In a new study by Smartest Dollar, the hourly wage needed to afford a one-bedroom rental in the Madison metro area is $20.14, but the estimated hourly wage of renters in Madison is just $14.23. This renter wage gap — the gap between renters’ actual wages and the wages they need to make to afford the median rent for a one-bedroom rental where they live — has been widening in the U.S. in recent years. The general rule of full-time workers not spending more than 30% of gross income on rent is not possible in any large metropolitan area in the country. The gap between actual wages and what’s needed to afford a typical one-bedroom apartment is larger in places where rent is more expensive than normal. This is particularly true in states like Massachusetts, California, New Jersey, and Hawaii, where housing supply is limited. The analysis for Madison found:
- Renter wage gap: -29.4% ;
- Median one-bedroom rent: $1,047;
- Hourly wage needed to afford a one-bedroom rental: $20.14 ;
- The estimated hourly wage for renters: $14.23; and
- Share of renter-occupied households: 39.4%.
Analysis for the entire United States:
- Renter wage gap: -37.7%;
- Median one-bedroom rent: $1,089;
- Hourly wage needed to afford a one-bedroom rental: $20.94;
- Estimated hourly wage for renters: $13.04; and
- Share of renter-occupied households: 35.9%.
