by Dan Threet, NLIHC research analyst

NLIHC published this year’s Out of Reach: The High Cost of Housing report in mid-July. Out of Reach estimates a Housing Wage, the hourly wage a full-time worker must earn to afford modest rental housing, nationally and for every state, county, and metro area in the country. This year’s report finds that, on average, a full-time worker needs to earn $23.96 an hour to afford a two-bedroom apartment and $19.56 an hour to afford a one-bedroom apartment. In nearly every community, low-wage workers earn far less.

For over 30 years, Out of Reach has highlighted how housing is out of reach for low-wage workers and other low-income households (Figure 1). The sudden economic downturn spurred by the COVID pandemic has made millions of low-income households even worse off, and renters who managed to keep their jobs still face significant struggles, as well. Regardless of the state of the economy, real long-term solutions for housing affordability require deep, sustained commitment to affordable housing programs, to help close the gap between renter wages and housing costs.

Figure 1: The 2020 national one- and two-bedroom Fair Market Rents, next to the rents that low-income households can afford.

While the Housing Wage is a simple, accessible tool for measuring the gulf between the income needed to afford a rental home and what low-wage renters earn, we routinely receive several questions about the report. Here we provide detailed responses to some of those questions to help readers better understand the report and the need for long-term solutions.

WHAT DOES NLIHC MEAN BY MODEST RENTAL HOUSING? NLIHC measures the cost of rental housing using HUD’s Fair Market Rent (FMR), which represents what a family moving today could expect to spend on rent and utilities for a typical lower-cost apartment in their area. The FMR is generally set at the 40th percentile of gross rents of recent movers, meaning 40% of available apartments are priced at or below the FMR. Apartments that rent for the FMR are adequate, but they are not luxury housing.

IF SOMEONE WITH A LOW INCOME CANNOT AFFORD THE FAIR MARKET RENT, SHOULDN’T THEY JUST FIND A CHEAPER APARTMENT? While there are less expensive apartments, the cheapest rents are still not affordable for the lowest-income workers. In 2018, low-wage workers at the 20th percentile of wages earned $12.12 per hour (EPI, 2020), which would allow them to afford a monthly rent of $630 if they worked full-time. According to the American Community Survey (ACS), however, the 20th percentile of gross rents was $688 per month. Among renters who had moved within the last 12 months (better reflecting the prevailing rate on the rental market), the 20th percentile of gross rents was $750 per month.

The least expensive rental homes are also more likely to have physical deficiencies. The American Housing Survey indicates that 9.2% of occupied rental homes with monthly housing costs of less than $700 are physically inadequate, compared to 6.7% of rental homes with rents above $700. When households are forced to rent at the bottom of the market, they often have to endure problems like mold, lead paint, exposed wiring, and other health hazards (Pfeiffer, Brennan, & Burrowes, 2018).

As NLIHC’s The Gap: A Shortage of Affordable Rental Homes report makes clear, extremely low-income renters outnumber the supply of physically adequate rental homes affordable to them. And because higher-income renters are free to occupy low-cost apartments, not all of those affordable homes are actually available to the lowest-income renters. NLIHC estimates a shortage of nearly seven million rental homes affordable and available to renters with extremely low incomes, forcing too many renters to be over-burdened by their housing costs and to face housing instability with just one financial setback.

WHY DOES OUT OF REACH FOCUS ON WHAT ONE EARNER CAN AFFORD–WHY NOT ACCOUNT FOR TWO-INCOME HOUSEHOLDS? To calculate the Housing Wage, we assume someone working full-time works 40 hours per week, 52 weeks per year. For an individual who works fewer hours, the Housing Wage will underestimate what they need to earn. For households with multiple wage-earners who collectively work more than that, the Housing Wage will overestimate what they need to earn. The Housing Wage, nonetheless, is a useful measure of affordability.

According to 2018 ACS data, approximately 46% of renter households include just one adult. The remaining renter households do not all have multiple wage-earners. Some adults have family obligations or disabilities that prevent them from working, and some are retired. Among renter households with more than one adult, 25% include a child under 7 years old, 17% have a disabled householder, and 14% have a householder 62 years or older. Some of these households have more than one of these characteristics.

Even among households with multiple wage-earners, not all can work full-time. Fewer than 24% of all renter households have two or more adults working full-time (at least 35 hours per week). In 2018, the median renting family with two adults and at least one child typically worked a total of 65 hours per week. At 65 hours per week, the hourly wage needed to afford a two-bedroom apartment at the average Fair Market Rent is $14.74 per hour—higher than a number of low-wage occupations, including six of the largest occupations in the United States.

Figure 2: The median hourly wages for twelve of the twenty largest occupations in the United States, and the one- and two-bedroom Housing Wages.

Focusing on what a full-time wage earner needs to earn to afford a modest rental home can clarify the challenges that millions of single-income families face. The problem of housing affordability is pervasive, though, and two-income renter households also struggle to pay for rent that is out of reach. We need significant investments in our federal rental housing programs—including increased and sustained support for the national Housing Trust Fund, which creates and preserves homes affordable for the lowest-income people, and full funding for the Housing Choice Voucher (HCV) program—to ensure that everyone has a decent and affordable home.


Economic Policy Institute. (2020). State of working America data library: Wages by percentile and wage ratios. Washington, DC: Economic Policy Institute.
Joint Center for Housing Studies. (2020). America’s rental housing 2020. Cambridge, MA: Joint Center for Housing Studies of Harvard University.
Pfeiffer, E., Brennan, M., & Burrowes, K. (2018). “What gets lost in the definition of inadequate housing?” Washington, DC: Urban Institute.
U.S. Bureau of Labor Statistics. (2020). Employment situation summary.