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Yahoo Finance’s Aarthi Swaminathan breaks down the least and most affordable states for minimum wage workers.
ALEXIS CHRISTOFOROUS: Florida is set to hike its minimum wage to $10 an hour at the end of this month, bringing it closer to the $15 national minimum wage that many progressive groups have been calling for. But a new report reveals that even $15 may not be enough for a worker to cover their basic living costs, as inflation pushes costs higher across the board. Aarthi Swaminathan, here now, has a story out about how minimum wage workers have been able to afford things like rent, at this point. Aarthi?
AARTHI SWAMINATHAN: Hey, Alexis. Yeah so basically, we were trying to understand if $15 is enough, because in many states that we have seen more than $15 or $16, in certain cities in California, for minimum wage, but we found through this report by LendingTree that is just not enough for people to rent a home. But when you use data from the Department of Labor and Census Bureau data to sort of estimate, if you are paid minimum wage, and you spend about 30% of your monthly income on housing, how much would that let you afford?
And we found that the states that were basically the worst for renters on minimum wage were Hawaii, California, and Maryland, I think. And it's just ridiculous the gulf between how much you can rent on minimum wage and how much you're actually paying in rent. So for instance, Hawaii has a minimum wage of $10, which makes you think, OK, I can afford about $525 in terms of monthly housing payments. The actual rent is a $1,600 price tag, which is really such a big difference.
California is about the same. You may make $13 an hour, which is much higher than many states, but you're paying $1,600 in rent. That's also very, very difficult. There are states, though, where renting is kind of affordable, that gulf is a little bit easier. So states like Arkansas and Maine, the minimum wage is about $11 or $12, but the difference between how much they could afford versus how much they're paying is less than maybe $100, $200. For instance, in Arkansas, the median gross monthly rent is only $742, whereas the affordable monthly housing rate is basically $572.
ALEXIS CHRISTOFOROUS: Well, all right, there we talked about rent. How much more expensive is it, though, if you own a home or are trying to own a home on minimum wage?
AARTHI SWAMINATHAN: Yeah, that's a really good question, because this is even more expensive. In Arkansas and West Virginia and in New Mexico, in particular, we saw that owning a home is kind of affordable, not really affordable. The median monthly housing costs for a homeowner with a mortgage in Arkansas is $1,000, when you can only afford $572. So if you're owning a home, a lot more difficult than renting a home was the bottom line. But renting a home, in and of itself, is a huge issue for minimum wage workers. So we need to think again about what is the cost of living.
ALEXIS CHRISTOFOROUS: All right, Aarthi Swaminathan, Thanks so much. We appreciate--