Government

Report: Iowa's minimum wage far below cost of rent

To afford a two-bedroom rental, an Iowan needs over twice that

Supervisor Ben Rogers, District 3, speaks on the benefits of the minimum wage increase during a press conference celebrating wage increases across four Iowa counties, including Linn County, in Cedar Rapids on Saturday, Jan. 7, 2017. (Photo by Michaela Ramm/The Gazette)
Supervisor Ben Rogers, District 3, speaks on the benefits of the minimum wage increase during a press conference celebrating wage increases across four Iowa counties, including Linn County, in Cedar Rapids on Saturday, Jan. 7, 2017. (Photo by Michaela Ramm/The Gazette)

Despite having some of the cheapest housing in the nation, Iowa’s minimum wage still falls far below what many workers who earn it need to be able to afford rent, a new study has found.

According to the National Low Income Housing Coalition’s 2018 “Out of Reach” report, Iowa ranks fairly well — 45th best in the country — in terms of the wage needed to afford a two-bedroom rental home. Still, the study found a tenant would need to earn $15.01 per hour, or more than $31,000 a year. At that rate, the individual would be able to cover rent and utilities without spending more than 30 percent of his or her income on housing.

The report, released last week, states that an individual earning Iowa’s minimum wage of $7.25 an hour would have to work 83 hours per week — or 2.1 full-time jobs — to be able to afford a two-bedroom apartment at the state’s fair market rate of $781. A one-bedroom apartment would require 65 hours per week on the state’s minimum rate.

What’s more, the cost of renting varies by county and metro area.

The hourly rate needed to afford a two-bedroom apartment in Linn County is $14.88 per hour, but the estimated hourly average wage for Linn County renters is $13.27 an hour.

“Here in Linn County, our main focus is just that $7.25 is not enough and we need to address the issue,” said Devin Mehaffey, co-founder of Living Wage Linn County, an organization pushing for a higher minimum wage.

In Johnson County, the most expensive housing area in the state, a resident needs to make $18.38 an hour to afford a two-bedroom apartment, yet the county’s average pay for renters is lower than most counties at only $9.25 an hour.

The average pay for Iowa renters is $12.50 an hour, compared with a national average of $16.88 an hour, according to the report.

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Nationally, a renter would have to make $17.90 an hour to afford a one-bedroom apartment or $22.10 an hour for a two-bedroom rental — in order to not spend more than 30 percent of their budget on housing.

John McGlothlen / The Gazette

“The housing crisis is growing, especially for the lowest-income workers,” Diane Yentel, president of the National Low Income Housing Coalition, told the Washington Post. “The rents are far out of reach from what the average renter is earning.”

In Iowa, the “housing wage” of $15.01 an hour places the state 45th out of 52 rankings — all the states plus Washington, D.C., and Puerto Rico. That’s slightly better than No. 44 Ohio’s $15.25 an hour but slightly worse than No. 46 Alabama’s $14.65.

The report states that, out of 3,000 counties nationwide, a one-bedroom apartment is affordable in only 22 counties across five states — Arizona, California, Colorado, Oregon and Washington. All five set their minimum wage thresholds above the federal rate of $7.25 per hour.

“In no state, metropolitan area, or county can a worker earning the federal minimum wage or prevailing state minimum wage afford a two-bedroom rental home at fair market rent by working a standard 40-hour week,” the report determined.

In Iowa, the debate over the minimum wage — specifically counties’ right to raise their own local rate — began in 2015 when Johnson County became the first in the state to pass a countywide minimum wage increase, which phased up to $10.10 an hour last January.

Proponents of raising the minimum wage often have touted $15 an hour as a “livable wage,” while opponents have argued that businesses should be able to determine what wages to pay.

As a handful of other counties including Polk, Linn and Wapello began following Johnson County’s lead with their own minimum wage increases, the Iowa Legislature in early 2017 passed measures stripping counties of their ability to pass rates higher than the state’s — rolling back the increases, though some businesses have stuck with higher hourly wages regardless.

The state left alone the $7.25-an-hour floor it has had since 2008.

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With that action, most talk over local minimum wage ordinances has diminished and lawmakers have not taken up much discussion over enacting an increase.

Johnson County supervisors earlier this year approved a 17-cent increase to the local minimum wage. While unenforceable, the ordinance encourages local businesses to pay a minimum wage of $10.27 an hour.

Linn County’s Mehaffey said he remains hopeful that the November election might shift the balance in the Iowa Legislature to a majority more willing to not only raise the state minimum wage, but also return authority over setting minimums to the counties.

l Comments: (319) 398-8309; mitchell.schmidt@thegazette.com

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