Gap Between Wages and Housing Affordability Grows in Southeastern Michigan

The eviction moratorium in place by the Centers for Disease Control ended July 30, and while programs funded through COVID Emergency Rental Assistance program are in place there is a deeper issue to be examined: affordable housing and a national living wage. According to data from the National Low Income Housing Coalition even if there weren’t a pandemic, the ability to obtain affordable housing and the ability to earn an hourly rate to afford housing continues to grow farther apart. In Michigan, according to the report, the average worker needs to earn $18.55 to afford a two-bedroom rental home at fair market value.

The average rule of thumb is that those who rent should spend about 30 percent of their income on their rental unit. In 2019, according to the American Community Survey, the average resident living in Wayne and Monroe counties was already living above that. According to the Census Bureau, the average percentage of gross income spent on rent in Wayne County was 32 percent and in Monroe County it was 30.7 percent. Macomb, St. Clair and Washtenaw counties were all at the 30 percent threshold (29.3%, 29.7% and 29.8%, respectively). Oakland County had the lowest percentage of gross median income spent on rent at 26.8 percent.

Further expanding on the gap between wages and access to housing, the National Low Income Housing Coalition released additional data drilling deeper into the hourly rate an individual would need to make in each county to afford a two-bedroom rental home (at fair market value) and what the current estimated hourly wage rate is for rent.

Washtenaw County has the highest housing wage rate in Southeastern Michigan at $24.31; this is the hourly amount an individual would need to make to afford a two-bedroom rental there. However, the current estimated hourly renter wage in Washtenaw County is $16.92; that is a $7.39 wage gap between current wage conditions and what is needed for local affordable housing security.

Livingston County has the largest gap between the average estimated renter wage and the hourly wage needed to secure a two-bedroom home at fair market value; that gap is $8.51. The current hourly renter wage in Livingston County is $12.26 and the amount needed to secure a two-bedroom home is $20.77.

Monroe County has lowest hourly wage needed to secure a two-bedroom home at $17.29 and the current estimated average hourly renter wage is $12.18, meaning there is a $5.11 gap.

The smallest gap between the hourly wage needed to secure a two-bedroom home and the current estimated average hourly renter wage is in Oakland County; that gap is $1.39. In Oakland County the average estimated current hourly renter wage is $18.78 and the hourly wage needed for a two-bedroom rental home is $20.17.

As the data shows, each county in Southeastern Michigan (and throughout the state), has a gap between the wages individuals earn and what it costs to obtain a home on the rental market. This gap means that many need to work more than 40 hours a week, sometimes closer to two full-time jobs.

In order to bridge this gap many changes need to occur; the two glaring ones would be additional affordable housing options added to the market and an increase in the minimum wage. The minimum wage in Michigan is $9.45, and it was not increased to $9.87 in 2021 because the average unemployment rate for 2020 was more than 8.5 percent. However, there have been pushes both nationally and state-wide to increase the minimum wage to $15 an hour—but that has yet to widely come to fruition. In 2019 though Oakland County did adopt a $15 an hour minimum wage for County employees and Oak Park recently did the same for City employees. As businesses continue to try to attract and retain employees we are also seeing increases in the wages they are offering. However, while individual business and local governments implement living wages policies nothing is guaranteed without broader policies.

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