Published by Forbes.com | January 31, 2o23
Only in 10 of the 50 largest U.S. cities can two full-time workers earning minimum wage comfortably afford a typical two-bedroom rental.
Nationally, four minimum-wage workers would have to double up in both bedrooms to not stretch their budgets, finds a new Zillow analysis shining a light on the impact of the country’s housing shortage.
In cities where there are higher-than-average rents – but the minimum wage is also higher – workers tend to fare better. It takes 2.5 full-time workers on average spending 30% of their income to pay two-bedroom rent in cities with minimum wage set beyond the federal level.
“This is perhaps the only context in which San Francisco is more affordable than San Antonio. Renters have been squeezed by record-fast rent growth while incomes haven’t kept up. That’s true for those making minimum wage, but especially so where the minimum wage hasn’t budged for more than a decade. Clearing the path for more construction, especially at entry-level prices, is needed to make housing more affordable across the board.”
—Nicole Bachaud, Zillow senior economist
Of the 10 cities where two full-time workers earning minimum wage could afford a typical two-bedroom rental, all have a minimum wage of at least $10 an hour. That includes cities with relatively inexpensive rent prices, such as Cleveland and Albuquerque, and also cities where a two-bedroom rental costs more than the national average, including Sacramento, Chicago and Minneapolis.
There are six cities where at least four full-time minimum wage incomes would be needed to reasonably afford a two-bedroom rental: Austin, Atlanta, Nashville, Dallas, Charlotte, North Carolina and Raleigh, North Carolina. All use the federal minimum wage of $7.25 an hour and have been among the hottest housing markets in the country in recent years. Charlotte, Dallas, Nashville and Atlanta are also among Zillow’s hottest markets for 2023, making it likely that affordability will become even tighter in those markets.
