A few days ago Time magazine posted an article entitled Millions of Americans Spend Half Their Paycheck on Rent. Here Are Median Rental Prices by State. The research used in the analysis was generated by the Joint Center for Housing Studies at Harvard. And the intent is (seemingly) to draw readers to an alarming conclusion- that there is a large underclass in America who can’t afford a place to live.
But let’s pull apart the numbers in this claim that half of rental households and who that puts in dire straights.
In Minnesota three quarters of the population own a their home. That leaves one quarter of the population living in rentals. So half of those who rent are approximately twelve percent of the population.
In Minnesota just under ten percent of the population is known to live in poverty. Let’s use an even number of ten so that we cover the homeless as well. I don’t think it is surprising that this population pays a disproportionate amount of the income in housing expenses. And it should also be noted that support for people in poverty is not categorized as income, but arrives in different categories such as child tax credits, SNAP, and renter credits.
That leaves two percent of the population unaccounted for in this observation by the Joint Center for Housing Studies at Harvard. Could there be an explanation for the remaining few who pay a large share of their montly income to rent? College and grad students come to mind. For a brief time individuals work summer jobs, take out loans and yet still must pay for housing. Many of these folks are back stopped financially by family. The policies however for student loans and financial aid give advantage to individuals with lower income. And thus kids come off their parent’s returns and file individually.
In additional to students, the elderly could fall in this category. Say someone was living out their last years in a care facility with high rental fees for comprehansive services. Maybe they are even spending down a large retirement portfolio- because that what they saved it for in the first place. Their ratio of montly expense toward rent versus income will still be high. That was planned, not unexpected.
Here are some reasonable explanations for the breakdown in how housing expenses filter through the population. None of it is worthy of a hair-on-fire headline. And diverting attention to one market can do damage elsewhere. As people who need assistance are ignored.
Home Economics 