This caught my attention because I was speaking about this with some family and friends the past couple of weeks. One thing about different filling out applications and providing your income, they do not take into consideration the net income vs. the gross income. The net income is what you bring home after taxes and the gross income is what is earned before deductions. Often times for many people it is not enough to live off of. This takes me to the focus of minimum wage, the states that where minimum wage covers the rent and the states that do not.
The federal minimum wage is $7.25 per hour. On average, a person who would like to rent a one-bedroom unit need to make at least $15.50 per hour and $19.25 per hour depending on where you live. Here in Maryland, the minimum wage is $8.00 per hour. Maryland made the list of states where there is a big gap between minimum wage and rental prices. On average the price of a decent one bedroom apartment in Baltimore City is about $700 or more and a two bedroom is $900 or more.
According to a study done by the National Low Income Housing Coalition,
“In Maryland, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,281. In order to afford this level of rent and utilities — without paying more than 30% of income on housing — a household must earn $4,271 monthly or $51,249 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into an hourly Housing Wage of: $24.64.”
Other states that had increasingly large gaps are: Hawaii (they had the biggest), Vermont, New Jersey, Connecticut, California, New Hampshire, Massachusetts, Maine and Rhode Island.
The issue is that the federal baseline has remained unchanged while housing prices has increased!
Click here to view full study. The information about Maryland can be found on page 105.