Paycheck to Paycheck is an online, interactive database prepared by the Center for Housing Policy – the nonprofit research affiliate of the National Housing Conference (NHC) – that compares wages for selected occupations with the costs of owning and renting a home. The purpose of the database is to examine how working families relying on these earnings fare in housing markets around the country. Paycheck to Paycheck uses a common set of data applied in a consistent way to examine housing affordability. The user can compare one occupation across three metro areas or up to ten occupations in a single metro area. If no occupations are selected, Paycheck to Paycheck analyzes the following default set of occupations: teacher, police officer, licensed practical nurse, retail sales worker, and janitor.
The most recent update to Paycheck to Paycheck features a look five jobs targeted by veterans’ job training programs: long-haul truck drivers, firefighters, electricians, dental assistants and carpenters.
A link to the Paycheck to Paycheck database is available on NHC’s home page at www.nhc.org. To access the database directly, please go to www.nhc.org/paycheck/.
With a few selections from a drop-down menu, Paycheck to Paycheck provides custom charts examining the affordability of homes for workers in your choice of up to ten occupations (from a total of 74 included) in any one of more than 200 metropolitan areas or the U.S. as a whole. (Alternatively, Paycheck to Paycheck can show the affordability of homes in up to three metropolitan areas for any one occupation that you select.)
Paycheck to Paycheck results include two charts: The homeownership chart shows the income needed to qualify for the median priced home in the metropolitan area and compares that income to what workers in the selected occupations actually earn. The rental chart shows the amount a worker needs to earn to afford a one- or two-bedroom rental unit—that is, so that rent does not exceed the generally accepted standard of 30 percent of income. This wage is then compared to the median wage actually earned by workers in the metro area(s).
The U.S. government uses census data to define official metropolitan areas. Go to http://www.census.gov/population/www/metro areas/metrodef.html for a list of metropolitan area definitions.
The Center strives to include as many metropolitan areas as possible, but limits on data availability and size of the database mean we can’t cover all geographic areas in the country. However, Paycheck to Paycheck does provide a template that can be used for similar analyses in metropolitan areas, counties, cities, or other communities of any size.
See our Step-by-Step Instructions on how to produce a Paycheck to Paycheck analysis for your community.
No, the data sources we use to prepare Paycheck to Paycheck report home price, rent, and salary data at the metropolitan level only. Because of limits on data availability and size of the database, we cannot provide data on smaller geographic areas. However, Paycheck to Paycheck does provide a template that can be used for similar analyses in communities of any size.
See our Step-by-Step Instructions on how to produce a Paycheck to Paycheck analysis for your community.
Paycheck to Paycheck is produced by the Center for Housing Policy, which specializes in developing solutions through research. The Center is the research affiliate of the National Housing Conference (NHC). In partnership with NHC and its members, the Center works to broaden understanding of the nation’s housing challenges and to examine the impact of policies and programs developed to address these needs.
Combining research and practical, real-world expertise, the Center helps to develop effective policy solutions at the national, state and local levels that increase the availability of affordable homes.
The 2012 edition of Paycheck to Paycheck was produced with the support of the John D. and Catherine T. MacArthur Foundation; however any opinions or conclusions expressed are those of the authors alone.
At present, the Center is updating the database biannually. In the past we have updated the database only once each year.
In addition to providing more recent wage and housing price data, the updated version added two additional jobs – mail carrier and retail assistant manager – and new ranking charts, including the share of occupations that can afford to rent or buy in each metro area.
The sheer volume of occupations and metropolitan areas included in the Paycheck to Paycheck online interactive database makes it impossible to produce a hardcopy report summarizing all the data. However, the Center does publish a report summarizing key findings. This edition of Paycheck to Paycheck features five jobs targeted by veterans’ job training programs: long-haul truck drivers, firefighters, electiricans, dental assistants and carpenters.
Where there are gaps between wages earned and what is actually required to purchase or affordably rent a home, working families must make adjustments. For example, they can devote a disproportionate share of their income to housing while cutting back on other necessities. Indeed, a separate study by the Center for Housing Policy, Something’s Gotta Give showed that compared to working families in affordable housing, those spending half or more of their household budget on housing spend less on healthcare and insurance, transportation and other necessities. As documented in the Center’s publications A Heavy Load and Beltway Burden, workers faced with unaffordable housing may also “drive til they qualify” and end up spending as much or more on the combined burden of housing and transportation as if they lived in higher priced housing closer to work.
Instead of or in addition to cutting expenditures, families can obtain additional income either through increasing the number of hours they work or adding a second (or even a third) income earner. Or they can crowd in with other working individuals or families to pool their resources to obtain housing they can afford—at a considerable cost to their quality of life.
In areas where wages are not sufficient to afford to affordably rent or own a home, states and localities can adopt policies to increase the availability of affordable housing. A wide array of high-impact solutions that meet the needs and realities of both slow-growth and high-growth markets can be found on HousingPolicy.org.
In markets where low- and moderate-income workers can afford the mortgage for a median-priced home, workers may still face barriers to homeownership. Amassing a downpayment, getting access to credit, and affording the bills for utilities, maintenance, and repairs can be substantial additional burdens, especially for working families. A separate Center for Housing Policy publication, Stretched Thin, looks at the impact of expenses, such as major repairs and utility bills, that families face on top of their mortgage payment.
These specific occupations were selected for several reasons. First, demand for “traditional” occupations is expected to increase. The Department of Labor’s list of occupations with the largest expected growth through the years 2006 to 2016 includes retail salespersons (587,000), food preparation workers (452,000), customer service representatives (545,000), and home health aides (384,000). These and other occupations included on the Paycheck to Paycheck list—for example, truck drivers and elementary school teachers—are among those with large numbers of practitioners as well as with substantial projected growth in the labor force. In short, these traditional jobs with traditional wages are the types of occupations that will continue to be the primary source of income for many working families.
Second, the recent recession has pushed many workers to consider taking any job that is available rather than those for which they originally trained. Whether these jobs pay enough to afford housing is an important question for policymakers, community leaders, and jobseekers alike.
In addition, stock clerks, construction laborers, and landscapers represent occupations that are attracting recent graduates from welfare and other first-time entrants into the workforce, including recent immigrants. Their relatively lower qualifications make these occupations suitable for workers moving up the economic ladder. They also represent occupations important to the continued expansion of local economic growth.
Finally, some occupations on the list, such as police officers, librarians and firefighters, have been selected for the vital role they play in our communities. The same can be said for child care workers, social workers, and other job categories we have included.
The structure of Paycheck to Paycheck is much like that of the proverbial three-legged stool, with the legs representing home prices, rents, and wages, respectively. On the homeownership side, we gather data on the median priced home in each of the metropolitan areas from respected data sources. The National Association of Homebuilders (NAHB) obtains data from a third party, a private company which gathers home sales information from title companies and public records. We use the NAHB median home price figure, which includes sales of both new and existing homes, if available; otherwise, we substitute the median price data from the National Association of Realtors (NAR), which include only existing homes.
On the rental side, we use the Fair Market Rents (FMR) established by the U.S. Department of Housing and Urban Development. Generally the FMRs for a one-bedroom and a two-bedroom apartment are set at the 40th percentile of prevailing rents, based on a survey of recently rented units. For a small number of metropolitan areas, the FMR is set at the 50th percentile, or median rent.
Information on prevailing wages for the selected occupations comes from a proprietary database maintained by Kenexa's Salary.com. The wages are median annual salaries for an intermediate-level worker, typically someone with two to four years of experience.
For homeownership, we calculate the income required to qualify for a mortgage on the median priced home by assuming a 90 percent loan-to-value ratio (that is, a 10 percent downpayment plus the use of private mortgage insurance). Monthly payments are calculated to include loan principal and interest as well as estimated taxes and insurance. The interest rate in the calculation is 4.51 percent, the effective interest rate for February 2012 according to the Federal Housing Finance Agency’s Monthly Interest Rate Survey. Private mortgage insurance, taxes, and insurance are based on national estimates. The monthly mortgage payments are annualized and assumed to comprise no more than 28 percent of annual income in accordance with conventional underwriting guidelines. The salaries for each of the 72 occupations are then compared with this “qualifying income” for each metropolitan area.
For rental housing, we calculate the annual income that must be earned so that gross rent does not exceed 30 percent of income, a commonly accepted standard of affordability. Actual median wages for the selected occupations are then compared to the income needed.
For more details on both homeownership and rental calculations go to Calculating Homeownership Affordability and Calculating Rental Affordability.
Job loss, household composition changes, and other factors mean that many households find themselves relying on just one income to get by. In recent years, single wage-earner households account for just under 40% of all U.S. households. The median number of workers per household is typically around 1.5.
For many lower wage jobs, even two earners would not have enough income to afford housing in moderate or high-cost markets.