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Minimum wage-earners face hardship paying rent

In order to afford to live in a two-bedroom apartment in the state of Massachusetts, one must work three minimum wage jobs, according to a new report by the National Low Incoming Housing Coalition. PHOTO BY CHRISTIANA MECCA/DAILY FREE PRESS STAFF
In order to afford to live in a two-bedroom apartment in the state of Massachusetts, one must work three minimum wage jobs, according to a new report by the National Low Incoming Housing Coalition. PHOTO BY CHRISTIANA MECCA/DAILY FREE PRESS STAFF

In order to afford a two-bedroom apartment in Massachusetts, employees earning minimum wage would need three jobs to pay rent, according to a report from the National Low Income Housing Coalition Wednesday.

“The purpose of Out of Reach is to illuminate the root cause of America’s housing problems — the gap between the cost of decent housing and household income, particularly for renter households,” said Amy Clark, communications director of the NLIHC.

The Fair Market Rent for a two-bedroom apartment is $1,251 to pay rent and utilities without paying more than 30 percent of income on housing, so a household would need to earn over $50,000 annually to afford an apartment, according to the Out of Reach 2013: Massachusetts Report.

In Massachusetts, a person working at minimum wage, which is $8 an hour, must work 120 hours per week, 52 weeks per year. That equates to three minimum-wage employees working 40 hours a week to afford the FMR, according to the report.

Clark said NLIHC has been producing these reports since 1989.

“After nearly 25 years of completing this report, there are very few surprises,” she said. “The Housing Wage changes, the list of cities that are the least affordable for renters changes somewhat, but the fact remains that if you are a low-wage worker in the U.S., there is very little rental housing on the market you can afford.”

Reports such as this show how difficult it is for people find affordable housing around the country, Clark said.

“We want people to understand that the affordable rental housing shortage is something that affects every corner of our country,” she said. “In the case of market failures like this, the only real solution to the problem is for the government to intervene by providing housing assistance to the lowest income renters.”

Jason Lefferts, spokesman for the Massachusetts Executive Office of Housing and Economic Development, said the report is not surprising because housing in Massachusetts is expensive and Mass. Gov. Deval Patrick is taking action to create more housing for people.

“Massachusetts has some of the highest housing costs in the country and those costs are pushing away young adults and families, including recent college graduates,” he said. “In order for our world-leading innovation economy and other sectors to continue to thrive, we need to ensure that [the] workforce has access to reasonably priced housing.”

Lefferts said the Commonwealth should expand its housing stock in Boston and throughout the rest of Massachusetts.

“We are working to meet the governor’s goal of 10,000 new housing units a year,” he said. “We know the demand for housing is in town centers or urban areas, and the statistics show that developers are reacting to that demand.”

Kevin Lang, professor of economics at Boston University, said the results of the report are sending the right message to people, but their statistics are ambiguous.

“The use of the minimum wage as a metric for affordability is somewhat misleading,” he said. “Minimum-wage workers tend to come from somewhat lower-income families than other workers do.”

Lang said the NLIHC’s use of 30 percent of income to spend on rent and utilities is arbitrary.

“How much rent is affordable depends on the total cost of housing including utilities,” he said. “Financial advisors typically suggest spending no more than one-third of household income on rent. But many people spend noticeably more.”

Randall Ellis, a professor of economics at BU, said the statistics are not surprising and seem to represent the issues that people have when trying to rent an apartment in the city.
“Clearly, one person earning the minimum wage cannot live in decent housing alone, but will have to share it with another wage-earner or have less housing,” he said.

Ellis said the government could raise the minimum wage to help alleviate the burden of affording an apartment.

However, he said the report is flawed in using an average or median rent because it can vary depending on the location within the city.

“Very low-income people live in far suburbs where rents will be lower. Also, the calculations ignore the earned income tax credit, which supplements minimum-wage earners,” he said. “Things are still tough, but there are some things that make it easier to live in Boston.”

One Comment

  1. Even families and singles who are able to obtain affordable rentals; if need be up to 38% of income, have another very important expense; that being transportation. Many low income jobs have erradict hours, hours that often do not match up with public transportation. In fact many low income workers face the problem of car break down, loss of work and finally loss of job. Living “further out” is expensive for transportation and time. Another necessary expense is day care. And, what happens when children are sick or day care shuts down for holidays etc.?

    I work with homeless families. One of the methods I have developed is “rental gap insurance”. Tax returns with the income tax credit are divided into twelve equal parts of on average $250 to $325 per month to cover either rent payment gaps or the cost of utilities. However very seldom does this make up the gap. Also taxes are often used to catch up on car maintenance, day care costs, debt reduction etc.

    Another issues is what would Capitalism do without low wage workers? Example: In Northern Virginia many many workers go into DC for their jobs. What would happen if day care workers went on strike? Note: Day care workers earn from minimum wage to maybe at the higher levels $15 per hour. Okay so they go on strike. What now will the DC workers do with their children? They need to get to their high five low six figure jobs. At this point the value of day care workers escallates!!

    Can many small businesses pay a living wage and survive as a business. NO. Then let’s think about ways to subsidize our very valuable low wage workers so that they too can afford day care for their children, as well as safe decent housing. Lets not hide behind numbers and policies that really do not fill the gap and leave many men, women and sadly for their future children struggling just to exist.

    A key target could be the revision of the Section 8 Program!!