Can Americans still afford a house?

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• The minimum wage in the United States is at least $7.25. That equates to a monthly income of about $1,257 before taxes.
• A minimum wage earner cannot afford a one-bedroom apartment in any American city.
• To be considered affordable, a one-bedroom apartment would have to cost about $377 per month, which is significantly lower than the average rent in the US.

A minimum wage worker cannot currently afford a one-bedroom apartment in any American city. The minimum wage of $7.25 is equivalent to a monthly income of about $1,257 before taxes. However, according to Apartments.com, the average rent for a one-bedroom apartment in October was $1,558. This is more than 30 percent of an employee’s income, a threshold that is generally considered unattainable by financial experts.

To be considered affordable, a one-bedroom apartment for one renter earning the federal minimum wage would need to cost about $377 per month. Unfortunately, research by Clever Real Estate shows that housing costs in all major cities are significantly higher than this. Differences in affordability can be attributed to differences in minimum wages between states and cities.

Buffalo is the cheapest city for minimum wage earners

Buffalo, New York, is the cheapest city for minimum wage earners. In that category, 39 percent of their total income goes to renting a home. But it’s important to remember that even with a minimum wage of $15 an hour, rent is still a challenge. The average monthly rent in Buffalo is $1,001.

Rent is unaffordable in big cities

In contrast, Atlanta is the most expensive place for minimum wage earners looking for rental property. They have to pay 132 of their salary to rent a one-bedroom apartment. Fifteen cities require three or more minimum wages to cover the cost of one one-bedroom apartment.

The difference between the minimum wage and the cost of living is rising alarmingly. Since 2009, the last time the federal minimum wage was raised, the average rent has increased by 64 percent, and inflation increased by 48 percent.

An increase in the minimum wage is needed

Clever’s analysis shows that the federal minimum wage would need to increase to $10.59 an hour to maintain purchasing power after fifteen years of inflation. But even then, people on the lowest wage would still struggle to pay the average rent.

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