Rental Housing Unaffordable for Many Michigan Hourly Workers

By PATRICK LUCE and BETH DALBEY

While the economy has improved and the unemployment rate has dropped in most states across the country, many people are still struggling to pay the bills, especially when it comes to rental housing, a National Low Income Housing Coalition study shows.

The problem is that while jobs have increased, wages have not, forcing roughly 21 million working Americans to scrape by on a near minimum wage salary, according to the Pew Research Center. At the same time, rents keep rising because the demand for rental units has increased across the country as the homeownership rate has dropped to its lowest point since 1989.

The result is that people are being priced out of the rental market. In Michigan, that puts rental housing out of reach of a minimum-wage worker. according to The Atlantic’s City Lab.

The minimum wage in Michigan is $8.15 per hour. Step increases planned over the next few years will take it to $9.25 by Jan. 1, 2018, but that’s still well below what rental housing costs in Michigan.

Most economists advise renters to pay no more than 30 percent of their annual income on housing. Anything more is unaffordable. Nationally, the average worker needs to make $19.35 an hour to afford the rent on an average two-bedroom home, about $4 an hour more than the average renter’s income of $15.16.

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In Michigan, the Fair Market Rent (FMR) for a two-bedroom apartment is $788. In order to afford this level of rent and utilities — without paying more than 30 percent of income on housing — a household must earn $2,627 monthly or $31,524 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into an hourly housing wage of $15.16.

That’s troubling for the approximately 96,000 Michigan residents working at or below minimum wage, according to a 2013 Bureau of Labor Statistics report. It showed a median hourly wage of $12.90 among the state’s 2,531,000 hourly wage workers.

Finding affordable renting housing is worse for residents of Washtenaw County, where workers would need to earn $18.54 per hour. Other counties above the $15.16 housing wage are Livingston ($16.60), Keweenaw ($16.33), and Macomb and Lapeer counties ($16.27). Find more Michigan information here.

The problem continues to grow as potential homeowners are increasingly priced out of the market, instead turning to rentals, further limiting the rental stock and driving prices higher.

“The tightening rental market has the most significant impact on low income renters,” the report concludes. “Many higher and middle income renters occupy units that are affordable to lower income groups, reducing the supply of affordable and available decent apartments for the lowest income renters. As a result, for every 100 extremely low income (ELI) renter households, there were just 31 affordable and available units.”