Welcome to CASA’s new Advocacy Blog! We’ll use this space to talk about housing issues in the news that matter to the people we serve. Today’s topic: Housing and the Minimum Wage.
Minimum wage and housing access: Currently, 41% of renters in Wake County are cost burdened, meaning they spend more than 30% of their income on rent. When rents are unaffordable, families are forced to choose between housing and other basic needs such as healthcare, transportation, childcare and education. As housing costs rise, the minimum wage remains stagnant, resulting in more people who are housing cost burdened.
The problem: Minimum wage earners cannot afford housing. A minimum wage earner cannot afford a modest apartment anywhere in the United States. A home is considered “affordable” if the renter or homeowner is paying no more than a third of his or her income on housing costs. The wage needed to afford an average apartment varies by state, county and municipality. Someone earning the minimum wage of $7.25 could only afford $377 per month for rent, a nearly impossible feat anywhere in North Carolina.
In Wake County, an individual would need to earn $17.17 an hour, working full time, to afford a modest one-bedroom apartment for $893, the 2018 Fair Market Rent (FMR) established by HUD. In more urban areas accessible to transportation and other amenities, the problem is even worse: the average rent for a one-bedroom in Raleigh is $1,124.
One Solution: Increase the minimum wage. Many municipalities, counties, and states have taken action to increase their minimum wage. (The District of Columbia has the highest minimum wage of $13.25.) On February 12, 2019, North Carolina State Representatives Pricey Harrison and Susan Fisher introduced House Bill 46, Economic Security Act of 2019, to increase the state minimum wage in phases to $15.00 over the next five years. The bill proposes the minimum wage increase to $8.00 per hour effective September 2, 2019, followed by increases each year until the minimum wage reaches $15.00 on September 2, 2024.
Raising the minimum wage will allow more households to earn a Housing Wage, defined as “the hourly wage a full-time worker must earn to afford a modest rental home while spending no more than 30% of their income on rent and utilities.” Increasing the minimum wage could have a significant impact on low-income households. Increasing the minimum wage and supply of affordable housing are both essential to moving low-income renters from poverty to self-sufficiency.
Impact on CASA: Most CASA tenants and applicants earn minimum wage or have fixed incomes (such as Social Security or Disability Income). While most tenants choose to stay in their CASA apartment for many years, those who may wish to move into the conventional rental market or homeownership are often prevented from doing so due to insufficient income. Simply put, families earning minimum wage can’t afford market rate housing options. CASA has an applicant pool of over 2,800 people. While CASA strives to provide permanent, quality, affordable rental housing, we are unable to match the rapidly growing need for affordable housing. Other avenues to self-sufficiency, such as earning a livable wage, need to be pursued in conjunction with housing development. While it may take years to build more affordable housing, increasing the minimum wage could assist many families and individuals immediately.