How Much Rent Can Americans Afford on Minimum Wage?

The minimum wage is the lowest legal wage that businesses can pay their workers. The U.S. current national minimum wage is $7.25 per hour in 2020. This equates to $15,080 per year for a full-time job. This works out to more than the federal poverty level for a single person.

Many argue that the minimum wage should provide a living wage, sufficient enough to provide a decent standard of living covering food, clothing, and shelter. The common budgeting standard in 2019 indicated that you should spend no more than 25% of your income on housing.

The $7.25 per hour minimum wage, therefore, gives you a housing budget of $3,770 per year, so you could only afford rent of $314 a month ((7.25 x 40 x 52) x .25 = $3,770 per year; divided by 12 = $314).

Minimum Wage Statistics

Congress established the minimum wage under the Fair Labor Standards Act in 1938 in an effort to stop employers from exploiting workers. The U.S. Bureau of Labor Statistics found that 58.1% of U.S. workers age 16 and older worked for hourly rates rather than salaries in 2019. Of these, 1.9% were paid the federal minimum wage or less.

Where Could You Live on Minimum Wage?

You're pretty much confined to rural areas, older areas in some cities, college towns, and states with a low cost of living if you can pay only $314 a month.

There are affordable housing options in rural small towns across America. For example, a search on Apartments.com found Lane Stone Apartments in Lawton, Oklahoma. It offers a 555-square-foot one-bedroom for $320 a month.

You won't find these options in expensive states like California or Virginia. You'd most likely have to sublet an apartment or townhome in those areas, if you could find such an arrangement, and you wouldn't be near a major city.

Some cities still have low-cost options in older parts of town. These tend to be in areas with a low standard of living.

College towns in smaller cities offer affordable student housing. Most student housing options operate like hostels. You rent the bedroom in a three or four-bedroom apartment.

You can find apartments in your price range in the four least expensive states: Arkansas, Mississippi, Kentucky, or West Virginia. Most of these states have the lowest income in the country. Here's an example from each of these states:

• Pleasant Point in Springdale, Arkansas would rent you a 525-square-foot one-bedroom for $400.
• The Polos in Starkville, Mississippi, would rent you a 1,200-square-foot townhome with two bedrooms for $399 a month.
• You could live in Richmond, Kentucky, by renting a 425-square-foot one-bedroom at Shade Tree Apartments for $399 a month.
• In Wheeling, West Virginia, you could rent a two-bedroom condo at La Belle Green for $395 a month.

States with Higher Minimum Wages

• Twenty-nine states and D.C. have minimum wage rates above the federal level as of 2020. In those states, you can afford a higher rent. Here's what you could rent if you made the minimum wage in each of those states.
• Washington state's minimum wage pays $13.50, affording you rent of $585 per month.
• You could afford $553 a month in Massachusetts based on its minimum wage of $12.75 an hour.
• You could afford $520 a month in California based on its minimum wage of $12 an hour. Maine, Oregon, Colorado, Connecticut, and Arizona also pay $12 hour.
• New York pays $11.80 an hour. Rents of $511 would fall within your budget.
• Maryland $11
• New Jersey $11
• Vermont pays a minimum wage of $10.96 an hour. You could afford a monthly rent of $475.
• Rhode Island $10.50
• Alaska $10.19
• Hawaii $10.10
• Minnesota $10
• Arkansas $10
• Illinois $10
• Michigan $9.65
• Missouri 9.45
• South Dakota 9.30
• Delaware $9.25
• West Virginia 8.75
• Ohio $8.70
• Florida $8.56, increasing to $10 in September 2021 with $1 per hour increases to $15 in September 2026