Only five of the 50 largest metropolitan areas in the country remain affordable for minimum wage workers, according to a new study by Realtor.com, even as rent prices have been falling nationwide.
Why It Matters
Despite recent declines, rent prices are still much higher now than before the pandemic.
The national average rent among the top 50 metros in the country was $1,693 in November, down 1 percent, or $17, from a year earlier. While it was the 28th consecutive month of declines and rent was 2.5 percent lower than its November 2022 peak, the national average is still 17 percent higher than before the pandemic.
Low-income earners across the country find themselves in an especially difficult situation: not only higher costs are keeping them off the property ladder, but rental units are also slipping out of their reach.
What To Know
While prices have climbed in the housing and rental market over the past five years, wages have struggled to keep up—especially minimum wages. The federal minimum wage has not changed since 2009, and it is still $7.25 per hour.
According to Realtor.com, in only five metros in the country could a household made up of two adults earning minimum wage afford the median-priced rental unit last month without having to work overtime.
These were Buffalo, New York; Rochester, New York; St. Louis; Phoenix; and Kansas City, Missouri.
To identify these cities, Realtor.com researchers calculated how many hours each of the two minimum-wage earners/renters would have had to work weekly to pay for the median rental, ranging from a studio to a two-bedroom. Their assumption was that no more than 30 percent of their income went toward housing—which would make them cost-burdened otherwise.
In Buffalo, two adults earning the median minimum wage of $15.50 per hour needed to work just 30 hours a week to afford the typical rental, which lists for $1,176—more than $500 below the national median.
In Rochester, which has the same median minimum wage as Buffalo, the pair needed to work a 35-hour workweek to afford a rental property priced at $1,339.
In St. Louis, a couple earning $13.75 an hour would have needed to work 38 hours weekly to afford a $1,305 unit.
In Phoenix, where the minimum wage is $14.70, two minimum wage workers would have needed to work 39 hours a week to afford the typical rental home priced at $1,445.
Finally, in Kansas City, where minimum wage workers earn $13.75 per hour, two adults earning that amount would have needed to work 40 hours weekly to pay for a $1,387-a-month rental.
What People Are Saying
Realtor.com senior economist Joel Berner said in the report: “The biggest determinant of minimum wage affordability is being in a state that has a minimum wage higher than the federal minimum of $7.25. The federal minimum is simply too low for workers at that wage level to afford the median rental unit in any of the 50 largest metros in the country.”
He added: “These metros where minimum wage workers can actually afford to rent the median unit are also significantly more affordable than the country at large. So it takes both things being true: a high minimum wage and a low local rent level.”
David Jaffee, a professor of sociology at University of North Florida and founder of Jax Tenants Union, told Realtor.com: “The rental housing system in the U.S. is broken as currently organized and will be unable to provide affordable housing to the working class.”
What Happens Next
There is some good news for American renters: two more metros might soon join the list of markets affordable for minimum wage workers, one in Michigan and one in Florida. These are Detroit and Jacksonville, respectively.
Even with this addition, however, in 43 metros rent would remain unaffordable for a household of two minimum-wage workers.
