What's a Fair Relationship Between Salary and Rent?

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Can a minimum-wage worker in your state afford to rent an apartment? Does the answer to that question say anything about us as a people? Should you care? (See also: A Decent Standard of Living)

Pretty quickly after I started writing for Wise Bread, I discovered that writing about a "decent standard of living" is really hard. There is no luxury so frivolous that there aren’t people out there who consider it a necessity, and there is no necessity so essential that there aren’t people ready to point out that a billion poor people around the world manage to get by without it.

With that in mind, I found this map (from the National Low Income Housing Coalition‘s report Out of Reach 2012) pretty interesting:

It shows the number of hours of minimum-wage work it takes to pay the monthly rent on a two-bedroom apartment at fair market rent.

Their statement here is that there’s nowhere in the country where a minimum wage worker can afford to live. If you go by the rule of thumb that it’s reasonable to spend about 30% of your income on rent, and you figure that there are 21 working days in an average month, then you’d calculate that it’s reasonable to spend 50 hours a month earning your rent. But there's no state where that's possible. The cheapest states (West Virginia and Arkansas) take 63 hours of minimum wage work to pay for a two-bedroom apartment.

To my mind, the whole notion is a bit odd. For how long has it been reasonable — not just reasonable, but presumptively true — that every worker needs his or her own two-bedroom apartment?

Let's try an alternative perspective. Let's instead suppose it’s reasonable that poor folks shouldn’t expect to be able to make ends meet without a roommate. In that case, it would be reasonable for rent to run as high as 100 hours a month, with two workers sharing the cost.

Accept that as a standard — poor folks have to have roommates — and the implication of the map seems much more reasonable. It’s still too expensive to live a few places — the Northeast corridor, California, and Florida — but everywhere else 100 hours of minimum-wage work will rent you an apartment.

Of course, having a roommate is only one way to afford decent housing. An even cheaper option might be to rent a room in someone else's house. Or to rent a one-bedroom or an efficiency apartment.

In fact, there's a lot of complexity, once you dig a little deeper. The whole idea of "fair market rent" buries a lot of variation in the costs of individual units. If you can find a cheaper apartment that meets your needs — and you only need to find one — it doesn't really matter what other units go for. (The Department of Housing and Urban Development calculates the fair market rent numbers used. It might be worth mentioning that my wife and I — and I presume, most of our neighbors in our apartment complex — are paying almost 25% under the fair market rent for our area.)

Underlying all this are a lot of implications about social organization. If one minimum-wage worker can afford a two-bedroom apartment, then one worker with a spouse can afford to start a family, and the non-working spouse can stay home and take care of the child. At the lower end of the income spectrum, that's been tough to arrange for many years now — in large part because it isn't "decent" to live at the standard of living that a single wage-earner can afford.

But if you don't get too hung up on what's decent, and instead go for what works for you, a whole lot of options open up. As I said, you only need to find one apartment that's affordable. You can eat a healthy diet that's frugal. There are a million ways to spend less on transportation, clothing, fuel, education, health care, and all the other necessities of life, and produce a standard of living that would have been considered superb by almost everyone who has ever lived — as long as you don't get too hung up on what other people consider necessary.

I'm glad people are talking about issues of fairness related to the cost of living and how it relates to the minimum wage, and I rather like this group's contribution to the discussion. But I'm also glad I'm living large on a small budget.