Comment by sokoloff | Hacker News Reader

Comment by sokoloff | Hacker News Reader

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The minimum wage went up to $1.45/hr in Feb, 1970. 2000 hours of that would be $2900. I used the following assumptions: 7.5% fixed-30, median house $17K, down payment of 20%. That was unaffordable by a factor of almost 2x.

The house that seemed affordable with no car payment was a little over $9K (down payment of $1800). Adding in a $50/mo car payment took the affordable house down to a little over $8K, less than half the price of the median home in 1970.

Was there a minimum wage worker sometime in 1970 who bought a house and a newish car? I'm sure there was. Was it typical to do so? I don't think so.

Refs: http://www.freddiemac.com/pmms/pmms30.html , https://news.ycombinator.com/item?id=29590190 , https://www.bankrate.com/calculators/mortgages/new-house-cal... (I used a 10x multiplier, so I modeled in the calculator someone making $14.50/hr, a median house of $170K rather than $17K, etc, and then divided them by 10 to cite the figures above.)

If I apply the same calculation today, on a minimum wage of $7.25…

  Wage: $7.25/h
  per-month affordable: $362.50
  median home price: $374,900
  3.519% fixed, 30-yr
  20% down
  required monthly payment -> $1,350

which is unaffordable by a factor of almost 4x.

In fairness, the comment chain you're responding to is talking about the thing you're responding to in your comment, but I think the increase in unaffordability at the minimum wage still speaks to the problem: while it wasn't likely to allow home ownership in the past, but it's even less possible now, and that translates up into the higher wages where people then might have afforded a home, but cannot now.

Plenty of maps have been drawn to show that minimum wage can't even afford to rent median 1-bed apartments.

I agree that it’s gotten worse; I just think people underestimate how much it has always sucked to be among the lowest earning households.

You can look at these retired 70-something boomers driving nice cars, owning a house, and taking a couple trips a year and assume they lived on Easy Street their whole lives when in fact they were probably struggling to pay bills 40 and 50 years ago as well.

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