New analysis conducted by the National Low Income Housing Coalition in the United States highlights how unaffordable the cost of renting is in the country.
The analysis shows that in no “state, metropolitan area or county” can a federal or state minimum wage worker afford to rent a two-bedroom apartment or home. Indeed, in only 22 counties out of more than 3000 can a minimum wage earner afford to rent a one-bedroom unit. And in those cases, the counties were in states where the minimum wage was higher than the federal minimum wage, which sits at $7.25.
Now, it’s worth mentioning that the definition of affordability in the study is a fair market rent (FMR) that does not exceed 30% of the tenant’s income. This means that there are areas in the country where a minimum wage worker can pay their rent, but it would mean spending more than 30% of their income on housing. Indeed, the study reports that wage earners in the 40th percentile can’t afford a ‘modest’ one-bedroom apartment without spending more than 30% of their income on housing costs.
This affordability crisis is not limited to just the United States – cities all over the world are feeling the pinch of rentals leaving wages in the dust. Numbeo analysis of Bloomberg’s Global City Housing Affordability Index shows that emerging economies seem to have the least affordable housing – six Latin-American cities and seven Asian cities are in the top 20 least affordable cities.
Venezuela’s capital, Caracas, is number 1. The analysis shows that the average monthly rent is 1342% of the average monthly pay, which is $31. Hanoi and Kiev come in second and third on this measure, with rent being 265% and 213% of monthly pay respectively.
While city living tends to be expensive, this global crisis highlights the need for proactive and smart economic policies to keep housing affordable for the world’s worst-off.