Paying the rent a harder challenge for low-wage workers

A combination of stagnant wages and rising rents means a single parent working for minimum wage in Indiana must hold down nearly two full-time jobs to afford a modest, two-bedroom apartment, according to a national report.

Housing prices and availability range widely across the state, but the report finds people with the fewest resources are spending disproportionate amounts of take-home pay on rent in both wealthy and poor communities.

The findings come from a report by the National Low Income Housing Coalition's released this May. They're backed up by a new study by Harvard University’s Joint Center for Housing Studies.

Affordable housing advocates say the reports show why it’s so hard for people with limited means to get ahead.

“Housing is the platform on which the ladder of economic opportunity stands,” said Andy Fraizer, head of Indiana Association for Community Economic Development. “We need to make sure the platform is in place to make sure people can climb the ladder.”

The housing coalition’s report offers a look at the effects of rising rents across the United States. Judging specific communities, the authors determined a “housing wage” of what it takes to afford an apartment at what the federal government defines as fair-market rent without paying more than 30 percent of a worker's income.

An Indiana renter seeking a two-bedroom apartment needs to make at least $29,764 a year to fit that definition. But numbers vary within the state.

The most expensive Indiana city for renters is the small, affluent community of Columbus, home of the global headquarters of engine-maker Cummins Inc. The housing wage for a two-bedroom apartment is $16.21 per hour.

In less affluent Anderson, the same renter only has to make $13.40 an hour.

The average housing wage in rural communities is $12.77.

The report finds nearly half of U.S. renters spend more than 35 percent of their income on housing, said Elina Bravve, senior research analyst with the coalition.

That’s worrisome, in itself, say housing experts who look to a rule of thumb that a worker should not spend more than 30 percent of their income on housing.

But low-wage workers stretch that guidance, often putting 50 percent or more of their income toward rent, the studies found.

“That means they may be cutting back on food, healthcare and other essentials,” said Bravve. “If you’re a single mother paying that much in rent, you’re struggling.”

The June report by the Center for Housing Studies reflected similar concerns. In many communities across Indiana, it found, more than 40 percent of renters put more than 30 percent of their income toward housing.

Renters in Indiana aren't alone. In no state can the typical minimum-wage, full-time worker afford even a one-bedroom apartment without spending more than 30 percent of his or her income.

The most expensive states for renters are California, New York and Hawaii, where one must make at least $25 an hour for an affordable apartment.

In Indiana, a worker needs closer to $14 an hour to meet that standard.

But that’s still twice the state’s minimum wage of $7.25.

And, as Fraizer points out, Indiana has a lot of renters — about 30 percent of the population — and a lot of minimum-wage workers.

Indiana ranks among the top 10 states in its proportion of minimum-wage workers, according to a 2013 Bureau of Labor Statistics report.

Housing advocates say the problem is tied in part to availability of rental housing at a time when fewer Americans can afford to buy a home.

In Gary, one of the poorest cities in the state, the housing wage is just over $15 per hour.

There are an estimated 8,000 vacant housing units. But most are blighted beyond repair; the city is spending more than $6 million in federal money to knock them down.

Meanwhile, in Hamilton County, the state’s richest county, about 3,500 new housing units are built each year, but they're considered luxury apartments. A full-time worker would have to make a $15.23 an hour to afford a two-bedroom apartment.

That’s beyond the reach of workers in the service sector and retail jobs that have followed the area's explosive growth, said Nate Lichti, head of the Hamilton County Area Neighborhood Development Inc.

When the housing wage report came out, Litchti said fixing the problem is simple — increase wages or lower housing costs.

But the chances of a broad solution seem slim.

A measure to raise the state's minimum wage to $10 an hour died in the General Assembly this year. The Legislature also rejected proposals to boost funding for construction of more affordable housing.