Should a man with a full-time job and a child be able to afford a modest 2-bedroom apartment in Pittsburgh? That was one of many questions I asked myself as I read Out of Reach, the annual report released by the National Low Income Housing Coalition (NLIHC) last week. Well, readers, should he?

I’ll come back to that.

Out of Reach (OOR) is considered a national gold standard for data that describes that gap between rental housing costs and wages. It begins with an assessment of national housing trends before drilling down to every state, county, metropolitan area and zip code. Wherever you choose to look, the news is not good. If you don’t identify with terms such as “renter,” “low income” or “wages,” you may want to stick around anyway.

While publications such as the Guardian and Washington Post reported on the findings in cities around the country, I found very little local reporting on what this means for the Pittsburgh region. So, Downstream will lay it out for you. For free. (Ahem.)

There’s one overarching theme in the report that we ought to keep in mind. Since the 2007 recession, rental costs have risen about 6% while wages have only risen 1%, adjusted for inflation. Put another way, “rent eats first,” leaving renters with 5% less income for transportation, groceries and everything else than they had a decade ago.

The housing crisis is becoming equally serious for working people and is reaching higher and higher up the income ladder.

The widely accepted calculus for housing affordability is this: a household’s rent or mortgage plus utilities equals 30% or less of monthly household income. If you’re new to this, we’ll do some quick math; if you already get it, skip ahead. If your annual household income is $50,000 (about $24/hour for one wage earner) and your housing costs exceed $1,250/month, then you have a “housing cost burden.” The affordability threshold for an annual income of $25,000 is $625/month; for an income of $100,000 it’s $2,500/month.

From OOR, Pennsylvania is the 20th most expensive state to live in. The Pittsburgh Metropolitan Statistical Area (MSA) is composed of the City of Pittsburgh and the seven surrounding counties, and fares slightly better than statewide averages.  Here is the key data at a glance for the Pittsburgh MSA:

Pittsburgh Metropolitan Statistical Area

Average Fair Market Rent (FMR) for a 2-bedroom apartment:

 $822

 

Average renter wage:

$14.65

approximately $30,400 annually for F/T workers

 

Wage needed to afford FMR for a 2-bedroom apartment:

 $15.81

 

State Minimum Wage:

 $7.25

Annual income needed to afford an apartment:

[Hours needed to work per week at Average Renter Wage in brackets]

  1-BR: $26,280 [35]  

2-BR: $32,880 [44]

3-BR: $41,120 [55]

4-BR: $45,320 [60]

 

Work hours/week at
minimum wage to afford FMR:

1-BR:  70

2-BR:  87

3-BR: 109

4-BR: 120

If numbers aren’t your thing, here are a couple of scenarios that summarize them. These examples are mine, not the NLIHC’s.

Joe is a phlebotomist with three kids. Earning $15/hour, Joe needs to work 55 hours per week to afford his 3-bedroom apartment.

Also with three kids, Donald and Melania both earn the minimum wage. To afford their 3-bedroom apartment, Donald works 50 hours/wk handling baggage at the airport. Melania works 40 hours/wk as a vet technician and another 19 hours as a greeter at Walmart.

At 280 pages, the 2017 OOR report is a feast for data hounds. For the data-averse set to which I belong, it provides some basic takeaways. The average worker can’t afford the average apartment and will gradually slide out of an average financial situation and into a precarious one. The minimum wage worker attempting to live independently will not survive. The wealthy suburban homeowner is in all likelihood living in subsidized housing.

Wait, what did he just say? Like I said, you might want to stick around.

In Pittsburgh the “average renter” earns twice the minimum wage and still pays more than 30% of those wages on housing.

The national housing crisis has been widely acknowledged, but the response at all levels of government throughout the country has been characterized not by bold national action but by local tinkering. Non-profit organizations, foundations, housing authorities and some banks shoulder most of the burden for creating new affordable housing and maintaining what we already have. The critically important and complex discussions that happen on high levels between housing experts and policy makers can have a mind-bending effect on ordinary people, often leaving them with the impression that this is all about poor people. This doesn’t concern me because I don’t earn minimum wage or because I own a house.

So let’s return to our first question: Should an adult with full-time job and a child be able to afford a modest 2-bedroom apartment in America? If that worker earns minimum wage we don’t need to look beyond Page 1 of the OOR report: “In no state, metropolitan area, or county can a full-time minimum-wage worker afford a modest two-bedroom rental home.”  The data for Pittsburgh tells us that the “average renter” earns twice the minimum wage and still pays more than 30% of those wages on housing.

But I asked should, not can, such a household be able to afford a decent place to live, and there’s no data that answers values-based questions. Much of the dialogue about our national economy is predicated upon one’s willingness to work and is clouded by assumptions that the housing crisis originates from unemployment. For even the most strident free-marketers out there, it must be difficult so explain why a single father with a full-time job and $30,000 in income cannot afford a 2-bedroom apartment.

Housing affordability has always been and will continue to be a serious matter for those don’t work because of inability or unwillingness. But note that I have not even mentioned “extremely low income” people receiving SSI or other federal aid. What the OOR makes clear is that the housing crisis is becoming equally serious for working people and is reaching higher and higher up the income ladder. If its current trajectory stays the same or worsens, those barely staying afloat now may soon be under water.

Pittsburgh emerged from the foreclosure crisis of the late 2000s relatively unscathed compared to most everywhere else, but it’s catching up to us. While the data hounds turn out analyses of their own, I’m most interested in a few broader questions.

How does the national disparity between the growth of housing costs vs. wages compare to Pittsburgh? Does it alone explain the worsening local housing crisis? If not, what are the other factors that are making decent housing further and further out of reach for Pittsburghers?

As for the explainer on wealthy suburbanites living in subsidized housing, it’s true, but limited to neither the wealthy nor suburbanites. It’s called the Mortgage Interest Deduction (MID), and any household that owns a house and itemizes its taxes can claim it.

Because I’ve wandered into another multi-part housing story, I’ll have to get to it next time. For now I’ll simply note that $50 billion of federal housing expenditures each year go to households earning more than $100,000 through the MID deduction.

Also in the next segment, I’ll ask some local experts to break down Pittsburgh’s complicated housing market into smaller pieces that are easier to handle. Let me know if you have any questions for them.

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