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Renting 'is unaffordable to minimum wage workers in every state,' study finds

money.yahoo.com

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Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#21

Post by tzs »

They compared minimum wage to median housing costs, and found that minimum wage is not enough to afford median housing.

But isn't this exactly what we'd expect? You can't have everyone able to afford housing that is in the top 50% of housing costs (except possibly in Lake Wobegon).

This seems like the housing equivalent of those periodic "richest N% have M% of the wealth" where M > N stories that present that as something obviously bad when in fact in any population where there are variations in wealth it is mathematically necessary that the top N% has more than N% of the wealth.

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#22

Post by mft_ »

bloodyplonker22 wrote: post #6

Minimum wage is not the problem as this article seems to imply. People move up from those starter jobs, they don't stay there forever. The problem is that the politicians and local governments have enacted strict building and zoning laws which disallow for new housing construction. This, in combination with market forces has driven up the price of housing artificially fast.

> Minimum wage is not the problem as this article seems to imply. People move up from those starter jobs, they don't stay there forever.

[citation needed]

The phrase 'starter job' may indicate where you're coming from, attitudinally. For many people, of all ages, there aren't starter jobs - they're the only attainable jobs. And I suspect many people bounce around between different similarly-poorly-paid jobs, without significant moves up. We're talking about people for whom 'the grind' is just surviving, and for whom the American dream of self-improvement through hard work has died - if it was ever alive in the first place.

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#23

Post by thunderbird120 »

This is the actual source of the article[1]. The methodology does not support the claim the title makes.

>LendingTree used U.S. Department of Labor and U.S. Census Bureau data to determine whether owning or renting a home is affordable to a person working a full-time minimum wage job. Assuming a person could afford to spend up to 30% of their gross monthly income on housing, LendingTree calculated how much in monthly housing costs a person working 40 hours a week for 52 weeks a year at an hourly wage equivalent to their state’s minimum wage could afford. Researchers then compared that figure to the median monthly homeowner costs for homes with a mortgage and the median monthly gross rent payment in each state.

So, to recap. This study assumes you must spend less than 30% of your income on housing and assumes that all housing costs the median homeowner/rent payment. These are both independently terrible assumptions but combined you get total nonsense. People earning in the bottom 5 percentiles of the income distribution do not rent places that charge 50th percentile rent. They also are not arbitrarily constrained to follow good budgeting guidelines which specify not more than 30% of income to housing. I know this because according to this methodology, the arrangement which I very comfortably made it through grad school in is apparently not possible.

[1]https://www.lendingtree.com/home/mortgage/minimum-wage-worke...

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#24

Post by Fricken »

skohan wrote: post #13
bloodyplonker22 wrote: post #6

Minimum wage is not the problem as this article seems to imply. People move up from those starter jobs, they don't stay there forever. The problem is that the politicians and local governments have enacted strict building and zoning laws which disallow for new housing construction. This, in combination with market forces has driven up the price of housing artificially fast.

I think it's a combination of factors. More home building would help, but also regulating housing speculation might be a good idea.

The speculation is a symptom. The systemic factors compromising the our ability to meet demand are the disease.

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#25

Post by reilly3000 »

bloodyplonker22 wrote: post #6

Minimum wage is not the problem as this article seems to imply. People move up from those starter jobs, they don't stay there forever. The problem is that the politicians and local governments have enacted strict building and zoning laws which disallow for new housing construction. This, in combination with market forces has driven up the price of housing artificially fast.

The US housing market has been a parking lot for global capital, some of which isn’t always clean money. I saw it first happen to Vancouver BC when Chinese stock market winners started buying up condos until prices were insane, but it continued to expand to the states with little to no resistance. Now Mexico and Columbia are in the top 5 countries leading foreign investment in US real estate. It’s a cash flow positive way to park drug money, along with a generally stable asset for any global investor.

The supply issue is very real. Per the article linked below, 1 housing unit is being created for every 6 new jobs. It’s absolutely unsustainable.

https://knowledge.wharton.upenn.edu/article/foreign-purchase...

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#27

Post by [deleted] »

skohan wrote: post #20
strictfp wrote: post #7

Earlier quoted context omitted.

I live in Sweden and I can tell you that it's not so clear-cut. Rent control means that people have to queue for many years for decent rental apartments. We also have a lot of black market labour. The unions have historically had a strong grip, but are under attack by political forces that want to undermine that market with unskilled workers. And on top of all this I think that people simply always prioritize living…

Imo some level degree of rent control is needed to prevent forces like housing speculation from causing housing prices to spike wildly in certain market conditions. Otherwise you end up with SF where it's impossible for anyone but the highest income earners to even exist. I think the vienna model seems to have been fairly successful: if you build lots of high-quality public housing, the incentive structure is good fo…

[deleted]

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#28

Post by bombcar »

> They calculated how much in monthly housing costs a person working 40 hours a week for 52 weeks a year at the minimum wage hourly rate in their state could afford. They then compared that to the median monthly homeowner and rent costs derived from the U.S. Census Bureau’s 2019 American Community Survey.

This … signifies nothing? Take a hypothetical state that consists of three people and three houses, one rented by me at my minimum wage job for $350 a month, and the other two rented by Bill Gates and Warren Buffett at $55m/month.

The median is way unaffordable to me, yet I have a comfortable rent payment.

Comparing minimum to minimum would be a more useful metric.

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#29

Post by bombcar »

thunderbird120 wrote: post #23

This is the actual source of the article[1]. The methodology does not support the claim the title makes. >LendingTree used U.S. Department of Labor and U.S. Census Bureau data to determine whether owning or renting a home is affordable to a person working a full-time minimum wage job. Assuming a person could afford to spend up to 30% of their gross monthly income on housing, LendingTree calculated how much in monthly…

Yeah see my comment - this is basically useless without additional data. Minimum to median is a big flag.

Re: Renting 'is unaffordable to minimum wage workers in every state,' study finds

#30

Post by gexla »

reilly3000 wrote: post #8
jokoon wrote: post #4

I'm not american and yahoo has a cookie wall. How exactly are those people managing to survive? My country has welfare that allows people to pay rent and food. I'm not really aware of how american welfare works, but I guess it varies a lot between states?

Below the federal poverty line people can receive food assistance, and sometimes there are state or local programs that help with rent. In general people just work more, borrow more, and live in a perpetual state of financial peril. It’s awful, and even if the situation improves, living like that leaves a lasting blow to the psyche.

I have never had these benefits but I imagine this isn't something which happens on short notice. One of the issues with unemployment was that people would sometimes have to wait for months to get their assistance. When employers received pandemic loans for payroll, the choice was to brush off the employer (against unemployment rules) or take your chances that the employer wouldn't just have to let you go again after X months only to face the unemployment process all over again. The narrative around this was that people would rather stay home and get paid rather than working for their money, but the reality was a bit more complicated.
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