Gap grows between income and rental fees
“Out of Reach 2012” is a report released by the National Low Income Housing Coalition that shows minimum wage workers in Rhode Island must work 96 hours a week in order to soundly afford a two-bedroom apartment at fair market value.
In Rhode Island, minimum wage workers earn $7.40 hourly. The fair market value of a two-bedroom apartment is $924 a month. In order for a household to pay 30 percent of their yearly income or less for housing, they must earn at least $36,974 a year. Given the hourly minimum wage, workers must either work 96 hours a week for 52 weeks a year, or have 2.4 minimum wage earners per household.
But Rhode Island, which has the 17th highest two-bedroom housing wage, is not alone. Nowhere in the country can a minimum wage worker afford a two-bedroom apartment at fair market value.
“It’s disappointing, but it’s not surprising,” says Brenda Clement, executive director of the Housing Action Coalition of Rhode Island, the local chapter of the organization that released the report. “It’s clear we’ve got a lot of work to do.”
The problem also reaches beyond minimum wage workers. According to the report, the estimated average hourly wage for a renter is $11.64. Still, in order to allocate 30 percent of their yearly income to rent, the renter must work 61 hours a week, 52 weeks a year. Or, the household must have 1.5 workers earning the same, average wage.
Chris Hannifan, executive director of the Housing Network of Rhode Island, said even if people were willing to work more hours a week, it is unlikely their employer would schedule them to work so often. She thinks it’s unfair that people have to choose between paying their rent or buying food, and said the report points out a greater need for affordable housing.
“We need increased state investment for affordable housing,” echoed Clement. “We need a dedicated funding stream.”
Rep. Joseph McNamara (D-Dist. 19 Cranston, Warwick) recognizes an increased need for affordable housing.
“[Homelessness] is not something remote anymore,” he said.
At the beginning of April, House of Hope will open its newest affordable housing on Fair Street in Warwick. The home is the newly renovated George Galen Wheeler House, built in 1875.
McNamara is a proponent of affordable home creation, and of the House of Hope’s efforts. But not everyone in the General Assembly is in favor of allocating more money to affordable housing.
“Aside from throwing more money at the problem, which I’m not in favor of, I would like to see a place homeless people could feel safe in,” said Rep. Joseph Trillo (R-Dist. 24, Warwick). “But shelters are expensive.”
Hannifan fears the effects of shrinking federal and state resources.
When people don’t have affordable housing available, Hannifan said they spend time with a family member or friend, a practice called “doubling.”
“But I mean, for all purposes, they are homeless,” she said.
Clement said if trends continue in the direction they’re going, more and more people will be using homeless shelters. In turn, the effects would be detrimental to the state’s economy as a whole.
The problem at the heart of the issue is a hike in rent, a plateau of the minimum wage and a steady increase in unemployment. Rhode Island’s minimum wage has been set at $7.40 since 2007, and rent prices have fluctuated since then. The current unemployment rate is 11 percent.
“I don’t think the minimum wage has been increased, and if it has, it’s very small,” said Hannifan. “Plus housing is at a premium, and homeowners have been able to increase their rentals.”
Hannifan cannot say how long it has been since there wasn’t a gap between minimum wage and rental costs.
“There’s been a gap there for a while,” she said.
Clement said the state was beginning to get a hold on producing affordable housing in the early 2000s, when the real estate bubble burst.
“It just exacerbated and worsened the problem,” she said.
A voter approved federal bond in 2006 has been keeping the affordable housing market on its feet ever since, said Clement. “Political will” is what she now thinks is crucial in solving the crisis.
Clement said there are ways to fix the problem without monetary aid, and believes two pieces of legislation are critical in sorting out the affordable housing and foreclosure dilemmas.
The “Just Cause” bill would prevent tenants from being evicted from their home if the property they are in is foreclosed on.
Hannifan said an increase in foreclosed homes does not mean more units are available. If a house is foreclosed on, she explained, the renter and the homeowner both go on the rental market.
The other bill Clement said is crucial is a mediation bill that would require lenders to meet with homeowners and intervene before foreclosures happen.
If the problems are not resolved, Clement worries about the health and well-being of families that will be forced to inhabit homeless shelters.
“They need healthy places to start the day and to lay their heads down at night,” she said.
Clement believes affordable housing and ensuring its accessibility is as important as the roads we drive on.
“I consider this an important form of the state’s infrastructure,” she said.
The full “Out of Reach” report is available at nlihc.org/oor.