On Minimum Wage

I was checking emails and browsing the internet yesterday when an article from CNN caught my eye: Minimum wage to rise in 13 states on Jan. 1.  This reminded me of the reason why I have this blog, which is to promote my Bike & Build trip and spread knowledge about the affordable housing crisis in America.

While the minimum wage is working it's way back up in value, it still does not have the same buying power that it did 40 years ago (as seen below), which challenges the "American Dream" of home ownership.  It's amazing to find out that no one person can afford to have a single-bedroom apartment in this country at the federal minimum wage*.  Additionally in 2011, it was found that 20 million American renters and nearly 22 million homeowners paid more than 30% of total income on housing, while approximately 12 million low to moderate-income households spent over 50% on housing (http://nlihc.org/).

Source: http://www.bloomberg.com/

Former Pres. Jimmy Carter has reportedly said that raising the minimum wage was one of his biggest regrets of his administration for the inflation it caused.  I'm not an economist and I'm not sure about the full effects of raising the minimum wage, but we do know that the cost of housing has outstripped the minimum wage and that there is an enormous lack of affordable housing in the US.  So much, in fact, that for every 10 of the poorest households in the US, there are only 3 homes available for rent at an affordable rate.  As it stands, 7.1 million low-income American households cannot find an affordable home to rent and that number is expected to grow every year.

* Based on the localized fair market rent (FMR) and the US definition of "affordable" housing at 30% expenditure of pre-tax income.