Descriptive Title: Housing wage as a percent of minimum wage

Geographic Unit of Analysis: County

Housing Wage as Percentage of Minimum Wage, 2011
  2011 Fair market rent (FMR) for 2-bedroom Annual income needed to afford FMR 2011 Housing Wage for 2-bedroom FMR 2011 SF Minimum Hourly Wage Housing wage as % of Minimum Wage (1-worker) Housing wage as % of minimum wage (2-worker)
San Francisco $1,833.00 $73,320.00 $35.25 $9.92 355% 178%
2011 Fair market rent (FMR) for 2-bedroom = Fiscal Year 2011 Fair Market Rent (HUD, 2011, http://www.huduser.org/datasets/fmr.html)
Annual income needed to afford FMR = Multiply the FMR for a unit of a particular size by 12 to get the yearly rental cost (2BR: $1,833 x 12 = $21,996). Then divide by .3 to determine the total income needed to afford $19,104 per year in rent ($21,996 / .3 = $73,320)
Housing wage = Divide income needed to afford the FMR for a particular unit size (2BR:$63,680) by 52 (weeks per year), and then divide by 40 (hours per work week) ($73,320 / 52 / 40 = $35.25)
Housing wage as % of minimum wage (1-worker) = Divide the Housing Wage for a particular unit size (2BR: $35.25) by any locality's minimum wage ($9.92), and then multiply by 100 ($35.25 / $9.92 x 100 = 355%) - for two workers, multiple minimum wage by two

Why Is This An Indicator Of Health and Sustainability?

High housing costs relative to the income of an individual or household result in one or more outcomes with adverse health consequences: spending a high proportion of income on housing, living in overcrowded conditions, accepting lower cost substandard housing, moving to where housing costs are lower, or becoming homeless. Spending a high proportion of income on rent or a mortgage means fewer resources for food, heating, transportation, health care, and child care. Sharing housing can mean crowded conditions, with risks for infectious disease, noise, and fires. Lower cost housing is often substandard with exposure to waste and sewage, physical hazards, mold spores, poorly maintained paint, cockroach antigens, old carpeting, inadequate heating and ventilation, exposed heating sources and wiring, and broken windows. Moving away can result in the loss of job, higher transportation costs, difficult school transitions, and the loss of health protective social networks.

For additional information on the connections between housing and health, visit: The Case for Housing Impacts Assessment by SFDPH, Program on Health Equity and Sustainability.a

Interpretation and Geographic Equity Analysis

The table above illustrates that the fair market rent for a 2 bedroom apartment in San Francisco is practically unattainable for someone earning minimum wage. Even in a two-person household scenario where both occupants are earning minimum wage, the amount of money needed to rent the average two bedroom home or apartment in San Francisco is nearly twice as their combined minimum wage incomes (178% greater). 

Beginning January 1, 2011, all San Francisco employers must pay to each employee who performs work in the City (including temporary and part-time employees) wages not less than $9.92 per hour. In accordance with the SF Minimum Wage Ordinance, the Minimum Wage shall increase by an amount corresponding to the prior year's increase, if any, in the Consumer Price Index for urban wage earners and clerical workers for the San Francisco-Oakland-San Jose, CA metropolitan statistical area.

Methods

Fair Market Rent (FMR) is a gross rent estimate; it includes shelter rent and the cost of utilities, except telephone. The FMR is an amount calculated by the Department of Housing and Urban Development (HUD) for Section 8 housing assistance. It is set at a level high enough to permit a selection of units and neighborhoods and low enough to serve as many low income families as possible.

The current definition used is the 40th percentile rent, the dollar amount below which 40% of standard quality rental housing units rent.

Housing wage as a percent of minimum wage for a one worker household is calculated by dividing the housing wage for a 2 bedroom FMR by the minimum hourly wage. For a two-worker household, the denominator (minimum wage for one person) is doubled.

Data Source

Housing Wage Calculations: Out of Reach, 2011, National Low Income Housing Coalition. Accessed online at: http://www.nlihc.org/oor/oor2011/data.cfm?getcounty=on&county=224&state=CA

Minimum Wage in SF: Minimum Wage Ordinance. Office of Labor Standards Enforcement. SF City Gov. Accessed online at: http://www.ci.sf.ca.us/site/olse_index.asp?id=27605

    1. SFDPH. The Case for Housing Impacts Assessment: The Humean Health and Social Impacts of Inadequate Housing and their Consideration in CEQA Policy and Practice. May 2004. Accesible at: http://www.sfhealthequity.org/component/jdownloads/summary/6-housing/136-the-case-for-housing-impacts-assessment?Itemid=62