$15.92 per hour.
That is how much a Wisconsin household must earn in Wisconsin to afford a 2-bedroom apartment, according to the National Low Income Housing Coalition’s (NLIHC) annual Out of Reach report for 2016.
Each year the federal Housing and Urban Development calculates the fair market rent for housing based on a number of factors including economic conditions and housing demand. The calculations are used to determine eligibility for housing subsidies. This year the statewide fair market rent for a 2-bedroom apartment was pegged at $848, placing Wisconsin 29th highest among all 50 states.
The NLIHC’s report then translates those rates to determine the wages needed to afford housing and utilities, without paying more than 30% of income for housing. According to the Coalition, there is no state in the country where a person earning the prevailing minimum wage and working full-time can afford a one-bedroom apartment. In Wisconsin a minimum wage earner meeting the 30% standard could afford just $377 in rent.
Renters make up about 32% of all wage earners, or more than 740,000, in the state and have an average hourly wage of $12.07. The largest number of renting households is in Milwaukee County, with more than 243,000.
The Fair Market rents in Wisconsin range from $658 per month to $1,027.
NLIHC points out that the affordable housing problems are really two-fold, stagnant or inadequate wages and the rising rents and availability of affordable housing.
“The declining inflation-adjusted value of the federal minimum wage contributes to wage inequality and the housing affordability challenges faced by low wage workers,” according to the NILHC. Even though 22 local jurisdictions have minimum wages above prevailing state federal norms, “(They} all fall short of the one-bedroom and two-bedroom Housing Wage.” Two separate pieces of legislation before Congress aimed at increasing the minimum wage would still fall short of Wisconsin’s Housing Wage by almost $2.00 per hour.
The demand for rental housing is also at its highest level since the 1960s. In the last 10 years the U.S. has added 9 million renter households while adding just 8.2 million rentals units. The Coalition notes that “vacancy rates are at their lowest levels since 1985 and rents have risen at an annual rate of 3.5%, the fastest pace in three decades.” Because of high development costs, developers target new rental units to the upper end of the rental market where rents are higher. The NLIHC report notes that nearly three-quarters of the rental housing is occupied by households in the bottom three-fifths of the U.S. income distribution.