You have probably heard the financial advice that you shouldn’t spend more than a third of your wage on rent. Some rental offices even look at the amount you receive as a salary. They want to ensure you’re not overextending yourself and can afford the rent. When they are satisfied, they will let you sign the lease. This financial approach is a smart one.
However, this financial idea is more difficult to achieve with what is going on in the economy than it sounds. The reason is that while rents keep increasing, salaries are not growing at the same rate. An example is a report made in 2023 by the National Low Income Housing Coalition (NLIHC). They reported that you need to earn $28.58 per hour to afford a basic two-bedroom rental home. The report says you need to earn $23.67 per hour for a basic one-bedroom rental home.
However, because the location of a house matters, there are certain exceptions. The cost of renting a home varies greatly depending on where you live. In places like California, you would need more than $28.58 per hour. You would need to make nearly $42.25 an hour to be able to rent a two-bedroom apartment, based on data from the NLIHC in 2023. On the other hand, in Arkansas, you would need to earn just $16.27 an hour to afford the same two-bedroom apartment.
This is where things start to get complicated. The federal government requires that everyone gets paid at least $7.25 per hour.
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Apart from the fact that salaries are lower than the minimum amount required for rent, there is also a different problem. There aren’t enough cheap apartments available for everyone who needs them. According to the HHIC, for every 100 renters with meager incomes, there are only 34 affordable places to rent.
A household must earn a certain hourly wage to afford the “fair market rent” (FMR) for a two-bedroom apartment without spending more than 30% of their income. This means the amount they earn per hour should be up to a certain amount. It should be high enough that their monthly rent does not take up more than 30% of their total income. The following numbers assume each household works 40 hours a week and 52 weeks a year.
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The Wage You Need To Earn Hourly Based on the States in the US
- California – $42.25
- Hawaii – $41.83
- Massachusetts – $41.64
- New York – $40.08
- Washington – $36.33
- Wyoming – $36.33
- District of Columbia – $35.35
- New Jersey – $33.5
- Colorado – $32.13
- Connecticut – $31.93
- Maryland – $31.08
- Florida – $30.59
- Arizona – $29.93
- New Hampshire – $29.86
- Oregon – $29.72
- Nevada – $27.99
- Rhode Island – $27.78
- Virginia – $26.84
- Alaska – $26.32
- Delaware – $26.09
- Vermont – $25.54
- Texas – $25.06
- Utah – $24.93
- Georgia – $24.75
- Maine – $24.73
- Illinois – $24.59
- Minnesota – $24.11
- Pennsylvania – $23.61
- Michigan – $21.65
- North Carolina – $21.54
- Idaho – $21.53
- South Carolina – $21.38
- Tennessee – $20.76
- Wisconsin – $20.32
- New Mexico – $19.88
- Louisiana – $19.39
- Montana – $19.28
- Ohio – $19.09
- Indiana – $19
- Nebraska – $18.91
- Kansas – $18.71
- Missouri – $18.54
- Alabama – $18.13
- Iowa – $18.13
- Oklahoma – $18.00
- Kentucky – $17.90
- North Dakota – $17.79
- South Dakota – $17.49
- Mississippi – $17.21
- West Virginia – $16.64
- Arkansas – $16.27
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