Minimum Wage Workers: Barely Getting By

“For decades, having a decent, safe place to call home has been a cornerstone of opportunity in America- a place where we can raise our families, connect to our communities, and pursue better opportunities for ourselves and our children.”- HUD Secretary Shaun Donovan

Having a decent, safe place to call home is no longer the given for working people in America. The lack of affordable housing has lead to poor housing conditions, rent burdens on the poor, and overcrowding in the form of doubling-up. Americans can no longer rely on affordable housing and housing assistance programs to get by. It turns out that public housing has not been built in decades! In fact, the public housing stock is dwindling due to demolition and the lack of federal funding. The shortage of affordable housing is negatively impacting the housing stability of America’s lowest-income households.

Americans, working full-time minimum wage jobs, cannot afford rents in the private market. Here is a simple map to really convince you of this crisis. It shows how many hours per week a minimum wage worker in every state would need to work in order to afford the rent and utilities of a market rate, 2-bedroom apartment.

For instance, a person, living in California, would need to work 130 hours per week to afford a 2-bedroom apartment. Yes, you heard me right; 130 hours! That’s 130 hours of flipping mechanically separated meat! Keep in mind, there are 168 hours in a week.

In 17 states across the country, minimum wage workers would have to work more than 88 hours per week. In 19 states, workers would have to work 71 to 88 hours and in 15 states, they would have to work 70 hours or less.

I’m going to go out on a limb here and say that something is wrong. We live in one of the wealthiest countries in the world and yet millions of U.S. citizens are unable to rent a 2-bedroom apartment without outside help. Frankly, it’s embarrassing. The disparity between what wageworkers can afford to pay and what is available for them in the private market is shocking. It is ridiculous how little one can afford living on a minimum wage income.

Excuse me, Shaun Donovan, but how can we “pursue better opportunities for ourselves and our children”, when we cannot even afford an apartment to live in? Not everyone has the privilege of going to college and getting a good education. Minimum wage earners should at least have the privilege of living in a decent apartment to raise their families in.

Let’s not forget that millions of wageworkers work FULL-TIME jobs. According to the Bureau of Labor Statistics, the average wage earner works 34.5 hours per week. And this is even with our terrible economy; millions have seen their hours cut back.

It is discouraging to know that even if you work a full time job, you can still not afford a market rate, two-bedroom apartment. This country should reward those who work full time jobs (even minimum wage jobs) with adequate housing. Every working American should have a decent place to call home.

It is not very surprising to hear that 2.15 million adults and 1.35 million children are prone to experience homelessness in a given year. I wonder how that happened? 

New FHA Rules

You are probably wondering what is new in the housing world? Well, for anyone who is trying to buy a home or wants to buy a home, you should be aware of the new loan requirements! Don’t worry it’s nothing too drastic.

FHA is about to make it more difficult to borrow money to buy a home. On April 1^st, Uncle Sam will begin to crack down his whip on unqualified borrowers. FHA will no longer loan money to borrowers with debts of $1,000 or more. This new rule even pertains to borrowers with perfect credit scores. They also can be denied a loan if they are in debt $1,000 or more.

Before this, borrowers, who were in disputes with creditors over debts, could still be approved for a loan based on their prior credit history. With this new policy in place, lenders will have to justify to FHA why they are granting a loan to a particular person. They will have to prove to FHA that the loan was given to a qualified person based on proper documentation.

FHA does give the borrower a chance to show that they are worthy of a loan. The quote on quote risky borrower has the right to prove that the debt is paid off or in the process of being paid off. The borrower can also explain why the disputed loan is somehow wrong.

The agency is doing this in an effort to reduce its risk. It is all in an effort to improve their depleted reserve fund. Furthermore, FHA plans to charge more for insurance premiums.

I believe these new requirements to homeownership are good for potential homebuyers. It is a way to protect potential homeowners from buying a home that they cannot afford later on. It stops them from getting a loan that they ultimately will not be able to pay back. Denying unqualified borrowers loans will ultimately reduce the risk for FHA. Because of the devastation that the housing burst created for millions of homeowners, FHA must now be more cautious with whom they pass out loans to.

However, this new policy could slow down the housing market recovery even more. If fewer and fewer borrowers can secure FHA mortgages, then more and more people will not invest in the housing market. These loans are one of the few options available to homebuyers needing low down payment mortgages. It could potentially keep a lot of people out of the housing market.

Overall, I think this is positive news. Potential homeowners might not like that there are more barriers to entry, but it will help everyone in the long run. It could affect the housing market in the short run, but it is better if FHA grants loans to qualified homebuyers. It will hopefully prevent another housing bubble to form.

It is a little disheartening that FHA just made this new policy. You think this requirement would have been the status quo from the very beginning.