is the comparison is between the middle and the tail, not the tail earners and the tail quality 2-bed room apartment.
the housing cost problem is wholly created by government and instead of working to fix it too many cities keep doubling down on making it harder to create new housing, affordable or not. combine the housing cost with the high costs of government services, licensing fees, and other regulatory fees, and the lower class is further in the hole.
one issue is there is no reason for politicians to fix this issue, it is too hot button to have a true remedy and worse is a fantastic source of income for patrons and relatives through various special interest groups which exist to absorb funding from programs supposedly working to solve the issue. instead end up raising legal challenges in exchange for pay outs either in direct settlement or advisement roles all of which end up pushing costs of solutions too high to implement.
Seattle only recently upzoned many areas of the city to permit building denser housing however they may end up sabotaging it through rent controls which have been shown to be another method of limiting new housing
"The FMR is the 40th percentile of gross rents for typical, non-substandard rental units occupied by recent movers in a local housing market"
Minimum wage is not a 40th percentile income.
I have first hand experience with this crisis. I live in a reasonably priced area and make (with my spouse) about three times the minimum wage and I can barely afford to live anywhere. Basically one large unexpected cost could sink us into homelessness.
The article calls out that even the _average_ wage earner can't afford an FMR unit in many states:
> For a two-bedroom rental, the Housing Wage is $22.96—a figure that’s higher than average renters’ wages everywhere, and at least $5.00 higher than the average wage for renters in 16 states. For a one-bedroom rental, the Housing Wage is $18.65.
[1] https://www.huduser.gov/Periodicals/ushmc/winter98/summary-2...
FMR is a close to median value. From the linked definition: "The FMR is the 40th percentile of gross rents for typical, non-substandard rental units occupied by recent movers in a local housing market"
Additionally, FMR is itself statewide average, covering both high and low cost of living areas. Low cost of living counties have units available for far below FMR values.
Low end housing in low cost of living areas can be found for under $377/mo - their estimate of affordable minimum wage rent.
So while acknowledging that in many cities including my own there is an overall affordability issue, I have a problem with being presented with misleading statistics, even if for noble reasons. About 5 percent of workers make minimum wage or less. A straightforward and honest question would be to ask if they can they afford available apartments in the bottom 5-10% range of rents? Maybe they can't, and that would indeed be a problem. But in terms of this report, we have no way of knowing.
People should not aim to remain at minimum wage long, but use it as an entry point for somewhere better.
And you know exactly the point I was trying to make.
what makes you think this is the typical minimum wage earner?
Minimum wage is the least you can pay anyone for any reason. It is, by definition, an edge case.
bls: https://www.bls.gov/opub/reports/minimum-wage/2018/pdf/home....
> Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up just under half of those paid the federal minimum wage or less.
that means just over 50% of minimum wage earners are older than 25 (well outside the typical age where you're still living with your parents or just entering the workforce)
>It is, by definition, an edge case.
it is de-facto not an edge case.
I acknowledge that there’s a serious problem if millions of experienced workers are unable to get more than minimum wage, but I would prefer we fix that by helping those workers become more valuable, not by putting a “you must be this tall to ride” sign on entry level jobs.
And making minimum wage over the age of 25 is also outside of the typical pay, so it would make sense that they might be in the atypical situation of, say, still living with their parents. Only 2.7% of ALL workers are even making minimum wage to begin with [1], so you're talking about maybe 1.4% of workers over 25. Of those, some may be retired and have other sources of income. Some may have a spouse who makes much more and the are not dependent on the minimum wage income. So the remaining workers who are actually dependent on one minimum wage job to support themselves or their families are very much an edge case, since we're talking about probably less than 1% of all workers.
[1] https://www.bls.gov/opub/reports/minimum-wage/2016/home.htm
>since we're talking about probably less than 1% of all workers.
cool. congrats on proving it's an edge case. A+ case analysis.
so what? it's cool with you that 1.3 million people can't afford housing? even if it were 0.1% of workers? why should literally anyone be unable to afford housing? we're not talking iphones and gucci bags here - we're talking about the bare minimum needed to stay off the street.
Because it costs money? It takes time and effort from other humans to create and they need to be compensated for that? Anything that costs any amount of money will have someone that is unable to afford it. The article is not even talking about being able to afford any housing, they are talking about 2-bedroom apartments. There are smaller apartments. There are rooms in shared houses. There are other forms of housing.
Again, we're talking about the majority of the people earning minimum wage probably not depending on the job to pay for their housing. Maybe they are getting something else out of it. It's cool with you to eliminate a lot of their jobs by raising the minimum wage?
If the problem is some people can't afford housing, we can fix that by providing housing vouchers to those people, or changing zoning laws so more housing can be built to bring down the price, or nationalize the housing industry and just have the government build housing for everyone and we all get assigned a government issue apartment to live in, comrade.
Either way, we address the problem of housing by dealing with housing, not by manipulating the labor market which is only tangentially related to housing.
the question was "should" not can't. your answer is therefore normative rather than descriptive. let's agree to disagree that market forces shouldn't interfere with people's abilities to survive (healthcare, housing, justice system).
>Maybe they are getting something else out of it. It's cool with you to eliminate a lot of their jobs by raising the minimum wage?
you wrongly believe that raising the minimum wage will lead to mass lay offs. ny raised minimum wage in 2016 and 2018 and the only sector that cut jobs was food service.
> we can fix that by providing housing vouchers to those people, or changing zoning laws so more housing can be built to bring down the price, or nationalize the housing industry and just have the government build housing for everyone and we all get assigned a government issue apartment to live in, comrade
facetious nonsense. not a single one of those things is a current policy practice (section 8 is not a housing voucher).
>Either way, we address the problem of housing by dealing with housing, not by manipulating the labor market which is only tangentially related to housing.
like i told the other guy: go ahead and build housing at cost. until then i'll vote for minimum wage increases.
Fair enough. I mean, market forces do interfere with people's ability to survive whether we care to agree with it or not, at least until we can develop a post-scarcity economy.
The only way a market goes away is if the supply of something is so high that it is effectively worthless, because everyone can freely access all they could ever want. For instance, there is no market for breathable air. We can all breathe as much air as we want without impacting the ability of anyone else to do so. Hence, there is no reason for anyone to try to sell air to anyone else (for now, anyway...).
my ultimate point is therefore that you have almost no other policy levers than the minimum wage.
We could leave minimum wage to children, and charity workers.
As it stands, it used to pay better but has slowly slid to being subsistence living.
And if their parents haven't kicked them out of the house already because they got pregnant too early.
Or have a sexual orientation that their parents don't agree with.
Or..
https://www.google.com/url?sa=t&source=web&rct=j&url=https:/...
What if a 60 year old is feeling lonely and wants to be a greeter or lecter or something, more than they need money, but it is definitely not worth minimum wage for 99% of places to have such a job? Right now, these old folk and businesses are out of luck.
Why do you think money is the only operative thing here, or the only one ever possible, for all possible jobs for all possible people?
The sheer amount of work you exclude when you require all jobs to be livable is huge. Not everyone is trying to strike it out on their own. Some people want to help in small ways and are fine with commensurate pay. Why force these jobs out of existence? Are you sure doing so is solving the problem you want to solve, while creating no others?
Keep in mind that minimum wage jobs often make it hard to actually get 40 hours. You'll be lucky to get even 20 a week. And they rotate the schedules so that your hours are different every week, which makes it incredibly hard to get a second job.
[0] https://www.google.com/url?sa=t&source=web&rct=j&url=https:/...
In the US, minimum wage is defined as “the least you can pay anybody for any reason” with an exception for people who receive tips. As I understand it, some countries allow some people to make less than minimum wage.
I’m not entirely sure what the current point of the minimum wage is. The original idea was that it didn’t apply to everybody and was meant to make businesses less likely to hire people who were covered.
The minimum wage is not, and never has been, defined as “what an average worker should get for average effort.”
I agree that the average worker should have enough to live on, but I don’t see any connection between that and the minimum wage. People here are complaining about using “edge cases” to keep the minimum wage low, but by definition (“minimum”), the minimum wage is an edge case.
One solution gaining some attention is UBI. What are your thoughts on it?
Not everyone has the opportunity to move on to a better paying job.
What it should and should not do is a subjective matter.
However, stating that it was never intended to support a person 100% is just flat out ignorant. The history of minimum wage is easily read up on.
"Law requires companies to automate or illegally hire any job worth less than a 2-bedroom home"
For example, you can pay people under the table, outsource, close down your business (as many restaurants do), change your business model to require less labor (many restaurants in the US are switching from full service to counter-serve). None of these are good for workers.
Some notes:
- Those earning minimum wage are unlikely to be in the median rental market
- The report doesn't include the impact of any tax credits like child credits, EITC, LIHTC
- They don't adjust minimum wage by local jurisdictions. For example, minimum wage in Chicago is $13/hour but they only list the Illinois minimum wage ($8.25/hour). This is particular distorting given that cities (with higher minimum wages) are home to most renters
Worker productivity increases cannot be legislated. Such productivity increases can only come from workers improving their skills or technology that increases their productive output (as simple as an electric drill to as advanced as an exoskelleton with a HUD). Minimum wage laws are effectively bans on low-productivity workers. By making labor artificially expensive through legislation, demand for it drops, total economic output decreases, production costs increase. There's no reason to believe that the home-production industry would be able to reduce costs / increase output with minimum wage increases; in fact that opposite is the case.
Legislation can only reduce the permitting costs of housing production IFF it becomes more permissive. In the regions of the US that I'm familiar with, all the areas that have high housing costs pass legislation that increases permitting costs or transactional costs to bring housing to market. This can only result in a price increase globally with some politically-connected group receiving a benefit.
Legislation and corporate-bank policies artificially increase the money supply to the greatest degree with housing loans. Typically these workers are not minimum wage and in addition to the above effects, the Cantillon effect gives an undue subsidy to these higher wage workers https://www.aier.org/article/sound-money-project/cantillon-e...
If someone makes the absolute legal minimum, why does every expect them to live alone?
Or, I know, celibacy for everyone and hope you don't get raped? Free abortions when birth control fails, if you can afford birth control and aren't unlucky enough to have issues with it?
Do you happen to know the income level when kids are affordable? Is this well above the average wage in the area (or in general)? Is this higher or lower than low-level military salary? Knowing this sort of number would really help folks out.
suddenly becoming unable to provide for your kids through no fault of your own is quite different from deciding to have children when you know (or should know) you already have no ability to support them. in both cases, we need to at least do something to help the children, but we have to structure it carefully to avoid encouraging the latter.
> Do you happen to know the income level when kids are affordable?
no, but I can look at what I spend to sustain myself every month. if I can't comfortably double that, I'm probably not ready to have my first child.
...and in doing so you make certain assumptions which might not be true for others. Like that your circumstances can only get better, never worse. The GP specifically asked about the latter, in the form of job loss. What if you decided that you were ready to have that child, quite reasonably acccording to those assumptions, and then those assumptions turned out to be incorrect. Would you blame yourself the way you seem to be blaming others?
also, my heuristic is meant to be more like a bloom filter. you can't know for sure when you are ready to support a small human for the next eighteen years, but it's not hard to tell when you are definitely not ready. making barely enough to support your single self is a pretty strong signal.
Having roommates is fine and not a big deal.
You are now. Didn't seem to be previously.
> you should delete your own to avoid hypocrisy.
I wasn't the one over-generalizing from personal experience. I didn't say "it's no big deal" as though that would be true for everyone. There's no hypocrisy, so spare us all the whataboutism.
In your case, you probably made the choice of your living arrangement, not a choice your employer made for you. That's different.
Maybe because we prefer to grant individuals some degree of personal autonomy instead of making them dependent wards of whatever place they happen to work?
A business has the job of running itself in a profitable manner. Not babysitting what should be functional adults.
We should implement a UBI - minimum wage is not an effective method for decreasing poverty long term. Raising the minimum wage decreases demand for labor. A high minimum wage is only currently useful because of the other failures in our social safety net.
If someone can live in a 2/3 BR with roommates, that sounds pretty livable to me.
I used to live in a house with 6 other people during college. I lived just fine.
The common definition of a livable wage is enough income to "secure food, shelter, clothing, health care, transportation and other necessities of living in modern society"[1]. If you _need_ to procure the assistance of others to live, you're not making a livable wage. So if you need food stamps for food, you're not making a livable wage. The same is true for housing. If you _need_ to live with roommates because you cannot afford even a studio on your own, you're not making a livable wage.
Sure, you were just fine during your stint co-habitating with near-strangers. But we're not talking about temporary inconveniences. We're talking about an alternate situation where you had failed to launch and 10 years later, are still stuck with random roommates, still grinding the same shitty jobs, still trying to save but failing because the most you can pack away is $50/mo, and there's always something that needs to be fixed or bought that takes those savings up. We're talking about how public policy should be able to help you help yourself.
There is nothing remotely livable about $290/week (federal minimum), just in case you may have forgotten how small that number is.
> It manages to highlight its posters success
I did not intend to do that, I was clearly just providing context to my situation.
> humble brag
I don't see how I was bragging.
> how frugal & uncomfortable the poster situation once was
I never stated I was uncomfortable; I was perfectly comfortable. Of course it was more frugal than living alone; that's the entire point of this conversation.
> and dismiss other experiences
I wasn't dismissing other experiences, I was sharing my own.
> If you _need_ to live with roommates because you cannot afford even a studio on your own, you're not making a livable wage.
I absolutely disagree with that definition. A roommate is not "assistance".
> There is nothing remotely livable about $290/week (federal minimum)
State and local minimums are far higher. Areas that do not have a local minimum wage are often magnitudes cheaper and are more affordable than areas with higher cost of livings and higher wages.
if by "living wage" you mean "able to afford food and shelter", I'm 100% with you; any full-time job should support that. if you bump it up to a modest studio/1br, I'm still with you. but somewhere along the path to "a living wage is enough to rent a 2br+ dwelling, support a stay at home spouse, arbitrarily many children, and have some left over for eating out and putting away in savings" is where you've lost me.
> The goal of a living wage is to allow a worker to afford a basic but decent standard of living. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type.
this is what I'm saying. who knows what I'm committing to if I say I support a "living wage"?
The more prudent thing is to make sure that the single person can afford a one-bedroom apartment. Unfortunately, these are often not much cheaper than a two bedroom. Where I lived in the states, a studio wasn't much cheaper either, mostly because they were all in apartment complexes instead of divided up houses.
So where do they live?
Other options include overtime or getting multiple jobs. And while it shouldn't be an option, unreported tips and under the table pay is also a thing and its likely impacting purchasing power of some of the people in the statistics. My parents were "minimum wage workers" for a really long time and made more than I made as a software engineer for the first half of my career in practice.
- Living in units where the rent is far below the median rent.
- Working multiple jobs.
- Living in a multiple-income family.
- Living with roommates and pooling rent money.
- Payday loans.
- Behind on rent.
- Living in a house and not directly responsible for mortgage payments.
- Living with others in an informal arrangement and not legally responsible for payments.
- Homeless
The bigger problem with this particular article is qualifying affordable as less than 30 percent of income. That is a great rule in most situations. However, if you are on a limited income the percentage housing will be expected to be higher. It is one of the least elastic expenses, while things like a car or entertainment can be cut back or substituted for alternatives like public transportation. I don't know what the percentage should be, but 30% is unrealistic.
If you think about it, the opposite will also be true in many situations. If my income doubled from 100k to 200k overnight, I would consider upgrading apartments but from 1k a month to 1.3k a month. My food and entertainment costs would scale much quicker as a percentage of income.
Was it supposed to?
Edit: Meant to say rent instead of buy