Home prices and rents continue to rise, but the federal minimum wage hasn’t changed since 2009.
A recent viral tweet claimed, “The average rent in the US hit a new record high of $1,827 last month. On the federal minimum wage of $7.25 people take home $1,256 a month.”
Has typical rent in the United States exceeded monthly income earned on federal minimum wage?
Yes, typical U.S. rent has exceeded monthly income earned on the federal minimum wage.
WHAT WE FOUND
The federal minimum wage is $7.25 per hour.
Assuming a 40-hour workweek and 52-week work year without accounting for taxes, monthly income on that wage comes out to $1,256, just as the tweet claims. Of course, some states have higher minimum wages; we’ll come back to that.
Next, VERIFY looked at data on typical rent in America, which the tweet claims is $1,827 per month.
That number comes from Realtor.com’s April 2022 estimate of median rent, based on units advertised on the site in the top 50 metro areas, and only includes studio, 1-bedroom, and 2-bedroom apartments.
Redfin does a similar estimate, based on recently listed units of all sizes in the top 50 metro areas. That number for April was $1,962 per month.
All of those rent estimates are significantly higher than the $1,256 per month you can make on federal minimum wage.
So what wage would you have to make to afford typical rent in the United States?
Using Zillow’s $1,927 estimate, just to afford rent and nothing else, you’d need to make $11.22 per hour. Again, that doesn’t account for taxes or any other living costs.
Sixteen states plus the District of Columbia have minimum wages that meet or exceed that threshold, although the cost of rent in those states may be higher than the national estimates.
But allocating 100% of a budget to housing is certainly not realistic. The federal Department of Housing and Urban Development defines anyone spending 30 percent or more of their income on housing as “cost-burdened.” To not be cost-burdened and rent a typical American apartment, your wage would need to be $37.06 per hour. That’s an annual income of just over $77,080.
Washington, D.C., has the highest minimum wage in the nation at $15.20 per hour. That works out to an annual income of $31,616 a year.