‘Workers can’t afford a two-bedroom apartment’ is a weak argument for raising the minimum wage
CNBC reported the following today:
People working minimum wage jobs full-time cannot afford a two-bedroom apartment in any state in the country, the National Low Income Housing Coalition’s annual “Out of Reach” report finds. In 93% of U.S. counties, the same workers can’t afford a modest one-bedroom.
The report defines affordability as the hourly wage a full-time worker must earn to spend no more than 30% of their income on rent, in line with what most budgeting experts recommend. This year, workers would need to earn $24.90 per hour for a two-bedroom home and $20.40 per hour for a one-bedroom rental. That’s an increase from $23.96 and $19.56, respectively, from last year.
The average hourly worker currently earns $18.78 per hour, the report finds, more than $6 short of the wage needed to afford a two-bedroom rental.
Given each state and locality’s minimum wage, the report finds that the average minimum wage worker in the U.S. would need to work nearly 97 hours per week to afford the average two-bedroom home. That’s more than two full-time jobs.
There are a lot of issues with this type of analysis, especially when it’s used in policy-making.
For one, if someone is a low-wage worker, it should logically follow that certain things will be out of their reach. This need not be a catastrophe. It is just the way of life.
Secondly, to the extent adults with children are stuck in dead-end jobs with no progress in sight, raising the minimum wage would not magically fix that. It could even lead to job losses, pulling workers into poverty.
According to the evidence, the minimum wage labor force is almost exclusively made up of young, low-skilled workers, who are also more likely to be unmarried. This makes it ineffective policy for raising family incomes.
Lawmakers should certainly care about affordability, especially for something as important as housing. Centering this discussion on the minimum wage, however, detracts from more legitimate solutions that actually raise incomes and make life cheaper.