Vox serves up another over-selling headline: “A full-time minimum-wage job won’t get you a 1-bedroom apartment anywhere in America.” That is not actually true, as many thousands of minimum-wage renters can attest; what is true is that a single-earner household in which the sole worker earns the minimum wage cannot pay the rent and utilities on the average “fair market value” apartment in any U.S. state or in almost any U.S. county — for 30 percent of his income or less, the benchmark for “affordable.” This comes from a study by the National Low-Income Housing Coalition.
I do not see anything obviously wrong with the study’s numbers per se, though I do question its assumptions: Why would we expect a minimum-wage income not only to cover but to comfortably cover the rent on a one-bedroom apartment, as opposed to an efficiency or the more common home-sharing arrangements typical of the disproportionately young people who work at minimum-wage jobs? Half of minimum-wage workers are under 25; only 3 percent of workers 25 and older earn the minimum wage or less.
Further, state and county affordability benchmarks tell us less than we imagine, inasmuch as there continue to exist low-rent enclaves in most communities. The average rent on a one-bedroom apartment in New York City is $3,000 a month and the average overall apartment rent within ten miles of New York City is $3,365; using the prevailing NYC “40 times the rent” rule, we should really expect to see no household earning less than $120,000 a year living in New York City (not Manhattan; New York overall). In reality, that is more than twice the median household income in New York City. It may be the case that most New Yorkers cannot afford to live in New York (it certainly can feel that way!) but the fact is that there is a great deal of variability in local rents and that the average is in this case misleading.
Which is not to say that living independently on the minimum wage is easy—it isn’t. But it simply is not the case that it is beyond economic possibility, especially in places such as Nevada or Texas where the landlord gets less competition from the tax man.
The study reports that for a one-earner minimum-wage household, the ceiling of affordability is $377/month; I rounded up to a $400/month cutoff for the purposes of a quick review of what is actually available in the market. In and around which metros could you rent on that budget? Houston ($336/month), New Orleans ($370/month), Oklahoma City ($399/month in fashionable, urbane Norman), Cleveland ($395/month), Philadelphia, St. Louis ($400/month for two-bedroom apartment), Las Vegas, etc. None of those places looks all that great, to be sure. But all represent decent housing.
The report says that the rent affordable to a single-earner household with one worker earning the median renter’s wage is $788/month, which looks like this: Dallas, downtown Los Angeles, Philadelphia, and a nice view of downtown Lubbock, Texas, from my former abode. Reno looks pretty nice on that budget.
A few thoughts: First, I concur with Matt Yglesias and that other loopy guy that the rent is too damned high. Places such as San Francisco and New York City have high rents for a number of reasons: The first is high demand, obviously, with lots of people, especially high-income people, seeking to live there; the second is artificially constricted supply, with cumbrous planning and zoning rules, rent control, etc., effectively turning the desirable parts of those cities into gated communities and pricing a great many people out of the less-desirable parts, too.
Raising the minimum wage is not going to make Manhattan more affordable, and it’s probably not going to make Austin more affordable, either. The solution to housing scarcity is housing plenty — both New York City and San Francisco are remarkable for the relatively low density of development there. (New York’s population density about half of Paris’s.) If you want more housing, you either have to build more housing (which is to say: permit the building of more housing) or, in the case of U.S. cities with a great deal of abandoned housing stock, reclaim existing structures.
There is money to be made selling products and services to people of relatively modest means, which is why McDonald’s almost certainly makes hundreds or thousands of times more money a year than does Le Bernardin, and why Ford makes more money in a quarter than Lamborghini makes in a year. The same market forces can and should shape the way housing is delivered — if only we would let them.