3 Cities Where the Average Rent Is Out of Reach for Those Making Minimum Wage

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Rent has become more expensive in recent years, partly thanks to the COVID-19 pandemic. The general rule for paying rent is typically spending no more than 30% of gross (pre-taxed) income, which includes utilities. However, finance guru Dave Ramsey suggests paying no more than 25%.

With that in mind, rent has become so unaffordable that in 2022, more than 22 million U.S. renters spent over 30% of their income on rent, according to the America’s Rental Housing 2024 report by the Joint Center for Housing Studies of Harvard University.

For those making the federal minimum wage, which has been stuck at $7.25 since 2009, it’s even tougher to find budget-friendly housing. Although 34 states, districts and territories have increased the hourly rate, 1.1% of Americans still earn the federal minimum wage, according to the St. Louis Fed. With the national average rent of $1,739 for a 900-square-foot apartment, per RentCafe, low-wage earners can’t afford to live on a salary of $15,000 a year.

While rental markets are cooling down, Americans still need to make a significant amount more than the federal minimum wage to afford rent. According to the National Low Income Housing Coalition, full-time employees need to make $26.74 an hour to afford a one-bedroom home and a $32.11 hourly rate to afford a two-bedroom home. 

As a result, many cities are out of reach for those making minimum wage. Experts at Clever, a website that matches sellers and buyers with real estate agents, studied data on fair-market one-bedroom rent prices in the 50 largest housing markets to determine where minimum wages workers could afford.

Per the study, none were affordable, following the 30% guideline, but the cost burden is greater in some cities. According to Clever, here are the top three unaffordable cities for people making $7.25 an hour.

Atlanta

Founded in 1837, Atlanta is known as the birthplace of Coca-Cola. It has a rich history and fast-paced city life with a touch of Southern hospitality. However, it’s also the most expensive city for minimum-wage workers to live in. For employees who earn $7.25, here’s how the math breaks down. 

• Fair market rent for a 1-bedroom apartment: $1,653
• Income needed to rent a 1-bedroom apartment: 132%
• Hourly rate needed to rent a 1-bedroom apartment: $31.79
• Actual affordable rent for minimum wage earners: $377

Nashville, Tennessee

Known for its legendary music scene, history and Southern cuisine, Nashville offers a vibrant nightlife, strong job market — especially in healthcare — and an overall quality place to live. However, it’s unaffordable for people making $7.25 an hour.

• Fair market rent for a 1-bedroom apartment: $1,650
• Income needed to rent a 1-bedroom apartment: 131%
• Hourly rate needed to rent a 1-bedroom apartment: $31.73
• Actual affordable rent for minimum wage earners: $377

Austin, Texas

Austin is the perfect balance of history, fun things to do and culture. The city has a cool music scene, a lively energy and is the ideal place for foodies to explore. However, Austin ties with Nashville for the second least affordable U.S. city to live in for workers earning $7.25 an hour.

• Fair market rent for a 1-bedroom apartment: $1,650
• Income needed to rent a 1-bedroom apartment: 131%
• Hourly rate needed to rent a 1-bedroom apartment: $31.73
• Actual affordable rent for minimum wage earners: $377

Relying on minimum wage to cover monthly expenses and rent is a bleak prospect. The cheapest city out of the 50 metros analyzed by Clever is Buffalo, New York, where the minimum wage is $15.00. To afford a one-bedroom priced at the fair market rate of $1,001, people earning this amount would have to spend 39% of their income. The necessary hourly wage to live comfortably would have to increase to $19.25 per hour, per the study.

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