Housing Costs

 The Relationship Between Housing Costs and Wages in the U.S.

Over the past few decades, housing costs have increased far more rapidly than minimum wages. In terms of economics, America is experiencing what many have called a “housing affordability crisis”. This has led to a severe housing affordability gap, especially for hourly wage earners. Several data points show this reality:

• The average Fair Market Rent (FMR) for a modest one-bedroom apartment in the U.S. in 2024 was about $1,200/month, according to HUD. Current Georgetown apartment rental rates reflect these same market forces, although actual costs are often higher due to the proximity to Austin.
• To afford that without spending more than 30% of income on rent (the federal standard for affordability), a worker must earn at least $23/hour.
• Meanwhile, the federal minimum wage is still $7.25/hour (unchanged since 2009), and Texas has adopted this as the state minimum wage.
• At $7.25/hour, a full-time worker earns only $15,080/year — enough to afford just $377/month in rent.
• The average rental rate in Austin is currently over $1,500/month, making housing in the area unaffordable for most minimum wage workers. Consequently, many lower-wage workers look for housing far beyond the places where they work and must commute into the metro communities for jobs.

 The Negative Impact of the Housing Affordability Crisis on Hourly Workers

An employee working full-time at minimum or even prevailing wage rates in Georgetown cannot afford a one-bedroom rental at market rates. Consequently, most hourly workers in Georgetown commute from areas where housing is cheaper; they often hold multiple jobs or work excessive hours (sometimes 2.5+ full-time jobs); are more dependent on housing subsidies or rental assistance; or live with multiple roommates or family members. Georgetown has only a very few below-market-rate rental units, so many of our local hourly wage workers must commute from the outlying communities like Florence, Granger, and Killeen. The gap between housing costs and wages is also a major driver of homelessness and housing insecurity. The lack of affordable housing for hourly workers also creates higher transportation costs, long commutes to places of employment, time constraints on workers with school children, and higher rates of eviction risk, overcrowded living conditions, and family budget deficiencies for preventative health care. Essential workers (retail, food service, caregivers) that most of us depend on to keep the economy functioning well are especially affected by the wage restraints and higher average housing costs relative to income. Home ownership in Georgetown and nearby communities is out of the question for most hourly wage workers making a prevailing wage of $18-$20/hour.

 

Prosper Georgetown is a 501(c) 3 non-profit organization certified under File Number 803442241
by the Office of the Secretary of State for the State of Texas, dated 10/10/2019.