Discussion of the president’s minimum wage proposal in the State of the Union Address last week and debates over cuts to support programs like SNAP, coupled with lackluster job growth, have focused attention recently on the struggle that so many low-income families and individuals face trying to make ends meet even when they work long and hard hours. The gap between what low-income working households earn and what they must spend on basic every day needs is startling.
The National Center for Children in Poverty’s Basic Needs Budget Calculator determines the absolute minimum hourly wage and annual income a family with full-time workers would need to earn to afford day-to-day essentials like housing, food, transportation, child care, and health care in cities and counties around the country. This wage far exceeds the minimum wage in many states and the budget calculator allows you to see just how stretched thin working families are.
Oftentimes, the biggest budget item is housing. Since housing is not a discretionary budget item, many households find themselves spending unaffordable amounts of their income on their housing costs. As Lisa Sturtevant mentioned in her January blog post, in 2012, one in four low- and moderate-income renters spent at least half of their earnings on their rent and utilities. This statistic comes from the annual Housing Landscape report which evaluates housing affordability among low-income working households and set to be released later this month.
The situation is even worse for workers who are underemployed or unemployed. My analysis for the Housing Landscape report found that the number of underemployed and unemployed low- and moderate-income households actually grew from over 21 million at the end of the Great Recession in 2009, to 23 million in 2012. One way to relieve some of the pressure on the budgets of low- and moderate-income households is to ensure they have access to decent and affordable housing.
While higher wages will make it easier for low-income households to afford their housing, in this weak recovery we cannot rely on wages to steadily increase. We must focus on ways to contain housing costs through various affordable housing strategies. The Center for Housing Policy’s HousingPolicy.org website offers a road map of the steps communities should take as they consider how to build an affordable housing strategy.