What's a Fair Relationship Between Salary and Rent?


Can a minimum-wage worker in your state afford to rent an apartment? Does the answer to that question say anything about us as a people? Should you care? (See also: A Decent Standard of Living)

Pretty quickly after I started writing for Wise Bread, I discovered that writing about a "decent standard of living" is really hard. There is no luxury so frivolous that there aren’t people out there who consider it a necessity, and there is no necessity so essential that there aren’t people ready to point out that a billion poor people around the world manage to get by without it.

With that in mind, I found this map (from the National Low Income Housing Coalition‘s report Out of Reach 2012) pretty interesting:


It shows the number of hours of minimum-wage work it takes to pay the monthly rent on a two-bedroom apartment at fair market rent.

Their statement here is that there’s nowhere in the country where a minimum wage worker can afford to live. If you go by the rule of thumb that it’s reasonable to spend about 30% of your income on rent, and you figure that there are 21 working days in an average month, then you’d calculate that it’s reasonable to spend 50 hours a month earning your rent. But there's no state where that's possible. The cheapest states (West Virginia and Arkansas) take 63 hours of minimum wage work to pay for a two-bedroom apartment.

To my mind, the whole notion is a bit odd. For how long has it been reasonable — not just reasonable, but presumptively true — that every worker needs his or her own two-bedroom apartment?

Let's try an alternative perspective. Let's instead suppose it’s reasonable that poor folks shouldn’t expect to be able to make ends meet without a roommate. In that case, it would be reasonable for rent to run as high as 100 hours a month, with two workers sharing the cost.

Accept that as a standard — poor folks have to have roommates — and the implication of the map seems much more reasonable. It’s still too expensive to live a few places — the Northeast corridor, California, and Florida — but everywhere else 100 hours of minimum-wage work will rent you an apartment.

Of course, having a roommate is only one way to afford decent housing. An even cheaper option might be to rent a room in someone else's house. Or to rent a one-bedroom or an efficiency apartment.

In fact, there's a lot of complexity, once you dig a little deeper. The whole idea of "fair market rent" buries a lot of variation in the costs of individual units. If you can find a cheaper apartment that meets your needs — and you only need to find one — it doesn't really matter what other units go for. (The Department of Housing and Urban Development calculates the fair market rent numbers used. It might be worth mentioning that my wife and I — and I presume, most of our neighbors in our apartment complex — are paying almost 25% under the fair market rent for our area.)

Underlying all this are a lot of implications about social organization. If one minimum-wage worker can afford a two-bedroom apartment, then one worker with a spouse can afford to start a family, and the non-working spouse can stay home and take care of the child. At the lower end of the income spectrum, that's been tough to arrange for many years now — in large part because it isn't "decent" to live at the standard of living that a single wage-earner can afford.

But if you don't get too hung up on what's decent, and instead go for what works for you, a whole lot of options open up. As I said, you only need to find one apartment that's affordable. You can eat a healthy diet that's frugal. There are a million ways to spend less on transportation, clothing, fuel, education, health care, and all the other necessities of life, and produce a standard of living that would have been considered superb by almost everyone who has ever lived — as long as you don't get too hung up on what other people consider necessary.

I'm glad people are talking about issues of fairness related to the cost of living and how it relates to the minimum wage, and I rather like this group's contribution to the discussion. But I'm also glad I'm living large on a small budget.

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Guest's picture

Thanks again for a thoughtful article. I've know people who've rented houses/large apartments to share, or had unconventional sleeping arrangements (loft spaces in the living room, for example). What comes into play in these situations is chore rotation, communication, visitors, hours, storage division, and splitting joint expenses.

Guest's picture

I agree with your overall premise that the map simplifies something that is more complex. When I was making minimum wage, no way would I have tried to rent a two-bedroom apartment by myself.

However, it's worth noting that you talked about hours of work per month (50) and compared it to the map, which talks about hours of work per week.

So in Arkansas, you have to work 63 hours a week at minimum wage to afford rent on a two-bedroom apartment, and then can start to pay all your other expenses. If you have a roommate, then 31.5 hours a week apiece will do it, but, again, doesn't take into account any other expenses.

Philip Brewer's picture

You may be right about the hours/week versus hours/month. (That is, it isn't clear to me whether that's hours per week to pay a monthly rent or something else.)

On the other hand, they do presume throughout that you can only afford to spend 30% of your income on rent, and all their figures are calculated on that basis. So they're assuming that everyone has 70% of their income available for other necessary expenses.

Separately in the report they calculate a "housing wage," which is what the minimum wage would need to be for someone to rent a 2-bedroom apartment with just 30% of a full-time minimum-wage income. It varies from $31.68 in Hawaii down to $11.41 in Arkansas.

The report is worth reading, if you're interested in this sort of thing.

Guest's picture

Ah - I did not realize that the report took into account the 30% rent ratio. Thanks for taking the time to reply. I will have to look more into the report.

Guest's picture

I think the implication is that someone working a minimum wage job AND who has a child is unable to afford housing (not including child care and other associated costs). To me, this is an illustration of the importance of enforcing child support laws, but there are a lot of deadbeat parents out there.

This is yet another example of how the American Dream is beyond the reach of so many lower skilled workers.

Guest's picture

I dunno. I think roommates work fine when there is no care-giving involved, but take one minimum wage earner and add a few kids or a disabled partner, and you start to understand just how impossible the situation quickly becomes . . .

Guest's picture

I was just coming on to echo a few of the comments. This is a thoughtful article, and it's great how you've broken it down and pointed out alternative ways of approaching the situation presented in the infographic. Still, you haven't addressed the fact that many workers out there have children or other dependents. As soon as you throw that into the equation, living with a roommate (or in a one-bedroom, etc) is no longer such an easy solution.

Guest's picture

I just checked out the "Out of Reach" article referenced here and there's another map there - the Housing Wage Map - showing the hourly wage needed to afford a 2BR apartment in each state. I think those wage estimates may actually be low. For example, for my state, PA, the map says $16.06/hr is needed to afford rent on a two bedroom. Assuming I'm calculating right that comes to just over $835/month ($16.06x40x52/12 for the monthly salary, multiplied by .3 for the rent). But that's not what I'm finding now as I help my brother search for his very first apartment. The lowest rents we've found are around $900, and that's for a *one* bedroom. If we're hearing $900 for a one, the twos are probably at least $1100. Which means people looking for a two would need to make even more - possibly a lot more - than what that map says.

But really, any figures - wage *or* hours needed - for minimum-wage earners are moot because no landlord or property manager will approve an application with a salary that low. It used to be that applicants needed to make 3x the monthly rent, which basically matches what the Housing Wage Map is using. Some places may go lower but that's usually only if there are a lot of vacancies, which I doubt is the case now with the economy so bad that people can't afford to buy houses. And yet these rents are approaching what some people might pay for a mortgage - if they had good enough credit to qualify for one.

I've rented my whole adult life but not in the last few years and not in this area (PA) in >30. I'm currently staying in my parents' house and hope to move out in the next year, but after seeing what rents are going for I'm starting to despair of ever having my own place again; I have never in my life made 3x what these rents are, even when I wasn't working a minimum-wage job. I only hope my brother, whose salary isn't that high, will be able to find something he can afford.