This week’s paycheck might be slightly more substantial for many around the country. Ten states effected higher minimum wages beginning January 1st, impacting the wages of one million people. Washington state now boasts the highest minimum wage in history, at $9.19 an hour. If at some point you flipped burgers, tore tickets, or scooped ice cream for half that, the number may seem large. It might even seem like a livable wage.
Two- thirds of the one million people receiving the New Year’s Raise are over twenty, so this is not just a raise for a million teenagers working after-school jobs. We can assume that at least a portion of the group getting this “cost of living” wage might be working so they can buy food, cover expenses, have some savings, and pay their rent. Unfortunately, that isn’t mathematically possible.
Most housing policy suggests that 30 percent of one’s income should be used for housing. A 2012 study by the National Low Income Housing Coalition compared each state’s minimum wage with the average cost of a two-bedroom dwelling in the state. The report, tellingly called Out of Reach, calculates what a necessary minimum wage would be to allow individuals to put 30 percent of their income towards housing, while still being able to afford things like food, medical attention, clothing and transportation. Below is a comparison of a state’s minimum wage (blue) and the necessary wage a person would need to afford the rent on a market-rate apartment in each city (red).
While the red margins vary between cities, it is clear that not one comes close to providing a livable minimum wage to its population. (For states that have no minimum wage, the federal rate of $7.25 is used as a baseline.) In Baltimore, the livable wage is 3.2 times the current state minimum. This means a person would have to work 3.2 full time jobs to make rent. In Los Angeles, you’d need to work about three-and-a -half jobs at 40 hours each to pay your bills.
While people sometimes work two or more jobs, there aren’t enough hours in a day to work three or four full time jobs. (As an aside, try getting hired by saying, “I need my hours here to work around the hours at my other two jobs.”) When the bills are due, the money has to come from somewhere, which is when we see the ideal 30 percent of income for housing figure jeopardized.
The 30 percent number was determined by the Housing Act of 1937 and is still the generally accepted measure of affordability. Those who pay a larger share of their paycheck into housing costs are deemed “house burdened.” Today, 12 million people in the United States put more than 50 percent of their income towards rent.
At this point, you might wonder what these 12 million people have to do with homelessness. These 12 million people are paying rent – they are obviously housed. While this is true, I would contest that this population is crucial to the discussion of homelessness. If half of every earned dollar goes towards someone’s housing, there is a lot that stands to be cut from the budget. Healthy food, warm clothing, reliable transportation, necessary medical care – all off these things stand to be compromised when a household budget is overtaken by rent bills.
However a “house burdened” household reconfigures its budget, we can assume there is not a lot of money left for savings. This puts a person on the constant edge of a crisis. An accident, an illness, an unexpected expense – there isn’t money left for things like this. These people are okay for today, but if tomorrow brings the unexpected, their housing is in jeopardy.
So, while I am sure one million Americans are happy to take home a few more dollars in 2013, this latest wage increase is hardly enough of a change to provide safe and stable living to the millions who will continue to stretch their dollars in the new year.
UP NEXT: A Look at Plans to End Homelessness
