The Most Expensive States to Rent a House – and the bleak reality for minimum wage workers

By James On Jun 19, 2023

Americans on minimum wages must work an average of 104 hours a week to pay the rent of a modest two-bedroom home, according to one major report.

The total, equivalent to having 2.6 full-time jobs, would leave a person getting eight hours of sleep with just 60 minutes a day to cover everything else, the study said.

A further analysis of the hourly wages required to comfortably pay rent for a two-bedroom home found that California was the least affordable state at $42.25 per hour. Someone on minimum wage in the Golden State would have to work 109 hours a week to afford the average two-bedroom home.

In Hawaii, a person must earn $41.83 an hour to cover rent. With the minimum wage, they would have to work 139 hours a week.

The Out of range report by the National Low Income Housing Coalition paints a bleak picture for renters across America. Arkansas, West Virginia and Mississippi were the cheapest, but still required hourly wages above the minimum wage to comfortably pay rent.

California came out as the most expensive state to rent. Someone on minimum wage would have to work 109 hours a week to afford a two-bedroom house. They would need to earn $42.25 an hour to comfortably afford the same house, according to a major report from the National Low Income Housing Coalition

The NLIHC report said, “In no state, metropolitan area or province in the U.S. can an employee earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at a fair market rent by standard 40 hours to work week’

California topped the list for the states where rent is the most expensive after researchers found that a person needs to earn $42.25 an hour to comfortably afford a two-bedroom house

Researchers calculated the required hourly wage based on a job of 40 hours per week, 52 weeks per year. The study also made similar assessments based on the price of a one-bedroom home.

The report said, “In only seven percent of counties nationwide, not counting Puerto Rico, a full-time minimum wage worker can afford a one-bedroom rental home at a fair market rent. These counties are in states with minimum wages higher than the federal minimum wage of $7.25 per hour.

While higher minimum wages are needed, they alone will not solve the affordability crisis. Sixty-six counties and municipalities have minimum wages higher than the federal or, if applicable, state minimum wage, but in each of these jurisdictions, local minimum wages lag behind local one- or two-bedroom housing wages.”

California demands the highest hourly wage to comfortably afford a two-bedroom house. Researchers calculated the totals based on a 40-hour work week, 365 days a year

Americans on minimum wages must work an average of 104 hours a week to pay the rent of a modest two-bedroom house, according to a major report

TOP ‘OUT OF REACH’ RENTAL STATES

California demands the highest hourly wage to comfortably afford a two-bedroom home. Researchers calculated the totals based on a 40-hour work week, 365 days a year.

Legend: Hourly wage required to comfortably rent a two bedroom home / Mention minimum wage / Average rent / Hours at minimum wage

California – $42.24 / $15.50 / $2,197 / 109
Hawaii – $41.83 / $12 / $2,175 / 139
Massachusetts – $41.64 / $15 / $2,165 / 111
New York – $40.08 / $15 / $2,084 / 113
Washington – $36.33 / $15.74 / $1,889 / 92
DC – $35.33 / $17 / $1,838 / 83
New Jersey – $33.50 / $14.13 / $1,742 / 95
Colorado – $21.13 / $13.65 / $1,671 / 94
Connecticut – $31.93 / $15 / $1,660 / 85
Maryland – $31.08 / $13.25 / $1,616 / 94

The findings come as America is finally feeling some calm amid months of rising inflation.

The most recent statistics released on Tuesday by the U.S. Department of Labor show inflation has slowed to four percent year on year after growing just 0.1 percent between April and May.

While the annual rate is still double the Federal Reserve’s two percent target, it is well below the 9.1 percent peak seen last June.

Inflation drives up the price of everything from rent to gas and groceries. It has risen faster than the average wage.

The NLIHC report called on Congress to strengthen rent assistance programs and pass bills that encourage more affordable housing and improve existing stock.

The report follows research in May that showed rental growth across the country continues to outpace incomes.

Average rents have risen 134.9 percent since 1999, while incomes have risen 76.8 percent over the same period, according to data from Moody’s Analytics.

The big difference — driving up the cost of living for renters — was linked to data revealing that there are only four states in America where average mortgage payments are cheaper than rents.

The Moody’s Analysis showed that by 2022, the share of U.S. household income needed to rent a mid-priced apartment will exceed 30 percent for the first time in 25 years of tracking the trend.

The benchmark, called rent-to-income ratio (RTI), fell slightly to 29.6 percent at the beginning of 2023.

Hawaii was second in the ranking and a person must earn $41.83 per hour to rent a two-bedroom house while working 40 hours per week. They would have to work an impossible 139 hours a week to afford the same house at minimum wage, the National Low Income Housing Coalition found.

There are now seven metropolitan areas in the country where RTI is over 30 percent:

Los Angeles: 36% RTI; average rent $2,456
Miami: 42% RTI; average rent $2,141
Palm Beach: 34% RTI; average rent $2,051
Fort Lauderdale: 37% RTI; average rent $2,108
New York: 68% RTI; average rent $4,334
Boston: 33% RTI; average rent $2,948
Northern New Jersey: 33% RTI; average rent $2,416

Separate research Redfin found that there are only four major metropolitan areas in the US where estimated monthly mortgage costs are less than estimated monthly rental costs.