Trends & Data

The High Burden of Low Wages: How Renting Affordably in NYC is Impossible on Minimum Wage

New York City’s lowest-wage workers may be shut out entirely of the city’s ever-expensive rental market. According to StreetEasy rent data, New Yorkers need to earn an hourly wage of at least $38.80 to afford the city’s median asking rent of $2,690 in 2015, more than four times greater than New York State’s current minimum wage. For those workers that currently earn the state’s minimum of $8.75 per hour, there are no neighborhoods in which median asking rent could be paid affordably. The extent to which rent growth has outpaced income growth in New York City means low-wage workers face three options: find several roommates to lower their personal rent burden, take on more than one job, or move out of New York City.

The minimum wage necessary to afford median asking rent in 2015 is highest in Manhattan ($44.60), followed by Brooklyn ($35.87), Queens ($29.67), Staten Island ($26.21), and the Bronx ($21.26). Use the map below to see what the necessary wage would be to affordably rent in 2015 for each New York City neighborhood.

Central Park South, long one of New York City’s most expensive neighborhoods, requires the highest hourly wage. Residents of Central Park South need to earn an hourly wage of at least $85.07 in order to afford the neighborhood’s sky-high rents, roughly nine times the current minimum wage. Taken from another view, a worker making minimum wage would need to work 389 hours per week in order to afford rent in Central Park South. There are only 168 hours in a week, so a minimum wage worker could work every hour of every day and come up short on rent in Central Park South and 46 other neighborhoods including Tribeca, DUMBO, Stuyvesant Town, Park Slope, Williamsburg and Long Island City.

Proposed Minimum Wage Increase Does Little to Improve Affordability

Even if the minimum wage was increased to $15 per hour for the tens of thousands of fast food workers in New York City, as was recently recommended by a panel appointed by Gov. Andrew Cuomo, the rent affordability landscape would be largely unchanged. A New Yorker earning $15 per hour could afford just one neighborhood – Throgs Neck in the Bronx. Workers living there need to earn an hourly wage of at least $13.64 in order to afford rent. Other neighborhoods that come close to the $15 proposed minimum wage are New Dorp ($15.76), Woodstock ($16.45), Fordham ($16.79), and Far Rockaway ($17.09).

Apart from the growing cost of rent in virtually every neighborhood, low-wage workers in New York City must contend with much higher costs of living relative to other cities. According to a recent study by Pew Research, a $15 minimum wage in New York City would yield just $12.26 worth of purchasing power due to the region’s higher costs for items such as health care, groceries, and transportation.[i] A $15 minimum wage in Beckley, West Virginia, by contrast, would yield a purchasing power of $19.23. In other words, dollars do not stretch as far in New York City as they do in other, less expensive metropolitan regions, adding an extra burden for low-wage workers here.

For New York City’s Lowest Paid, Difficult Trade-Offs

Paying rent is a growing burden for most New York households. According to a StreetEasy study released in March 2015, annual rent will account for nearly 60 percent of a typical New York household’s annual income this year. For the roughly one third of all New York City workers who are employed in low paying industries such as hotels and fast food establishments, the burden is far more acute.[ii] Forced to stretch precious few dollars farther, minimum wage workers are confronted with difficult trade-offs. They can seek lower rents in areas surrounding New York City, but higher transportation costs – in terms of both actual costs and opportunity costs – will eat into their rent savings. They may also seek a second or third job, extending their work week well beyond the traditional 40 hours in order to muster enough to pay rent and put food on the table.

A minimum wage increase to $15, though hard fought by fast-food workers and supported by 73 percent of New Yorkers, may not be enough to stem the city’s growing rent burden.[iii] The extent of this burden is highlighted by the fact that just one neighborhood, Throgs Neck, would be affordable to a minimum wage worker at $15 per hour. All other neighborhoods would remain out of reach. In order to make a meaningful improvement to housing affordability, policy makers in New York City will need to target an expansion of housing supply along with income growth. As long as the city’s rent vacancy hovers at around 4 percent, as it did in 2014, New Yorkers will continue to feel the squeeze.

How We Did It

Median asking rent for each neighborhood in 2015 is based on forecasted rent levels using historical rent data and a standard auto-regressive integrated moving average (ARIMA) model. The median asking rent is the exact middle rent price across all listings in a neighborhood, meaning half of all listings will fall below the median price and half will fall above the median price. For the purpose of this study, we assume that renters will be the sole tenant in a rental unit. Rent is considered affordable if total annual rent accounts for 40 percent or less of gross annual income. We also assume a 40-hour work week in calculating the minimum hourly wage required to affordably pay median rent in a neighborhood.

 

[i] http://www.pewresearch.org/fact-tank/2015/08/03/the-real-value-of-a-15-minimum-wage-depends-on-where-you-live/

[ii] https://nycfuture.org/pdf/Low-Wage_Jobs.pdf

[iii] http://www.quinnipiac.edu/news-and-events/quinnipiac-university-poll/new-york-city/release-detail?ReleaseID=2267

Alan Lightfeldt

Alan Lightfeldt is a data scientist at StreetEasy. Previously, he was a research assistant at the Furman Center for Real Estate and Urban Policy, a joint research center between the NYU School of Law and the Robert F. Wagner School of Public Service. His research focused on subsidized housing programs and the effects of real estate-owned (REO) properties on communities. He received a master's degree in urban planning from New York University and a bachelor's degree in international political economy from the University of California at Berkeley.

  • deckbose

    I guess I’m lucky. I live alone in Yorkville and pay $1,600/mo., which just went up from $1,500. I try to remember that number whenever I’m listening to the jackhammers on 2nd Avenue.

  • ruthpapazian

    Why doesn’t this map include data on Morris Park? Do you have a datapoint for Morris Park, as regards the hourly salary needed to live there? Would appreciate the info.

    • Hi Ruth. We don’t include neighborhoods that don’t have sufficient rental data. Neighborhoods near Morris Park such as Parkchester and East Tremont have minimum hourly wages of $16-$18, and the Bronx-wide minimum is $21.26.

      • ruthpapazian

        Appreciate your explaining the reason Morris Park wasn’t included in the analysis.

        I don’t know the methodology used to arrive at these figures, but according to City Data, median rent in Morris Park was $1,111/month in 2013, and according to Neighborhood Scout the average rent is currently $1,344/mo. Assuming both are correct, what is the minimum hourly wage to make these two price points feasible (median and average not being the same thing)?

        Thank you for the info.

        http://www.city-data.com/neighborhood/Morris-Park-Bronx-NY.html

        http://www.neighborhoodscout.com/ny/bronx/morris-park/

        • Using the $1,111 median asking rent you cited, the minimum hourly wage necessary to afford Morris Park would have been $16.02 in 2013. Our methodology is posted under the “How We Did It” section above.

          • ruthpapazian

            Thank you again. Morris Park seems to fall within the norms of the immediately surrounding areas.

          • Frank TwoHarbors

            Morris Park is a rank place and why anyone would want to live there, I don’t know.

          • ruthpapazian

            Oh please keep telling people that, so those of us who live here can keep our Shangri-La our own little secret.

          • native new yorker

            I live on SI but have family up in Morris Park. It’s a nice safe area.

      • native new yorker

        I know that far-off S.I. is not part of your usual analysis. But the $1093/mo median you show for New Dorp is low. I did a download from your site and the median is around $1675/mo for Staten Island. Apartments are rare out here and are mostly in 2-family homes. Zoning forbids apartment buildings in most of SI. When you figure in the more expensive commute it’s really not affordable for the ‘$15/hour’ wage earner.

        http://streeteasy.com/for-rent/staten-island

  • commenter

    This article is sooo flawed, does not mention what is being rent at all, the cost of a studio will be way less than like a three bedroom

    • Thanks for your comment. Not every minimum-wage earner may want to live in a studio, so we take the median asking rent across all units in a neighborhood. Exactly half of all units will be priced below that median, and half will be priced above.

      • commenter

        But this still doesn’t make sense when comparing. Its basically mixing one person renting a studio vs one person renting a 3-bedroom apartment. It would make much more sense if it the rent of the 3 bed-room was divided by 3 for 3 people but from what it seems like the numbers are very inflated as it probably is one person for a studio vs one person for a 3 bedroom apartment.

        • This being a top-line analysis, we do make the assumption that renters will be the sole tenant in a unit. This will of course not be the case in every instance, but to understand what the typical rent level is for the available inventory in a neighborhood, we chose overall median. Thanks again for your feedback!

    • Piece Work

      Here in the east village (St.Marks & 1st Ave.) a studio goes for $2450; second floor, rear of the building, view of the building behind you.

  • What I find interesting is that New Yorkers generally would like to stay in the same apartment for 3+ years but not once do they get up and start looking for another job during that time frame. Not once do they say “hey, my rent keeps going up. I may not be able to afford this is 2 years”. Not only that but they wait until the last year/month and then decide wakeup smell the roses, an accept the fact their rent is going up!

    I’m just confused. All of these new jobs being created and with the age of digital/internet there is a clear ability to establish a secondary income, yet the complainers just sit and complain. Online t-shirt business, photography, ect, there are so many new options these days. New Yorkers don’t do anything but yell at the city and blame gentrification.

    Reality check, New York City may not be for you anymore. Things change, environments change, people change, and cities change.

    “Don’t work 8 hours for a company then go home and now work on your own goals. You’re not tired, your uninspired.”

    • Frank TwoHarbors

      Yawn.

    • Elise Elyz

      Photography pays well since never.

      You forget about the unpaid work: taking care off one’s kids and older family members, daily chores. That’s actual work, and that’s time consuming.

      • I didn’t forget about the responsibilities of life, not at all. (Which most of all you selected/created, but that’s not the point.)

        You’ve got to get a hold on things sir. A working photographer who is marketing themselves the right way does pretty well in New York City. I’d know because I work with a few that stay booked. (The mostly have work in Brooklyn)

        You should try http://www.sunrise.am, take the first step to just put your entire life on a calendar. Wake up time, grooming time, kids grooming time, lunch, snack, dinner, photography time, appointment timeblock, ect.

        And wake up super early. Try 4:45am to be up since you have so much responsibility. And set a specific time for bed, like 9:30pm? See how much work you can fit into those times. You’d be suprised how much free time you really have. And how much bette you’ll feel about your direction in life.

        I wish you the best!

        • andre berto eyes

          Your proactive attitude is a good one,you will never complain about anything because you are always ahead of the curve.However, People who complain will push policy through that will benefit them and their needs. complainers get things done in terms of policy.The rent freez is an example of that. Thanks though. And keep up the good attitude.

          • Thanks for your comment. I do agree with what you are saying!

            I think its safe to say that government (the city) needs to step up and have an open conversation about this “crisis”.

            The economy is changing, people are changing, and these complainers just want everything to remain the same. They use policy to their advantage when needed but seem to disregard other laws and policies that dont apply to them.

            I’m not sure anything would get done if they were in charge. Probably would still be using pushing cars.

          • andre berto eyes

            We all complain.. Your complaining that people are complaining.Politicians are elected to meet the needs of the people who complain about something. The rent is too high so they will put somebody in office to fix it(that is the idea anyway) and some people will complain that people are complaining and try to fight the complainers lol. The rent wont get any higher than it already is.. it has reached its limit and is about to go back down ever so slowly.

          • Herb Gee

            Odd to me there’s no discussion of supply/demand factor that really determines rent levels. Anyone?

          • andre berto eyes

            Not in nyc.. in nyc the rule is location location location.. overcharge where people all want to be.. it has little to do with supply and demand. And if there are willing tenants who can afford it , you get crazy rents. Recently the rich of the world have decided they no longer want to live in big houses in the hills, they want that urban life so now the rents have skyrocketed. There are enough people willing to pay it..everybody else just gets cought up having to pay rent they cant afford.

          • native new yorker

            Land and labor costs in NYC are so high that we will never have cheap rents in areas close to Manhattan again. Can’t wish that fact away. In my S.I. neighborhood the very few apartments around rent for about $1675/month. That’s cheap by NYC standards but the commute is obviously longer and more expensive (approx $241/month for the express bus) than in those close to Manhattan areas. Although even with all that I bet it’s still cheaper than good parts of Brooklyn and Queens. Plus you need a car so ‘cheap’ rent does not mean ‘cheap’ living. The trade-off is a safe quiet neighborhood with tons of on-street parking (no ASP) for that car you’ll need.

          • andre berto eyes

            That’s a cool neighborhood.

        • Elise Elyz

          You created your aging relatives? Sounds awesome.

          “Kids grooming time” is just funny because if you had kids (and took care of them) you would know that they oftentimes won’t do what you expect them to.

          BTW, I do not have dependent parents so far. I am not a photographer either. I don’t think only about myself. I understand from your comment (which I understand was written in a benevolent spirit) that you assumed I did.

          Rich, young, able, independent, & responsible only for yourself, you’re free to think everyone is just as free. Enjoy your smug vision of life, that’s how rich white able men think that those who don’t have their privileges simply didn’t deserve more than what they got.

    • andre berto eyes

      Your mentality is a good one..but there is still a fundamental problem with the city’s economy. The rent is simply too high.Dont put complainers down too much..People who complain are usually the ones that vote for certain policies to stop them from complaining. So the rent is high now..but it wont be for everybody for too much longer. The complainers will find a way eventually and the people who dont complain will pay top dollar. ..because after all, they are so proactive and they dont whine anyway right?

  • primeny

    I’m curious if public housing is included in the study?

    • commenter

      definitely not from these numbers as subsidized housing is around anywhere from 300-800 depending on the area and size of the apartment and number of bedrooms

    • Hi primeny. Public housing units are not included in this study as they are not publicly available on StreetEasy (or any other listings site).

      • jjlnyc

        And on those listing sites you are depending on, you also wont find the cheap apartments that get handed down relative to relative, or friend to friend, or subsidized housing, or rent control, or apt-shares, or any of a myriad of low-cost options. Your numbers are skewed

        • Our numbers reflect prevailing market-rate rent in neighborhoods. As you imply, New York City is a highly regulated market. If you are not lucky enough to secure a regulated apartment or your income is not low enough to qualify, then this would be the reality that a New Yorker would face.

  • Medians and means are not always the best measures of accessibility, though they do serve as powerful indicators, as shown in this article. You can actually live in New York City quite affordably. Sure, there are trade offs, but for those who come to this city to pursue something greater, those trade offs are rather minimal – living in a far out borough, having multiple roommates, etc. Every one of my peers pays less than 1k in monthly rent (often far less) using simple cost cutting strategies without sacrificing much in the way of quality of life.

    • Hi Stefanie, thanks for your comment. Our analysis is a top-line view of rents in neighborhoods using the median asking rent in 2015. As you noted, some rents will be well below that median. In fact, exactly half of all rents in the neighborhood will be less than the median and half will be above. The median tells us what the “typical” rent level is in a neighborhood.

  • native new yorker

    I don’t know how paying someone $15/hour ($31200/year) to hand out cheese danish is going to improve NYC’s economy one bit. That may work in upscale places like Park Slope or Greenwich Village. But in the rest of the city people aren’t going to pay $7 for that cheese danish. The small businesses will disappear in time from NYC. NJ will welcome them. The southern states will welcome the mid-size and large businesses.

    • andre berto eyes

      The rent is just too high plain and simple.

      • jjlnyc

        Then how about you buy and maintain a building and charge low rent?

        • andre berto eyes

          You sound very dramatic. Don’t you know? All you have to do is put your money into a hedge fund and you are a NYC landlord. No one manages anything. Everything is a hedge fund and that is why the rents are high. when housing becomes a thing where people expect “growth” quarter after quarter, the rent will be high. Housing is now part of a portfolio. The dirty little secret no one talks about.

          • jjlnyc

            No drama whatsoever. And yes, I DO know – I know many many many many many INDIVIDUALS who took a chance, bought buildings, borrowed heavily to do so, worked two or three jobs to make the payments, worked hard to maintain and improve them, been paying taxes on them and now are finally able to benefit from all of that.
            I have been seeing this here in your “hot spot” of downtown Brooklyn, where 20 years ago, nobody wanted to live, but people took a chance anyway. PEOPLE, not hedge funds. Working class people. People were born here or moved here at an early age. People who ran a bodega, or a variety store, or drove cabs. Maybe worked two jobs. Or three.
            And now people who have money want to live here, and we are always hearing from whiners about how its not faaaaiiiirrr.
            Not fair? That people who work hard for their money are willing to spend it on rent, and live where their budget says they can? But shouldn’t be allowed to, because its not faaaairrrr that people who want to make a career out of flipping burgers or pumping gas can’t compete?
            Spare US the “drama”….

          • andre berto eyes

            People always lived here. But now people with money want to live here too.. and that fine but you can’t expect the whole city of average paid people to leave because “there are 49” other states to live lmao..

      • jjlnyc

        I hear rents are a lot lower in Poughkeepsie

  • NJDG ALPHA

    Talking about the “median” rent for “minimum wage” workers doesn’t make any sense. That’s equivalent to talking about median wage earners ability to afford central park penthouses. Why not tell us about the lowest quintile wage earners ability to afford the lowest quintile rents. My guess is it would still be very difficult for those people to afford it and your point would be much stronger.

    • Thanks for your comment. Our goal is to reveal the affordability landscape of the entire rental market in New York City, not just the lowest quintile of rents. We therefore chose the median asking rent, a standard metric used for this type of analysis.

      • NJDG ALPHA

        If that is the goal, why the emphasis on minimum wage workers?

  • Kaspar Mao

    The median rent quoted – is it for two bedroom? If so, what is the median for one Bedroom? For studio?

    • Piece Work

      In many cases that is the rate for a studio apt.
      Here in the east village (St.Marks & 1st Ave.) a studio goes for $2450; second fl. rear of the building, view of the building behind you.

      • andre berto eyes

        i remember when a studio apartment was 200 dollars a month. .this was back in 2000..just 15 years ago. Somebody has become greedy..and somebody is willing to pay. It takes two to tango.

        • jjlnyc

          Where, in Fort Apache South Bronx?

          • andre berto eyes

            HAHAHAa no brooklyn. The now “hot spot” brooklyn.

  • jjlnyc

    Minimum wage should not be looked upon as a way of life. MW jobs should be for people who are just starting out in the workforce and who are trying to build up a little work history, learning ropes, working towards qualifying and applying for better paying, real jobs, or making a few extra bucks while in school and living at home.
    If minimum wage is all you will ever be qualified for and if those jobs are all you will ever stive for, then NYC is probably not where you should settle

    • andre berto eyes

      And in the mean time… where are they expected to live? The problem really isnt the wages. Its the greed of the land lords and the market as a whole.

      • jjlnyc

        Yes, let’s blame everyone except the people whose expectations are that “fries with that?” or “regular or high test?” are career options. Those jobs are suitable for kids living at home trying to earn some spending money, or maybe as a part-time income supplement for people with full time jobs who want to improve their situation.

        • andre berto eyes

          You need to relax a little. I dont see any drama day time show going on around here. Yes you are right. Low paying jobs are exactly that and people shouldn’t be using them as a means to survive long term. But with that said, the problem is not wages. NYC jobs already pay higher than most places all because of the cost of living. A dishwasher here is paid what a teacher might get in florida. The cost of living is too high point blank period.

          • jjlnyc

            I am totally relaxed because I made my peace with how things work here, and am quite happy to work with it.
            If anyone finds that the cost of living is “too damn high” – there are 49 other states available, and buses that will go there.

          • andre berto eyes

            Good for you. But there is a reason why we elect people that serve the needs of the people.. policy will be set to fit the needs of those who complain.

          • jjlnyc

            Kowtow to whiners – what a great strategy that is! 😀

          • andre berto eyes

            Kowtow to people who whine about whiners lmao..

    • andre berto eyes

      in nyc the rule is location location location.. overcharge where people all want to be.. it has little to do with supply and demand. And if there are willing tenants who can afford it , you get crazy rents. Recently the rich of the world have decided they no longer want to live in big houses in the hills, they want that urban life so now the rents have skyrocketed. There are enough people willing to pay it..everybody else just gets caught up having to pay rent they cant afford. But thankful regular people outnumber the rich.. policy will be put in place to preserve a place for all in nyc…not just the rich. The government considers you rich once you make 150,000 ( that is not rich to me but the gov thinks it is). I make only 80,000 a year.

      • jjlnyc

        What you described is EXACTLY supply and demand. And a big reason that there is a short supply of affordable housing is that there is an artificial price ceiling on so much of the housing. (A price ceiling occurs when the government puts a legal limit on how high the price of a product can be.)
        But in order for a price ceiling to be effective, it must be set below the natural market/equilibrium.
        When a price ceiling is set, a shortage occurs, because for the price that the ceiling is set at, there is more demand than there is at the equilibrium/market price. There is also less supply than there is at the equilibrium price, thus there is more quantity demanded than quantity supplied. Therefore the price is higher for the supply that is not artificially controlled.
        Fundamental economics.
        But this has gone on too long, I really have no interest in wasting any more time on this in this forum

  • LauraJ_NYC

    there can never be enough “affordable” housing in NYC. There’s just too much demand. A better option is to spend the money improving transportation so that lower cost communities have easier access to jobs in Manhattan. I commuted from NJ into NYC until i could afford it. What is wrong with that?

  • jjlnyc

    Streeteasy (a.k.a. “Sneakeasy”) seems to have based all the conclusions on what is available in their online marketplace. But it is a very unrepresentative sampling of what actually happens in the NYC housing market. Take with several grains of salt

  • LauraJ_NYC

    In the 1980s it wasn’t affordable so I commuted from NJ. Then I moved to Washington Heights. NYC is always expensive. This is not news. This is not fixable. No amount of money will ever provide all the inexpensive housing necessary to accommodate everyone. Better to take all that “affordable housing” money and vastly improve transportation so people can live where it’s affordable and communities can develop.

  • Pedro

    Where is “The Rent Is Too Damn High” guy who was running for president? I will vote for him now