Many Full-Time Workers Face Housing Affordability Problems

by Elizabeth La Jeunesse
Research Analyst

Our 2016 State of the Nation’s Housing report and accompanying webcast detailed how the private market is failing to supply housing that is affordable to lower-income households. Indeed, a National Low Income Housing Coalition report found that in 2014, for every 100 very low-income renters (those earning up to 50 percent of area median income) only 57 rental units were affordable and available. The resulting gap in affordable housing supply is due in part to a lack of low-rent units, and is compounded by the fact that many existing low-rent units are occupied by higher-income households.

While statistics on the gap in affordable housing clearly indicate the magnitude of the problem, they mask the extent of the difficulties that certain low-wage workers often face in obtaining a unit they can afford, particularly in major metro areas. For example, according to 2015 HUD estimates, the fair-market rent (including utilities) for a modest one-bedroom apartment was as much as $1,635 in San Francisco, and over $1,200 in New York and Washington, DC. Data from the Bureau of Labor Statistics indicate that in these markets, most full-time cashiers, retail and sales persons, and food preparation workers would have been unable to afford even a modest one-bedroom apartment, under the standard assumption that they should spend no more than 30 percent of their income on housing. The fair market rent of a two-bedroom apartment was even further out of reach for these workers: as high as $2,062 in San Francisco and over $1,400 Washington, DC, Boston, New York, and Los Angeles.

Other occupations where median annual wages were inadequate for households to afford a modest one-bedroom apartment include—but are not limited to—EMTs and paramedics, childcare workers, security guards, and several types of healthcare support occupations (nursing/medical assistants, home health aides), as well as office and administrative support workers. All of these jobs are vital to local economies, and support a variety of businesses and services required for healthy, growing communities.

Annual Wages in Many Occupations Falls Below Income Threshold to Afford a One-Bedroom Apartment (Constant 2015 dollars)

	San Francisco	New York City	Washing-ton DC	Boston	Los Angeles	San  Diego	Phila-delphia	Miami	Dallas
One-Bedroom Fair Market Rent (FMR) ($)	1,635	1,249	1,230	1,196	1,103	1,060	959	907	728
Income Needed to Afford 1BR at FMR ($)	65,400	49,960	49,200	47,840	44,120	42,400	38,360	36,280	29,120
Median Full-time Wage, All Occupations ($)	54,780	44,720	51,560	51,430	38,560	39,760	40,380	31,990	37,400
Emergency Medical Technicians, Paramedics	48,090	35,350	46,050	35,940	29,780	26,830	35,840	29,720	40,330
Home Health Aide	25,170	22,310	21,280	28,720	23,540	26,000	20,870	23,460	20,750
Nursing Assistants	38,220	34,250	28,130	29,560	28,870	28,980	29,090	22,950	24,170
Medical Assistants	43,010	33,850	35,030	37,420	32,680	35,260	33,220	30,620	31,130
Security Guards	32,340	29,200	35,640	28,540	23,730	24,550	23,220	21,500	24,410
Food Preparation, Serving, Related	25,850	22,020	21,280	23,840	21,240	22,250	19,230	19,810	19,220
Childcare Workers	29,090	26,600	22,980	26,110	23,600	24,700	19,670	19,380	19,490
Sales and Related	37,690	30,310	27,040	32,770	27,800	26,960	24,610	24,370	30,040
Cashiers	24,910	19,560	20,190	21,230	19,890	20,320	20,720	18,850	18,670
Retail Salespersons	27,820	21,430	22,100	23,430	23,020	22,700	21,110	19,910	22,340
Office, Administrative Support	45,690	38,330	39,800	42,630	36,030	36,110	36,940	30,810	34,520
Transportation, Material Moving	35,060	32,250	34,200	34,320	27,400	27,460	31,910	26,550	28,120
Heavy, Tractor-Trailer Truck Drivers	47,600	46,770	41,350	48,380	39,960	39,080	39,210	35,510	38,740
Laborers & Freight, Stock, Material Movers	28,770	24,160	25,260	29,610	24,330	24,240	28,710	23,990	24,120

Sources: US Department of Housing and Urban Development (HUD); US Department of Labor, Bureau of Labor Statistics, Occupational Employment Statistics (OES), May 2015 survey.

Notes: Estimates are expressed in 2015 dollars. Median annual wages for all occupations in metropolitan areas and divisions is available from the Occupational Employment Statistics website. Annual wage rates for non-salaried workers are calculated by multiplying the hourly wage rate by a typical work year of 2,080 hours (40 hour work week, 52 weeks per year). Overtime pay and self-employed workers are excluded. HUD’s final fiscal year 2015 fair market rent data is available here. 

Many workers in our transportation and warehousing sector are also impacted. In areas such as San Francisco, New York, and Washington, DC, the median heavy truck/tractor-trailer driver and freight/stock mover each earned insufficient annual income to comfortably afford a modest one-bedroom apartment. And in several high-cost areas, the overall median annual wage among all workers was inadequate to afford a modest apartment at the same 30-percent-of-income threshold.

Wage stagnation among low-income households is certainly part of the problem. Between 2001 and 2014, the median real household income for renters in the bottom quintile fell 9.9 percent, while income for households in the top quintile was up 3.1 percent. To make ends meet, many low-wage households must reduce expenditures on food and healthcare, move to areas which are less accessible and require longer commute times, double up with family or roommates, and/or live in housing with inadequate conditions.

Meanwhile competition for federal housing assistance is intense; waiting lists for housing vouchers managed by local public housing authorities are often years long or even closed. Affordable housing options are especially limited among single parents and low-income families with children. Nearly a third of the nation’s 7 million renters earning less than $35,000 in 2014 had minors living at home, and fully half of these families reported being severely cost-burdened in the same year—paying more than half of their incomes for housing. Very low-income renters living with severe housing cost burdens face the highest rates of housing insecurity, as measured by missed rent payments, having utilities shut off due to nonpayment, and feeling under threat of eviction.

The inability to afford stable, secure, and healthy housing even while working full-time particularly impacts young children in these households. A study published in the American Journal of Public Health examined the association between housing insecurity, as indicated by overcrowding in homes and multiple moves, and the health of very young children. Researchers found that young children living in households that moved frequently were significantly more likely to be described by caregivers as being in fair or poor health and at developmental risk. Overcrowding and multiple moves were also associated with increased household and child food insecurity.

Rising housing costs, low wages among many full-time workers, and weak income growth all highlight the importance of investments in affordable, stable, and well-located housing for the millions of families serving our communities through lower-wage occupations, many with only one breadwinner. Indeed, the strength of our cities is tied to all residents having an affordable and stable place to live. Employers also stand to benefit when the workforce can afford to live within reach of employment centers.

Given the high cost of building new housing, preservation of our nation’s existing supply of affordable housing is essential. Effective preservation strategies will include not only government subsidies but also new partnerships between public, private, and nonprofit organizations to focus greater investment on these vital resources, to ensure low-wage workers are able to live in the communities they serve.