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Rents are rising faster than Minnesotans’ incomes

Abimael Chavez-Hernandez
May 11, 2020
All Minnesotans want a safe home for themselves and their families. But even before our current economic crisis sparked by the novel coronavirus, people across Minnesota were finding it increasingly difficult to find an affordable place to live in our rental market. 

In 2019, a Minnesota worker needed to earn at least $19.74 an hour to afford a modest two-bedroom apartment. That figure is the housing wage calculated in the National Low-Income Housing Coalition’s Out of Reach report, defined as the hourly wage a full-time worker must earn to spend no more than 30 percent of their monthly income for a modest two-bedroom apartment. 

The Minnesota Housing Partnership further found that workers earning the minimum wage would need to have two full-time jobs to afford rent for a similar apartment.

This continues a trend of increasingly unaffordable housing for many Minnesotans. From 2000 to 2017, the housing wage increased 9 percent while renter incomes decreased 5 percent. This means more renters are cost-burdened, meaning they are paying more than 30 percent of their annual income in housing costs.  

Lack of affordable rental housing is a growing concern across the state

For over a decade, unaffordable housing costs due to persistently low wages has been the reality for too many Minnesota families. The Census Bureau estimates that almost half of renter households in Minnesota had trouble affording their housing in 2018. Families in many parts of the state find it increasingly difficult to afford a place to live. For example, Nicollet County’s housing wage has risen from $12.48 to $17.77 – a 20 percent increase since 2009 (adjusted for inflation), the largest increase in the state. 

Low-income households and people of color are impacted most

Low-income households, due to slow wage growth at the bottom of the income scale, have been disproportionately impacted by the persistently rising rental costs. The Minnesota Housing Partnership finds that six of the 10 most in-demand jobs do not pay enough to afford a one-bedroom apartment, and the top two fastest growing jobs, home health aides and personal care aides, pay less than the annual income of $41,061 needed to afford a two-bedroom apartment at fair-market rents. 

Minnesotans of color have a harder time affording their homes. That’s because people in these communities are both more likely to be renters (60 percent of households of color are renters compared to 24 percent of white households statewide), and their wages have grown more slowly. Since 2000, the wage gap between what white households earn and what Black, Native American, and Hispanic households earn has increased by 20 percent, 11 percent, and 9 percent, respectively. Overall, these trends result in 46 percent of white renter households and 50 percent of renting households of color spending over 30 percent of their income on rent and utilities.  

Housing is foundational for stable and thriving families, but for too many Minnesotans, rising costs and stagnant wages put adequate housing out of reach. Having a safe and affordable place to live is especially critical at this moment when Minnesotans are being encouraged to stay at home to limit the risk of contracting COVID-19 - which is also disproportionately impacting communities of color. To ensure we all can thrive, it is imperative to build on and expand policies that strengthen Minnesotans’ ability to afford housing.