What is happening?
More households are spending a big chunk of their pay on rent, forcing them to make deep cuts elsewhere in their household budget, and making it virtually impossible to save for a rainy day, much less college or retirement.
Many families have to make difficult tradeoffs simply to keep a roof over their heads, and many are just one unforeseen event – an illness, a job loss, even a drop in hours at work – from seeing an eviction notice on their front door.
When rents are too high, families and seniors often forego essentials like food, medicine or health care in order to keep a roof over their heads. Their children’s education and future success are at risk.
When children grow up in an unaffordable home, they are often forced to move frequently, which can lead to missed class and poor grades. When families don’t have enough money to pay the rent, options are limited. Homes with mold, lead paint, bad insulation and cockroaches may be all they can afford. This leads to serious health concerns like asthma as well as mental and emotional stress. These sorts of tradeoffs become inevitable because families have much higher expenses now – relative to their income – than they did nearly two decades ago.
Sources: Pew’s Analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata
Wage growth has been sluggish — at best — for folks at the bottom.
EPI Analysis of Current Population Survey Outgoing Rotation Group Microdata
Without a boost in pay, families can’t save much money. A NeighborWorks America survey found that despite the improving economy, 34 percent of Americans said that they don’t have any emergency savings. That is up from 29 percent – just one year before.
Source: Neighborworks America, Consumer Finance Survey
It’s not just low-income renters who are at risk. Increasingly, rental costs are posing a serious burden for middle class households as well.
SOURCE: Harvard Joint Center for Housing Studies, America’s Rental Housing, December 2015
Why is this happening?
As rent continues to rise, renters’ wages have remained flat. Median rent in the U.S. climbed from $869 per month in 2001 to $934 in 2014 – while incomes, adjusted for inflation, have barely budged from a post-recession low of $31,600 in 2011 to $34,000 in 2014.
Source: Enterprise and the Joint Center for Housing Studies, Projecting Trends in Severely Cost-Burdened Renters, September 2015
What can we do?
The number of struggling renters in the U.S. has already increased by 30 percent over the past decade, and without meaningful public policy changes, we expect that number to steadily increase in the years to come by a projected 25 percent.
We can prevent this from happening.
Commonsense policy changes can help improve the overall financial stability of households across the country and alleviate the burden of soaring rental costs.
For example, no state provides a minimum wage that’s sufficient for a full-time, minimum-wage earner to afford a one-bedroom apartment. By establishing minimum wages at the federal, state, and local level that reflect a community’s cost of living we can begin to reverse this trend.
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