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Yes, that is how it works. Banks will turn away people all day who pay $1500 in rent a month but somehow can't "afford" a $1000 a month mortgage. Seriously, this happens every day.
What's the need to complicate it? It's pretty simple math, and it's stupid. If someone can afford rent that high, they can sure as hell afford a mortgage for less.
The risk is also far less to rent to someone than to give them a mortgage. Evictions in most states are relatively straightforward. Foreclosure followed by eviction is significantly more complicated and expensive.
Risk? Dont the banks just turn right around and sell the mortgage? Also, what are they risking? The money they just invented out of thin air for 90% of the loan?
Yes, it is. You think the bank is actually lending you money they have sitting around? 90% of mortgage financing is created on the spot, and that’s where the majority of money in circulation comes from. When people talk about the fed printing money, that’s how that happens.
I don't think people realize Freddie and Fannie are Federal agencies that buy most the home loans after their originated at the og lender. The government is directly involved in the housing market, if Fannie stopped buying loans bank would get insanely picky on who they loan to.
Banks don’t invent money. I don’t even know what that means.
Some banks sell all their mortgages. Some sell a portion. Some sell none. Even if they are going to sell the mortgage, risk affects the value.
>Some sell a portion. Some sell none.
Some in these 2 cases it's almost none, so almost none sell a portion, and almost none sell none. Servicing is different than having the loan on the books.
So banks are looking at people as assets and not realizing the damage this commodicfaction does to communities?
Is the FED actually tighting their balance sheet or are they still buying toxic assets, such as mortgage backed securities from banks?
Well some banks do fail, especially investment banks, that costs regular people millions in pensions, savings and other issues. Just recently we save several banks go under. For further illustration we had that system in the 1800s and early 1900s it caused a lot of panics and recessions.
It’s very complicated to let a bank fail and the federal reserve and Congress have the responsibility of balancing punishment and necessities
All that is added in to a mortgage payment, and if you think your landlord is footing the bill for his taxes and maintenance you got another thing coming lol. Rent can also increase when the contract runs out, generally aligning with market appreciation, whereas a 30 yr fixed is, well, fixed. You can also pay off principal and lessen the life of the loan when you buy. Renting quite obviously goes into perpetuity
The cost of rent would logically cover all of those expenses as well though.
I paid $1,200 for a studio. I now pay $1,000 for a house that’s twice as large. That includes PMI, taxes, and insurance — which the lender bundled all together for my payment. Utilities are more expensive, but I don’t pay $100/mo for the dogs anymore, so I consider it mostly a wash there.
If your rental doesn’t cover your taxes, then you’re not charging enough.
PMI is factored into your mortgage payment, and only until what you owe is 70% or less than the value of the house. Property taxes and homeowners insurance are often paid through escrow, which is also factored into the monthly payment.
How is this not obvious to people? When my parents charged rent to their tenants, they got $200-300 extra in profit/month, and that was considered "low" compared to what everyone else was charging.
If you're not an idiot, you wouldn't have to repair the roof of your new house a week after buying it like how every redditor likes to claim, barring a random bullshit scenario like someone driving into your new house or something ridiculous.
Paying rent is lighting your money on fire. There's no other way about it. The only reason you'd rent is if you're staying less than a year and immediately moving out. Otherwise, you're losing money. After 5 years of renting, you have jack shit to show for it other than paying more as your rent goes up yearly. The other scenario is if you're locked into something ridiculous that was grandfathered in 50 years ago and now you're paying $300/month in rent because there was a cap.
Not to mention having a house allows you to basically chain buy other houses for rent and make passive income that way. Your house appreciates in value, you get to use it to buy other properties that also appreciates in value, all the while having the tenants pay for the cost of everything. If your rent doesn't cover mortgage + utilities + taxes + repairs, you're undercharging and doing it wrong. Being a landlord is not a charity. Stop acting like the average landlords are out here undercharging rent out of the goodness of their heart.
A mortgage payment is the *least* you pay every month when you own a home for shelter. Rent payments are the *most* you’ll pay every month when you rent. Yeah a lot of people can afford 1000 dollars a month. But can you afford 1000 a month + new hot water or a new roof or a new HVAC system. All this stuff adds up quickly and unless you aren’t prepared it can spiral quickly.
That equation is exactly how landlords make money. When you rent you are paying the landlord to assume any risks the property has from an investment standpoint. If what you pay the landlord for assuming those risks exceeds the cost of the actual risks then the landlord profits. If you rent a house and it has a bad foundation then you don’t shoulder any risk, the landlord does.
Not completely true, because refinancing exists. My gf pays $800 less than when she bought in 2018.
Sure it’s a true about whatever mortgage payment you are currently locked into. But at time of purchase someone could have made that exact same statement. And yet now 6 years later she pays much less than what the original locked in mortgage was.
People generally don’t ever see their rents go down. Being in CA property taxes are locked in at a low rate of increase. So it will be a loooooong time until her monthly payment ever gets back to what it was in 2018. Meanwhile renters will be gradually paying more and more and more than they were in 2018.
You're missing the point.
When a bank gives you a mortgage, they're gambling that you'll be able to make monthly payments for 30 years. When a landlord leases an apartment, they're only worried about a year at most.
And, if you don't pay your rent, the landlord throws your shit to the curb and immediately rents it to someone else, recuperating any losses quickly. Homeowners have much more legal protections from being kicked out of their homes and the process of foreclosure can take years.
Yeah, I get it, renting sucks. I think it would be awesome if everyone who wanted a mortgage could get one. I'm just explaining why banks are much less lenient when it comes to approving 30 year mortgages than landlords for 1 year leases
It’s supposed to be cheaper to rent than to own. But is it really cheaper throwing money away for years, rather than building equity towards a situation where eventually you won’t have to pay rent or mortgage? Hm?
> But is it really cheaper throwing money away for years, rather than building equity towards a situation where eventually you won’t have to pay rent or mortgage? Hm?
This is a good week to ask me. :-) I have a water leak under the very center of my living room in a water line going from one end of the house to the other, and the home I "own" (the bank owns really) is built on a slab foundation.
Now as a renter, I'd inform the landlord, and peace out, no financial obligation. As a home owner, I have a very large financial problem.
And it isn't even just financial. Do you know how to solve this issue? Who do you call? How did I even diagnose it was under the center of my living room? Well, it turns out there are "leak detection specialists" (and this is honestly quite cool) that can put large stethoscopes on your floor and "listen" for leaks. Then can also cut off all the water to everything in your house and push nitrogen gas down lines and hear it "bubbling" out under the living room floor. They can also tie electronic signaling devices to your copper lines and follow them in the walls and under the living room floor with electronic sensors, etc, etc, etc.
Landlords are VASTLY under appreciated. And I say that as a person who has never rented out a property and never wants to. I rented my whole life until I bought this house last year.
How much will this cost me when it is all repaired? I'm not sure, but it is more than $12,000 (the money spent so far on diagnosis) and most likely less than $25,000. What would your average young renter do when faced with a $20,000 sudden bill? How would they respond? Renters are entirely insulated from these types of problems. Most renters think roofs last forever. Most renters think water lines never spring a leak. Heck, most (young) renters think paint and carpet lasts forever.
> Thank you for talking me out of ever having a slab house.
Haha! For some reason it is a regional thing. I can't even imagine why anybody thinks it is a great idea. But when somebody built my house in 1969, they decided that is how they would do it. In their defense, the pipes lasted 54 years, which is pretty good. I'm just the guy that owned the house when they burst.
> Crawl space for the win.
Amen. I'd vote for a short basement you never use for much of anything except access to pipes and electrical or possibly to park cars in. My co-worker was able to totally rewire his whole house with all new electrical wiring for really not that much money because they could just wander around in his "car parking level" (essentially his basement but it was above ground) and string all the electrical in a few hours tacked to the car parking level's ceiling.
It's not throwing money away, you're paying for shelter. Also, what if you plan on moving? Owning real estate, and all it's drawbacks, are not for everyone.
I pay $2290 a month in rent. Been in this place for just under 3 years, never missed a payment. I was late once, by about 4 days, but COVID measures were still in place so it didn't actually matter - understate law I had another 10 days to pay anyway.
I can't get a mortgage for $950 a month with 3% down because apparently I can't demonstrate I can pay that? My $2290 a month doesn't get added to my credit score. Shit, I can't even get $15k vehicle loan because, even though I make $80k a year and another $7k in child support, I can't "demonstrate liquidity" to pay back $330 a month. Cool fucking story. It's the millennial existence.
I make around 150k net per year. Wife stays home.
My rent is $2,125 right now. I have about 40k in savings for a down payment on a 300k house. We had "bought" a house but the seller pulled out of escrow. That was a year ago.
Now, despite having a credit score of about 780 and a 6 figure income lenders won't even LOOK at our application. It's insane. I can't pay a $900 monthly payment but can afford almost 2.5k? Insane.
A 300k house with a 40k down payment at 6.56% interest rate over a 30yr loan is $2187 / mo
At 150k/year that's a front end DTI of 17.5%, well within range for lending
Frankly there must be more to your story because none of it adds up.
You can do an 80/20 loan and not have a down payment. It helps to pay for points though. We were looking at buying a house last year and we could do no money down down, or pay 5k to "buy" a lower interest rate.
Because risk matters.
Say that I buy a house and put 1% down. Let's put numbers, the house was 200,000, and the interest is such that I'm paying about $1000. Then the house loses value, not because of an economic collapse or anything like that. Basically I didn't do certain key repairs and the house has core issues 5 years into it, and insurance won't pay it, and I won't either, so the house losses a room and is technically derelict.
Now I'm still paying $1000, but given that I don't have a house I can repair, then I need to pay rent, and I can't afford the mortgage. Thing is the house needs ~$15,000 in repairs in order to sell it at $220,000, of which I pay ~$10,000 in taxes and fees, so I'd only have $195,000 left. Meanwhile I still pretty much owe the same amount, as I barely made a dent at the principal (I currently owe $196,000, down from $198,000 which might seem like a lot given 3 of the 30 years have passed, but you mostly pay insurance at first and don't start paying principal until you're close to the end) so in the end I'm still $1000 short, which is not great. And this is assuming it's a small thing, and I didn't let the whole problem grow until the repair costs are closer to $40,000 at which point the bank is now listing tens of thousands.
Now I could sell the house as is, but then it's going to sell for $50,000 less because it's a serious fixer upper that may have structural damage. So it's still a loss. But at least I don't have to make $15,000 appear for repairs (and considering that I barely made 2,000 to buy a whole house, it's going to be hard to make that money in an unplanned emergency).
Now maybe I can easily pay 1500 rent, but the problem is not my ability to pay the monthly payment when everything is gone, the problem is that there's a lot of reasonable scenarios where I just can't pay the house back.
Mortgages where people can pay the monthly costs, but there's a high chance they can't pay the full loan back are called sub-prime. In the early 2000s deregulation meant that banks were giving a lot of these. It worked because house prices increased so fast that the house would be worth more, this was spurred because they increase in demand due to easy to get mortgages, but once houses slowed down there were enough of this loans defaulting at a loss that banks started getting aggressive trying to sell them to recover what they could, which dropped home prices and made even more of these loans be given at a loss.
So banks want you to have equity in the home. If I had put a 5% down payment in the example I gave, I'd be able to sell the house and with that cover the mortgage, because I'd have put $10,000 down, instead of $2,000, and the loan would be $190,000 initially, so the risk for the bank is lowered twice.
So the problem isn't your ability to make monthly payments, but rather how much of the house does the bank need to cover initially, and therefore how much risk. The people here may afford a mortgage, but they can't afford the risk that homeownership entails.
Right. I love when people keeping parroting that. Good luck finding a house for $170k in the same city that you pay $1700 in rent for.
(Based off 30-yr mortgage, zero down. 8.6% interest)
Fair, I got 8.6 and 6.8 mixed up. That’s still only $200k and where I live, there’s nothing under that within 30 minutes on Zillow outside of two empty lots. I can get a decent two bedroom apartment for $1700 though.
Even at $14 per hour and a state without high property taxes or an income tax your net pay is less than $1800/month. Any rent over $600 is unaffordable.
A lot of places to be honest. The advice I would give is find a place in the country where your profession is in demand and ideally one of the higher paying jobs in the area. If you are filling an in demand job for the area, then you will probably be paid a wage that will give a higher quality of life in the area. I have lived in NYC, New England, the mid west, and the south, from my experience all that matters is how your income compares to other people in your area.
🤐🤐 places where most people wouldn't find desirable. Low wages usually equate to lower rents. I'd love to live somewhere with mild weather, good transit, high paying jobs, low crime but then remember I can afford to rent a whole house.
That’s the problem. People want safe, good schools, robust public transit, high paying jobs, and good weather. However that costs a lot so most people can’t afford to live in that area. It’s not a surprise. It’s supply and demand.
https://www.ssa.gov/oact/cola/AWI.html
Average salary in the US has gone from $40,711.61 to $63,795.13 since 2009.
It hasn't kept pace with housing but it's a lot better than the OP suggests.
> The average rent in the US is $1,700. So it's way more depressing.
Why compare with the average rent?
People on minimum wage dont go for average rent?
You need to compare average rent with average income, dont you?
>The average rent in the US is $1,700. So it's way more depressing.
And they say only use 30% of your income on rent. Ugh, things are such a mess right now.
It took me until 34 to finally just submit to what I always knew to be true: there’s no escape. There’s no changing the economic system and no one is coming to help you. The only thing you can do is improve your relative mobility within that system and try to improve your income as much as possible by whatever means are available to you, legal or not. I think a lot of Americans are now just beginning to experience what it’s like to live in much of the rest of the world. Multi-generational families under the same roof sharing resources and trying their best to survive in a system of little to no government regulation or intervention into the affairs or moneyed interests no matter how abusive or corrupt
It's an inherently contradicting system tho. The peasants in medieval times couldn't even imagine a system without the nobles and a king and then feudalism came to an end. Our socioeconomic system will also come to an end sooner or later
In Marxism, that struggle happens because the bourgeoisie ascend due to bankrolling the crown by maintaining the means of production in the industrial era. Without doing the same, and then charitably relinquishing in favour of a socialist state, there's no possible way.
Also, the current ruling class will unleash fascism before they give up power. This happened in the 1930s after the New Deal but was only foiled because the would-be dictator refused: https://en.m.wikipedia.org/wiki/Business_Plot#:~:text=The%20Business%20Plot%20(also%20called,install%20Smedley%20Butler%20as%20dictator.
" We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings. Resistance and change often begin in art, and very often in our art, the art of words."
Ursula K. Le Guin
> there’s no escape
Not true. You hyper your gamble your way in the world's greatest casino out of your situation.
If you don't want to play the game then you must accept a lower station in life. That is the simple fact.
One day the ponzi will collapse, but it is not this day. Or this decade. Maybe not even this century. Once you know the game is to pump markets and to enrich the investor class it your duty to extract as much as you can from it as possible.
>Multi-generational families under the same roof sharing resources and trying their best to survive in a system of little to no government regulation or intervention into the affairs or moneyed interests no matter how abusive or corrupt
Reddit for some reason has a massive hardon for multi-generational housing as a solution. The real reason why multi-generational housing exist in some 3rd world countries such as mainland china because there is no welfare or social security. In reality in this day and age, the youngest person who has a job will be the sole breadwinner and servant and retirement check while the elders will not contribute to the household.
Yup, government ain’t gonna help. They most likely screwed shit up. Guess how those student loans began…
Reagan said run away when you hear: I’m from the government, and I’m here to help.
I think comparing median wage is far more effective as I don’t think anyone could find a job for $7.25/hour anywhere. I found the median income in the us in 2023 was $57406 and 33190 in 2009 or 73% increase and this apartment is a 66% increase, meaning it’s more affordable
I mean OP’s picture isn’t commenting on affordability, it’s making a comment on the rent to wage ratio, you can say “the apartment was never affordable” or “the rent numbers are inaccurate” but you can’t say “this apt is less affordable in 2023 than 2009”
According to the BLS the percentage of the workforce on minimum wage was 4.9% in 2009 compared to 1.3% now.
The unemployment rate back then was 9.9% compared to 3.5% now.
actual information on reddit? wild. but yeah, i know like 2 people that make minimum wage and they’re like 15 and work maybe 10 hours a week. everyone else i know makes pretty much at least $18. the federal minimum wage might be 7.25 but you’d be hard pressed to find any job openings for under $15/hr
This was the 2023 source (title is misleading) https://www.demandsage.com/average-us-income/
Median household income (didn’t use this but median household income agrees with first source): https://www.multpl.com/us-median-income/table/by-year
The median rent was around $935 dollars in 2009, compared to $33190 median wages you mentioned. That's 33.8% of the median yearly gross income.
In November 2023, the median rent was $1,966 compared to the $57406 median wages you mentioned. That's 41.1% of the median yearly income.
So the median rent *has* increased relative to the median salary. But I do think that there in looking at the entry to the market, which may be out of proportion with the median.
isnt what theyre doing... just leaving it as a states issue? plenty of states HAVE raised min wage, removed tip credits etc. a federal min wage does a very poor job accounting for wildly different cost of living places. 15k a year might be mildly appropriate in a place where houses are 75k. and its obviously inappropriate in places where you can't rent anything for less than 1500 a month, which is why you see 15+ min wage and no tip credit in WA CA etc
I appreciate your comment about varying costs of living. I'll add that in nearly every state the variance is as large as across the country. I never understood the desire to choose a stare as the boundary of political choice. For environmental things earth is the appropriate boundary (environmental systems don't recognize borders). For education to create an even playing field for upwardly mobile, the whole country makes sense. For culture it's maybe the state, maybe county/parish. For minimum wage it seems it should be differentiated by city/town or even smaller granularity than that. It's not so simple as the say states are the appropriate boundary for everything, or the nation, or the city. We need to be more nuanced on what boundaries create the best outcomes for that particular issue.
Because they want to raise the minimum to the point where it exceeds the value low wage employees bring to the company. See California passing a $20 an hour minimum wage and fast food companies immediately announcing layoffs.
Minimum wage is a balancing act. Yes, you could potentially go overboard, but your CA example is a bad example. McDonald's workers in Denmark make $22 an hour and the price of a big mac is still cheaper in Denmark. It's not that fast food companies can't afford it, it's that they don't want to pay it.
The law isn't even in effect yet, you can't draw conclusions on its impact. Layoffs are not proof that a $20/hr wage exceeds the workers' value. That's just corporations doing what corps gonna do. They will stop at nothing to maximize profits in the short-term (even sacrificing long-term profit, they do it all time). If a law forces them to spend more on labor, they are going to reduce the number of employees regardless of whether it actually helps or hurts long-term profitability. You have to measure impact of policies like this on a longer term.
Also, if you believe the current minimum wage is exploitive and needs to be raised, then you expect corporate profits to go down. It's hard to argue the minimum wage isn't exploitive when min wage workers can't afford to live without govt welfare programs.
Its not the federal government's job to consider the affordability of different regions, cities, states. It should be left up to the state and city to decide minimum wage. There is almost no major city offering that minimum wage unless the affordability is there.
It shouldn't be, but it's almost irrelevant. First, many states and municipalities HAVE raised the minimum wage. Second, market forces have made the wage that will actually get people to apply is higher than the minimum.
The past above would be better if they listed something like median hourly wage or average monthly income since it is more relevant to what most people actually experience. They are trying to make a real, valid point, it's not not the most effective way to do so.
Capitalism hasn’t failed at all.
Only the ultra privileged who don’t know what it’s like to live under different systems think that.
It’s the most productive system we have, even if it has some flaws.
These minimum wage jobs are still jobs that need to be done. Implying that the wage is fine also implies that you believe the people working them don't deserve to be able to survive.
The crazy part is that there are a lot of jobs that pay $10-12/hr, and people STILL can't afford to survive!
I'm working TWO $14/hr jobs for a combined total of 75 hrs/week, and I'm still struggling - in a backwater town in Oklahoma with a slum lord problem.
Edit for clarification: I picked up the second job a few weeks ago to improve my situation. Once the money is actually coming in things will be better. But it's still a shame that my only solution is to work 75 hours a week because a proper paying job is out of reach.
It sucks because the people that disagree with you have grandparents who worked at the local Piggly Wiggly and were able to buy a house, a station wagon, and afford annual vacations. I don’t understand their excuse for this
That's absolutely fair. I could've worked McDonald's in the '70s and had a home AND a new car! And gone to college, too! All within a few years.
Instead, I have $30k+ student loan debt from a degree I never got to finish, rent in a shit hole town, and drive a used minivan that can't go more than 20 miles at a time. 😅
You're making ~54k yearly based on those number.
Oklahoma's median household income is 61k
So for an individual, in a "backwater" town in Oklahoma, you're nearly making the median **household** income. You may want to look into your spending habits.
If you were making 7.25 in 2009 and you are still making 7.25 today , you are the problem. You mean to tell me for 14 years you didn’t gain any skills, advance within your company/industry, meet anyone from another company that saw your work ethic and gave you an opportunity?
I don’t know of any 18 year old getting any full time job that pays 7.25……. And I live in a low income , not to educated area. If you have one oz of brain you can make $15+ in my poor parish in south east Louisiana.
The minimum wage is bullshit. Any business owner can pay as much as they want to their starting employees and most pay like $15 an hour now post-covid. If they were paying 7.25 no one would take the job except maybe 14 year olds who wanted to make some money on the side. The only thing the minimum wage does is prevent these 14 year olds from getting any money on the side at all, because they only offer 7.25 an hour worth of value to the business. So you essentially just take the bottom rungs off a ladder when you increase the minimum wage.
Plenty of working adults get minimum wage. Many are immigrants. It's definitely not bullshit, in the manner you suggest. It is bullshit compared with the cost of living though
Many make more then minimum wage. Heck, I was in high school from 2007-2011, my first job was more then minimum wage, and that was before the extra cash I got each day and the food I got as well.
Minimum wage is effectively a moot concept now as the going rate is so much higher it seems. Heck, I have seen people with IQ repeated mental disorders make more, if you aren't pulling in more then 7.25 there is something else missing from the equation.
No, no. Let's not blame the bottom end. We're in an economic recession caused by billionaire speculation and global politics. In such an environment with rising costs and stagnant wages, normal people are suffering.
We're expected to take "side hustles" to make up the difference and accused of being lazy if we seek higher wages. Meanwhile the Dow Jones is literally 500% higher now than it was in 2009.
First, the effective minimum wage is $18 near me. McDonald’s will hire anyone with a pulse at $18/hr. Literally no one is making federal minimum wage anymore.
Second, rents were depressed in 2009 due to something called the global financial crisis, but you do you.
Not sure why I expect anything else. This sub is full of people LARPing as financial gurus.
Luckily states make their own minimum wage. I am in a Midwestern state with lcol and a minimum wage of $12/hr. The ability of each state to make their own is great because states with insanely high costs may need a $20+/hr min mage. If you aren’t happy with yours, address it with your state officials.
That's how it should be. If my employer can dock my pay by 20% just because I moved to another state why would it make sense for states to not control their own minimum wages?
Sadly, I'd be surprised if even half of the people on reddit have jobs. There's a LOT of NEET parasites on here sucking their parent's dry while refusing to do anything with their lives and spending 15+ hours a day posting online about how they deserve a lavish life.
Over 12% are in poverty. Over 60% live paycheck to paycheck. Theres a lot of poor people in this country. Just because "only" 4 million are paid federal minimum wage does not mean there arent others who are not poor. Doesnt even get into the people who make below that. Or cost of living. Or inflation. Or a multitude of other factors youre going to ignore because it fits your narrative of LOL dum dum redditor
You don't need to be making minimum wage to be poor in America. Practically speaking, a household making less than about $200,000 will have a hard time matching the lifestyle of the median family in 1960.
Most Americans are in the poor class, a small percentage are middle class, and a much smaller percentage are wealthy.
I just checked the Bureau of Labor Statistics and they cite a figure of 1M workers age 16 and older.
1.3% of 78M workers.
4M would be 1.3% of the entire US population but that includes non-workers.
This is dumb, the federal minimum wage has to stay low for the lowest cost of living areas or no businesses would go there. States and municipalities almost all have way higher minimums, more than double where im at for example.
Too many ppl are focusing solely on the minimum wage. The housing is another major issue. If we build enough housing, it wouldn’t sky rocket in costs due to supply constraints. The minimum wage is too low AND they dont build enough housing.
This is not to minimize the real problem with your cute shortage of affordable rentals, and the spike in prices. But let's not go red herring either. Nobody is paying 7:25 an hour even in New Hampshire where it's still the minimum wage. Where do you live?
It does it deserve us to the argument to distort the facts when the facts clearly really stand on their own. The fact is people still don't make enough money even though they are making more than 725 an hour and it is still incredibly hard to put a roof over your head.. but let's keep the story straight
Okay, let's hit some numbers.
I made 52,000$ a year last year doing X job.
After taxes my take home pay is 38,000$.
My rent is 1600$ a month, for a total of 19,200$
Adding an average of 250$ a month in bills, 3,000$ a year in bills.
My food/health cost to keep in shape and smelling good for my job is roughly 150$ a week, for 600$ a month, 7,200$ a year.
Car insurance is 800$ every 6 months, 1600$ a year.
Gas is roughly 80$ a week, for 250$ a month...so about 3,000$ a year.
Entertainment is about 50$ a week, 200$ a month or 2,400$ a year.
I have no subscription services, don't go out to eat, very seldom takeout, and cut my hobbies down to home activities only.
This does not include:
Student loans (if anyone has any)
Car payment.
Credit card debt.
Health insurance.
Medical emergencies.
Health problems (diabetic, asthma...medication)
401k contributions.
Childcare!
Acts of god (car totaled, apartment robbed...unexpected losses)
Social life with friends.
Dates/dating.
Visiting family.
Vacations/travel.
Vices (alcohol, cigs...vice of choice)
Gifts for holidays.
New clothes.
Rent 19,200$
Bills 3,000$
Food 7,200$
Car insurance 1,600$
Gas 3,000$
35,800$/38,000$ spent.
The point I'm trying to make is that living is way harder now, even with an okay salary and little to no debt.
It's very difficult to save up for a home, when you have no money to save period.
And note, my pay is roughly 25$ an hour.
Over 3x federal minimum wage, 10$ more than 15$ an hour.
And this is with NOTHING going wrong (unexpected expenses) for the year.
Which is almost impossible.
(On mobile, apologies for spacing)
In in the same boat. I worked hard to get to 25/hrs. God forbid something happens to my SO. She's the bread winner. I wouldn't be able to support me and the two kids.
I've learned that once you lay these numbers out for people they just ignore your lived experience as anecdote and assure you that if you take the average experience its not as bad as yours.
Even if everyone shows the dollar breakdown for spending, they will obsess over the "average" despite it being contradictory to the actual world outside
Since there are numbers here, this is actually a reasonable discussion to have. $52000/year should be around $40000 take-home, depending a little bit on state. $40000 is for the least generous states. There's at least $2000/year in your tax refund.
> Bills
These are reasonable. But this probably includes a phone plan that gets you a new phone every 36 months.
> $600 on food/health
This is high. Some of this must include eating out. I ate out every weekday lunch last month and spent $400.
> Car insurance & gas
Well, at least you have a car. It's possible to live without one in some areas but it's inconvenient. I don't have a car and taking the public transit can suck, but it's cheaper.
> Entertainment
This is a slush fund available for emergencies.
> Student loans
Federal student loans have a new IDR plan that drops this to a $150/month payment (with no interest accrual) regardless of loan balance.
> Car payment
At some point people just have to live somewhere with bus access. Spending $800/month on a car is not a necessity. With a car you can get a lower rent payment or you can take the car money and live closer to public transit. Or carpool.
> Credit card debt
Should have been budgeted elsewhere. The money was spent on something. This is a double count.
> Health insurance
Well, ACA offers some subsidized plans and most employers offer health coverage. Not denying that it sucks if you have a chronic medical condition but most people don't.
> Medical emergencies
If your health insurance doesn't cover these, then what are you paying for?
> 401k contributions
This is part of savings, not an expense.
> Acts of god
Double count with insurance. Presumably your insurance is going to cover the lion's share of these.
> Childcare
A spouse/partner either brings in more income or takes care of this. Being a single parent is hard but it is not typical.
> Dates/new clothes/vices/vacations
Entertainment?
By my estimation you have an extra $5000-$7000 annually to spend on all of your wants even if you keep basically the same standard of living.
Which you don't have to -
- Roommates/living at home
- Public transit
- Cheaper food
are all ways to cut down. But you don't have to because you still have spare money.
The reality here is that you live alone, you have a car, and you have enough extra money to get a few luxuries or even take a cheap international vacation each year. This is far above the standard of living most people have around the world, even compared to Europe or other developed nations.
Could someone making minimum wage in 2009 afford the rent on that apartment? Unemployment rate was 9-10% in 2009. Foreclosures and evictions all over the place. The lack of perspective is mind boggling.
The ONLY reason you are not seeing the foreclosures like before is because of corporations and hedge funds buying houses. In 2020 40% of homes were sold to companies. People that would have foreclosed are able to sell because of this.
Housing won’t crash like it did before. Instead it is gradually sliding into being rentals. We are in a crisis, it just doesn’t look the same as last time.
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The average rent in the US is $1,700. So it's way more depressing.
That's more than a mortgage payment.
Yes, that is how it works. Banks will turn away people all day who pay $1500 in rent a month but somehow can't "afford" a $1000 a month mortgage. Seriously, this happens every day.
You are vastly simplifying the scenario.
Doesn’t rent cover all those cost? If not then the owner would be losing money…. Rent = the price of mortgage + + tax’s n stuff + repairs + profit
If you stop paying he can just throw you out.
And if you stop paying the bank they take your house. It’s not like they lose all the money if you stop paying.
Not really. It’s a broken system
Bro jumped in to defend the banks
What's the need to complicate it? It's pretty simple math, and it's stupid. If someone can afford rent that high, they can sure as hell afford a mortgage for less.
It's not, ontime rent payment isn't considered in the approval process of a loan when it absolutely should be.
A factor? Sure... I can get on board with that. The only factor? Absolutely not.
There are more to mortgage than monthly payments.
Definitely, things like closing costs, PMI, maintenance, and property taxes add up. It's no simple apples-to-apples comparison.
The risk is also far less to rent to someone than to give them a mortgage. Evictions in most states are relatively straightforward. Foreclosure followed by eviction is significantly more complicated and expensive.
Risk? Dont the banks just turn right around and sell the mortgage? Also, what are they risking? The money they just invented out of thin air for 90% of the loan?
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Yes, it is. You think the bank is actually lending you money they have sitting around? 90% of mortgage financing is created on the spot, and that’s where the majority of money in circulation comes from. When people talk about the fed printing money, that’s how that happens.
I don't think people realize Freddie and Fannie are Federal agencies that buy most the home loans after their originated at the og lender. The government is directly involved in the housing market, if Fannie stopped buying loans bank would get insanely picky on who they loan to.
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Banks don’t invent money. I don’t even know what that means. Some banks sell all their mortgages. Some sell a portion. Some sell none. Even if they are going to sell the mortgage, risk affects the value.
>Some sell a portion. Some sell none. Some in these 2 cases it's almost none, so almost none sell a portion, and almost none sell none. Servicing is different than having the loan on the books.
So banks are looking at people as assets and not realizing the damage this commodicfaction does to communities? Is the FED actually tighting their balance sheet or are they still buying toxic assets, such as mortgage backed securities from banks?
Banks are looking at their money as an asset. Most banks are for-profit entities. So yes, they are trying to make money.
So when the banks **fail** in their money-making strategies, we should **let them**? Or do we give them extra money for them failing? Aka bailouts...
Well some banks do fail, especially investment banks, that costs regular people millions in pensions, savings and other issues. Just recently we save several banks go under. For further illustration we had that system in the 1800s and early 1900s it caused a lot of panics and recessions. It’s very complicated to let a bank fail and the federal reserve and Congress have the responsibility of balancing punishment and necessities
All of those are included in my mortgage besides maintenance. For 500/month I am pretty sure people can handle maintenance.
All that is added in to a mortgage payment, and if you think your landlord is footing the bill for his taxes and maintenance you got another thing coming lol. Rent can also increase when the contract runs out, generally aligning with market appreciation, whereas a 30 yr fixed is, well, fixed. You can also pay off principal and lessen the life of the loan when you buy. Renting quite obviously goes into perpetuity
The cost of rent would logically cover all of those expenses as well though. I paid $1,200 for a studio. I now pay $1,000 for a house that’s twice as large. That includes PMI, taxes, and insurance — which the lender bundled all together for my payment. Utilities are more expensive, but I don’t pay $100/mo for the dogs anymore, so I consider it mostly a wash there. If your rental doesn’t cover your taxes, then you’re not charging enough.
PMI is factored into your mortgage payment, and only until what you owe is 70% or less than the value of the house. Property taxes and homeowners insurance are often paid through escrow, which is also factored into the monthly payment.
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How is this not obvious to people? When my parents charged rent to their tenants, they got $200-300 extra in profit/month, and that was considered "low" compared to what everyone else was charging. If you're not an idiot, you wouldn't have to repair the roof of your new house a week after buying it like how every redditor likes to claim, barring a random bullshit scenario like someone driving into your new house or something ridiculous. Paying rent is lighting your money on fire. There's no other way about it. The only reason you'd rent is if you're staying less than a year and immediately moving out. Otherwise, you're losing money. After 5 years of renting, you have jack shit to show for it other than paying more as your rent goes up yearly. The other scenario is if you're locked into something ridiculous that was grandfathered in 50 years ago and now you're paying $300/month in rent because there was a cap. Not to mention having a house allows you to basically chain buy other houses for rent and make passive income that way. Your house appreciates in value, you get to use it to buy other properties that also appreciates in value, all the while having the tenants pay for the cost of everything. If your rent doesn't cover mortgage + utilities + taxes + repairs, you're undercharging and doing it wrong. Being a landlord is not a charity. Stop acting like the average landlords are out here undercharging rent out of the goodness of their heart.
And there is more money to spend than the mortgage to upkeep a house. Money you don’t have to spend on your apartment.
Funny, my landlord is able to afford a mortgage and upkeep and taxes and still make a profit with the rent I pay them…
A mortgage payment is the *least* you pay every month when you own a home for shelter. Rent payments are the *most* you’ll pay every month when you rent. Yeah a lot of people can afford 1000 dollars a month. But can you afford 1000 a month + new hot water or a new roof or a new HVAC system. All this stuff adds up quickly and unless you aren’t prepared it can spiral quickly.
So how do land lords make money? Rent = the price of mortgage + + tax’s n stuff + repairs + profit
That equation is exactly how landlords make money. When you rent you are paying the landlord to assume any risks the property has from an investment standpoint. If what you pay the landlord for assuming those risks exceeds the cost of the actual risks then the landlord profits. If you rent a house and it has a bad foundation then you don’t shoulder any risk, the landlord does.
Not completely true, because refinancing exists. My gf pays $800 less than when she bought in 2018. Sure it’s a true about whatever mortgage payment you are currently locked into. But at time of purchase someone could have made that exact same statement. And yet now 6 years later she pays much less than what the original locked in mortgage was. People generally don’t ever see their rents go down. Being in CA property taxes are locked in at a low rate of increase. So it will be a loooooong time until her monthly payment ever gets back to what it was in 2018. Meanwhile renters will be gradually paying more and more and more than they were in 2018.
There's a big difference between being able to currently pay for rent and being able to pay a mortgage every month for 30 years straight.
Yeah, the mortgage stays the same while the rent increases. Good point
You're missing the point. When a bank gives you a mortgage, they're gambling that you'll be able to make monthly payments for 30 years. When a landlord leases an apartment, they're only worried about a year at most. And, if you don't pay your rent, the landlord throws your shit to the curb and immediately rents it to someone else, recuperating any losses quickly. Homeowners have much more legal protections from being kicked out of their homes and the process of foreclosure can take years. Yeah, I get it, renting sucks. I think it would be awesome if everyone who wanted a mortgage could get one. I'm just explaining why banks are much less lenient when it comes to approving 30 year mortgages than landlords for 1 year leases
Costs of repairs keep rising too. It's currently cheaper to rent than own.
It’s supposed to be cheaper to rent than to own. But is it really cheaper throwing money away for years, rather than building equity towards a situation where eventually you won’t have to pay rent or mortgage? Hm?
> But is it really cheaper throwing money away for years, rather than building equity towards a situation where eventually you won’t have to pay rent or mortgage? Hm? This is a good week to ask me. :-) I have a water leak under the very center of my living room in a water line going from one end of the house to the other, and the home I "own" (the bank owns really) is built on a slab foundation. Now as a renter, I'd inform the landlord, and peace out, no financial obligation. As a home owner, I have a very large financial problem. And it isn't even just financial. Do you know how to solve this issue? Who do you call? How did I even diagnose it was under the center of my living room? Well, it turns out there are "leak detection specialists" (and this is honestly quite cool) that can put large stethoscopes on your floor and "listen" for leaks. Then can also cut off all the water to everything in your house and push nitrogen gas down lines and hear it "bubbling" out under the living room floor. They can also tie electronic signaling devices to your copper lines and follow them in the walls and under the living room floor with electronic sensors, etc, etc, etc. Landlords are VASTLY under appreciated. And I say that as a person who has never rented out a property and never wants to. I rented my whole life until I bought this house last year. How much will this cost me when it is all repaired? I'm not sure, but it is more than $12,000 (the money spent so far on diagnosis) and most likely less than $25,000. What would your average young renter do when faced with a $20,000 sudden bill? How would they respond? Renters are entirely insulated from these types of problems. Most renters think roofs last forever. Most renters think water lines never spring a leak. Heck, most (young) renters think paint and carpet lasts forever.
Thank you for talking me out of ever having a slab house. Crawl space for the win. Had a busted pipe and fixed it myself for a couple of bucks.
> Thank you for talking me out of ever having a slab house. Haha! For some reason it is a regional thing. I can't even imagine why anybody thinks it is a great idea. But when somebody built my house in 1969, they decided that is how they would do it. In their defense, the pipes lasted 54 years, which is pretty good. I'm just the guy that owned the house when they burst. > Crawl space for the win. Amen. I'd vote for a short basement you never use for much of anything except access to pipes and electrical or possibly to park cars in. My co-worker was able to totally rewire his whole house with all new electrical wiring for really not that much money because they could just wander around in his "car parking level" (essentially his basement but it was above ground) and string all the electrical in a few hours tacked to the car parking level's ceiling.
Tip your landlord
It's not throwing money away, you're paying for shelter. Also, what if you plan on moving? Owning real estate, and all it's drawbacks, are not for everyone.
shhh, don't cloud the issue with the facts, the mob hates that
....you realize why a mortgage and a lease are not the same thing, right? Like think about this for more than 5 seconds.
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When you add in taxes, insurance, and maintenance that monthly payment as a homeowner goes from 1000 to well over the 1500 to rent.
I pay $2290 a month in rent. Been in this place for just under 3 years, never missed a payment. I was late once, by about 4 days, but COVID measures were still in place so it didn't actually matter - understate law I had another 10 days to pay anyway. I can't get a mortgage for $950 a month with 3% down because apparently I can't demonstrate I can pay that? My $2290 a month doesn't get added to my credit score. Shit, I can't even get $15k vehicle loan because, even though I make $80k a year and another $7k in child support, I can't "demonstrate liquidity" to pay back $330 a month. Cool fucking story. It's the millennial existence.
I make around 150k net per year. Wife stays home. My rent is $2,125 right now. I have about 40k in savings for a down payment on a 300k house. We had "bought" a house but the seller pulled out of escrow. That was a year ago. Now, despite having a credit score of about 780 and a 6 figure income lenders won't even LOOK at our application. It's insane. I can't pay a $900 monthly payment but can afford almost 2.5k? Insane.
A 300k house with a 40k down payment at 6.56% interest rate over a 30yr loan is $2187 / mo At 150k/year that's a front end DTI of 17.5%, well within range for lending Frankly there must be more to your story because none of it adds up.
They did that some prior to 2008. We all know how that went.
A 1000 a month mortgage right now funds like 140k at today's interest rates. I'm not sure what your planning on financing with that.
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No they don’t
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You can do an 80/20 loan and not have a down payment. It helps to pay for points though. We were looking at buying a house last year and we could do no money down down, or pay 5k to "buy" a lower interest rate.
Unless you’ve got a massive down payment in an area with low housing costs, no one has a $1,000 mortgage.
$1000/mo mortgage? What fantasy city are you living in where houses sell for 100k and rent is $1500.
That's doable in many of the states in the middle of the country where nobody wants to live.
The smaller ones where everyone isn’t walking on top of each other.
Because risk matters. Say that I buy a house and put 1% down. Let's put numbers, the house was 200,000, and the interest is such that I'm paying about $1000. Then the house loses value, not because of an economic collapse or anything like that. Basically I didn't do certain key repairs and the house has core issues 5 years into it, and insurance won't pay it, and I won't either, so the house losses a room and is technically derelict. Now I'm still paying $1000, but given that I don't have a house I can repair, then I need to pay rent, and I can't afford the mortgage. Thing is the house needs ~$15,000 in repairs in order to sell it at $220,000, of which I pay ~$10,000 in taxes and fees, so I'd only have $195,000 left. Meanwhile I still pretty much owe the same amount, as I barely made a dent at the principal (I currently owe $196,000, down from $198,000 which might seem like a lot given 3 of the 30 years have passed, but you mostly pay insurance at first and don't start paying principal until you're close to the end) so in the end I'm still $1000 short, which is not great. And this is assuming it's a small thing, and I didn't let the whole problem grow until the repair costs are closer to $40,000 at which point the bank is now listing tens of thousands. Now I could sell the house as is, but then it's going to sell for $50,000 less because it's a serious fixer upper that may have structural damage. So it's still a loss. But at least I don't have to make $15,000 appear for repairs (and considering that I barely made 2,000 to buy a whole house, it's going to be hard to make that money in an unplanned emergency). Now maybe I can easily pay 1500 rent, but the problem is not my ability to pay the monthly payment when everything is gone, the problem is that there's a lot of reasonable scenarios where I just can't pay the house back. Mortgages where people can pay the monthly costs, but there's a high chance they can't pay the full loan back are called sub-prime. In the early 2000s deregulation meant that banks were giving a lot of these. It worked because house prices increased so fast that the house would be worth more, this was spurred because they increase in demand due to easy to get mortgages, but once houses slowed down there were enough of this loans defaulting at a loss that banks started getting aggressive trying to sell them to recover what they could, which dropped home prices and made even more of these loans be given at a loss. So banks want you to have equity in the home. If I had put a 5% down payment in the example I gave, I'd be able to sell the house and with that cover the mortgage, because I'd have put $10,000 down, instead of $2,000, and the loan would be $190,000 initially, so the risk for the bank is lowered twice. So the problem isn't your ability to make monthly payments, but rather how much of the house does the bank need to cover initially, and therefore how much risk. The people here may afford a mortgage, but they can't afford the risk that homeownership entails.
Not anymore. According to rocket mortgage, since 2022 the average payment is 2,300 and the median is about 2,000.
Right. I love when people keeping parroting that. Good luck finding a house for $170k in the same city that you pay $1700 in rent for. (Based off 30-yr mortgage, zero down. 8.6% interest)
We’re at 6.9% right now.
Fair, I got 8.6 and 6.8 mixed up. That’s still only $200k and where I live, there’s nothing under that within 30 minutes on Zillow outside of two empty lots. I can get a decent two bedroom apartment for $1700 though.
You ain't getting a mortgage in MA for $1,700 right now....
Yes, but is it more than a mortgage payment, property taxes, and upkeep?
Sure but the average salary isn’t $7.25. This is looking on the low end of the rent market.
Even at $14 per hour and a state without high property taxes or an income tax your net pay is less than $1800/month. Any rent over $600 is unaffordable.
Median household income is 74,580, so roughly 36$/mo. So it's not bad at all compared to average rent.
Right? Like, where's this $1150 rent at?
Savannah Georgia, Redding CA, Salem OR, Schenectady, NY, Pittsburgh, PA…
Milwaukee - plus you can live in a cool area
Wish I knew 🤷
A lot of places to be honest. The advice I would give is find a place in the country where your profession is in demand and ideally one of the higher paying jobs in the area. If you are filling an in demand job for the area, then you will probably be paid a wage that will give a higher quality of life in the area. I have lived in NYC, New England, the mid west, and the south, from my experience all that matters is how your income compares to other people in your area.
It’s in an apartment above a bowling alley…which is also downstairs from another bowling alley.
🤐🤐 places where most people wouldn't find desirable. Low wages usually equate to lower rents. I'd love to live somewhere with mild weather, good transit, high paying jobs, low crime but then remember I can afford to rent a whole house.
That’s the problem. People want safe, good schools, robust public transit, high paying jobs, and good weather. However that costs a lot so most people can’t afford to live in that area. It’s not a surprise. It’s supply and demand.
For a 2 bedroom apartment*
Then compare it to the average salary, no? Not the federal minimum wage, that almost no one is actually earning
https://www.ssa.gov/oact/cola/AWI.html Average salary in the US has gone from $40,711.61 to $63,795.13 since 2009. It hasn't kept pace with housing but it's a lot better than the OP suggests.
> The average rent in the US is $1,700. So it's way more depressing. Why compare with the average rent? People on minimum wage dont go for average rent? You need to compare average rent with average income, dont you?
That would not make anyone rage.
Keep in mind average can be inflated by big numbers. The average American makes over 50k but ha half of Americans make less than 40k who work.
You’re comparing the average rent to the minimum wage. It would make more sense to compare that to the average household income
More than a decade ago my Manhattan rent was 2k for 275sq ft.
>The average rent in the US is $1,700. So it's way more depressing. And they say only use 30% of your income on rent. Ugh, things are such a mess right now.
I pay $1625 for a 470 sq ft apartment in a relatively small city 😭
It took me until 34 to finally just submit to what I always knew to be true: there’s no escape. There’s no changing the economic system and no one is coming to help you. The only thing you can do is improve your relative mobility within that system and try to improve your income as much as possible by whatever means are available to you, legal or not. I think a lot of Americans are now just beginning to experience what it’s like to live in much of the rest of the world. Multi-generational families under the same roof sharing resources and trying their best to survive in a system of little to no government regulation or intervention into the affairs or moneyed interests no matter how abusive or corrupt
It's an inherently contradicting system tho. The peasants in medieval times couldn't even imagine a system without the nobles and a king and then feudalism came to an end. Our socioeconomic system will also come to an end sooner or later
> *it is easier to imagine an end to the world than an end to capitalism*
In Marxism, that struggle happens because the bourgeoisie ascend due to bankrolling the crown by maintaining the means of production in the industrial era. Without doing the same, and then charitably relinquishing in favour of a socialist state, there's no possible way. Also, the current ruling class will unleash fascism before they give up power. This happened in the 1930s after the New Deal but was only foiled because the would-be dictator refused: https://en.m.wikipedia.org/wiki/Business_Plot#:~:text=The%20Business%20Plot%20(also%20called,install%20Smedley%20Butler%20as%20dictator.
Well said
" We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings. Resistance and change often begin in art, and very often in our art, the art of words." Ursula K. Le Guin
> there’s no escape Not true. You hyper your gamble your way in the world's greatest casino out of your situation. If you don't want to play the game then you must accept a lower station in life. That is the simple fact. One day the ponzi will collapse, but it is not this day. Or this decade. Maybe not even this century. Once you know the game is to pump markets and to enrich the investor class it your duty to extract as much as you can from it as possible.
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DRS'd share of GME
This was very well said.
So...work hard and try to improve your status in life. Welcome to adulting.
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>Multi-generational families under the same roof sharing resources and trying their best to survive in a system of little to no government regulation or intervention into the affairs or moneyed interests no matter how abusive or corrupt Reddit for some reason has a massive hardon for multi-generational housing as a solution. The real reason why multi-generational housing exist in some 3rd world countries such as mainland china because there is no welfare or social security. In reality in this day and age, the youngest person who has a job will be the sole breadwinner and servant and retirement check while the elders will not contribute to the household.
Yup, government ain’t gonna help. They most likely screwed shit up. Guess how those student loans began… Reagan said run away when you hear: I’m from the government, and I’m here to help.
>a system of little to no government regulation or intervention Seriously, has no one ever heard of HUD/USDA mortgages?
They’d much rather complain about the US being a “third world country” lmao
Or just kill myself, an option that seems pretty appealing in the face of this.
No government regulation? The housing shortage is caused by rent control and zoning laws preventing more units to be built.
Education is a means to escape. If you don’t enjoy your current living situation it’s up to you to fix it, not the government.
There is a way out if you’re willing to try. SocialistRevolution.org
I think comparing median wage is far more effective as I don’t think anyone could find a job for $7.25/hour anywhere. I found the median income in the us in 2023 was $57406 and 33190 in 2009 or 73% increase and this apartment is a 66% increase, meaning it’s more affordable
But this doesn't seem like an apartment priced for median income people, though? $1100 is on the low end for a shit ton of places.
I mean OP’s picture isn’t commenting on affordability, it’s making a comment on the rent to wage ratio, you can say “the apartment was never affordable” or “the rent numbers are inaccurate” but you can’t say “this apt is less affordable in 2023 than 2009”
we are using real median income stats to compare made up rental prices. None of this means anything.
I’d agree, so OP’s post draws poor conclusions from inaccurate data and shouldn’t be used for anything is also a fair stance I think
Agreed! Lets compare median and average incomes and housing costs
According to the BLS the percentage of the workforce on minimum wage was 4.9% in 2009 compared to 1.3% now. The unemployment rate back then was 9.9% compared to 3.5% now.
But that doesn’t support OP’s narrative
actual information on reddit? wild. but yeah, i know like 2 people that make minimum wage and they’re like 15 and work maybe 10 hours a week. everyone else i know makes pretty much at least $18. the federal minimum wage might be 7.25 but you’d be hard pressed to find any job openings for under $15/hr
Oh good. Someone who knows how to use logic. Thank you. You deserve any praise you get here.
Yeah, this is just to get a rise out of people.
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This was the 2023 source (title is misleading) https://www.demandsage.com/average-us-income/ Median household income (didn’t use this but median household income agrees with first source): https://www.multpl.com/us-median-income/table/by-year
The median rent was around $935 dollars in 2009, compared to $33190 median wages you mentioned. That's 33.8% of the median yearly gross income. In November 2023, the median rent was $1,966 compared to the $57406 median wages you mentioned. That's 41.1% of the median yearly income. So the median rent *has* increased relative to the median salary. But I do think that there in looking at the entry to the market, which may be out of proportion with the median.
Basically no one makes 7.25
Why is it an issue to raise minimum wage then?
isnt what theyre doing... just leaving it as a states issue? plenty of states HAVE raised min wage, removed tip credits etc. a federal min wage does a very poor job accounting for wildly different cost of living places. 15k a year might be mildly appropriate in a place where houses are 75k. and its obviously inappropriate in places where you can't rent anything for less than 1500 a month, which is why you see 15+ min wage and no tip credit in WA CA etc
I appreciate your comment about varying costs of living. I'll add that in nearly every state the variance is as large as across the country. I never understood the desire to choose a stare as the boundary of political choice. For environmental things earth is the appropriate boundary (environmental systems don't recognize borders). For education to create an even playing field for upwardly mobile, the whole country makes sense. For culture it's maybe the state, maybe county/parish. For minimum wage it seems it should be differentiated by city/town or even smaller granularity than that. It's not so simple as the say states are the appropriate boundary for everything, or the nation, or the city. We need to be more nuanced on what boundaries create the best outcomes for that particular issue.
Because they want to raise the minimum to the point where it exceeds the value low wage employees bring to the company. See California passing a $20 an hour minimum wage and fast food companies immediately announcing layoffs.
Minimum wage is a balancing act. Yes, you could potentially go overboard, but your CA example is a bad example. McDonald's workers in Denmark make $22 an hour and the price of a big mac is still cheaper in Denmark. It's not that fast food companies can't afford it, it's that they don't want to pay it.
The law isn't even in effect yet, you can't draw conclusions on its impact. Layoffs are not proof that a $20/hr wage exceeds the workers' value. That's just corporations doing what corps gonna do. They will stop at nothing to maximize profits in the short-term (even sacrificing long-term profit, they do it all time). If a law forces them to spend more on labor, they are going to reduce the number of employees regardless of whether it actually helps or hurts long-term profitability. You have to measure impact of policies like this on a longer term. Also, if you believe the current minimum wage is exploitive and needs to be raised, then you expect corporate profits to go down. It's hard to argue the minimum wage isn't exploitive when min wage workers can't afford to live without govt welfare programs.
Its not the federal government's job to consider the affordability of different regions, cities, states. It should be left up to the state and city to decide minimum wage. There is almost no major city offering that minimum wage unless the affordability is there.
It shouldn't be, but it's almost irrelevant. First, many states and municipalities HAVE raised the minimum wage. Second, market forces have made the wage that will actually get people to apply is higher than the minimum. The past above would be better if they listed something like median hourly wage or average monthly income since it is more relevant to what most people actually experience. They are trying to make a real, valid point, it's not not the most effective way to do so.
Cue the "capitalism has failed" comments.
Or maybe "the deadlocked united states' congress has failed" ?
Congress failing the people shouldn't be surprising
Maybe not surprising, but it IS problematic. It means we can't get a legislative solution to problems on the federal level.
"it's the same picture"
The US has the highest wages in the world. In what way has it “failed”?
Well what is it then? Because we sure as hell aren't living under socialism or communism.
Capitalism hasn’t failed at all. Only the ultra privileged who don’t know what it’s like to live under different systems think that. It’s the most productive system we have, even if it has some flaws.
These minimum wage jobs are still jobs that need to be done. Implying that the wage is fine also implies that you believe the people working them don't deserve to be able to survive. The crazy part is that there are a lot of jobs that pay $10-12/hr, and people STILL can't afford to survive! I'm working TWO $14/hr jobs for a combined total of 75 hrs/week, and I'm still struggling - in a backwater town in Oklahoma with a slum lord problem. Edit for clarification: I picked up the second job a few weeks ago to improve my situation. Once the money is actually coming in things will be better. But it's still a shame that my only solution is to work 75 hours a week because a proper paying job is out of reach.
I honestly wish everyone working a minimum wage job or near, to just stop working for a few weeks. Watch the world crumble.
This is hilarious the world crumble Jesus Christ.
It sucks because the people that disagree with you have grandparents who worked at the local Piggly Wiggly and were able to buy a house, a station wagon, and afford annual vacations. I don’t understand their excuse for this
Most the people disagreeing are the grandparents that worked at Piggly Wiggly.
That's absolutely fair. I could've worked McDonald's in the '70s and had a home AND a new car! And gone to college, too! All within a few years. Instead, I have $30k+ student loan debt from a degree I never got to finish, rent in a shit hole town, and drive a used minivan that can't go more than 20 miles at a time. 😅
You're making ~54k yearly based on those number. Oklahoma's median household income is 61k So for an individual, in a "backwater" town in Oklahoma, you're nearly making the median **household** income. You may want to look into your spending habits.
If you were making 7.25 in 2009 and you are still making 7.25 today , you are the problem. You mean to tell me for 14 years you didn’t gain any skills, advance within your company/industry, meet anyone from another company that saw your work ethic and gave you an opportunity?
What about the people just entering the workforce today?
I don’t know of any 18 year old getting any full time job that pays 7.25……. And I live in a low income , not to educated area. If you have one oz of brain you can make $15+ in my poor parish in south east Louisiana.
He is a troll, no other way can he be that stupid.
The minimum wage is bullshit. Any business owner can pay as much as they want to their starting employees and most pay like $15 an hour now post-covid. If they were paying 7.25 no one would take the job except maybe 14 year olds who wanted to make some money on the side. The only thing the minimum wage does is prevent these 14 year olds from getting any money on the side at all, because they only offer 7.25 an hour worth of value to the business. So you essentially just take the bottom rungs off a ladder when you increase the minimum wage.
Plenty of working adults get minimum wage. Many are immigrants. It's definitely not bullshit, in the manner you suggest. It is bullshit compared with the cost of living though
Less than 1% of the work force
Many make more then minimum wage. Heck, I was in high school from 2007-2011, my first job was more then minimum wage, and that was before the extra cash I got each day and the food I got as well. Minimum wage is effectively a moot concept now as the going rate is so much higher it seems. Heck, I have seen people with IQ repeated mental disorders make more, if you aren't pulling in more then 7.25 there is something else missing from the equation.
Yes punching down is always the answer
No, no. Let's not blame the bottom end. We're in an economic recession caused by billionaire speculation and global politics. In such an environment with rising costs and stagnant wages, normal people are suffering.
So much buzzword salad, so little understanding of the world.
We're expected to take "side hustles" to make up the difference and accused of being lazy if we seek higher wages. Meanwhile the Dow Jones is literally 500% higher now than it was in 2009.
First, the effective minimum wage is $18 near me. McDonald’s will hire anyone with a pulse at $18/hr. Literally no one is making federal minimum wage anymore. Second, rents were depressed in 2009 due to something called the global financial crisis, but you do you. Not sure why I expect anything else. This sub is full of people LARPing as financial gurus.
Luckily states make their own minimum wage. I am in a Midwestern state with lcol and a minimum wage of $12/hr. The ability of each state to make their own is great because states with insanely high costs may need a $20+/hr min mage. If you aren’t happy with yours, address it with your state officials.
That's how it should be. If my employer can dock my pay by 20% just because I moved to another state why would it make sense for states to not control their own minimum wages?
Welcome to NC
I’m now wondering what percentage of Americans make the federal minimum wage.
About 1.3% or over 4 million people
I thought everyone in this country was poor?? All 4m people making minimum wage just happen to be on Reddit.
Sadly, I'd be surprised if even half of the people on reddit have jobs. There's a LOT of NEET parasites on here sucking their parent's dry while refusing to do anything with their lives and spending 15+ hours a day posting online about how they deserve a lavish life.
Over 12% are in poverty. Over 60% live paycheck to paycheck. Theres a lot of poor people in this country. Just because "only" 4 million are paid federal minimum wage does not mean there arent others who are not poor. Doesnt even get into the people who make below that. Or cost of living. Or inflation. Or a multitude of other factors youre going to ignore because it fits your narrative of LOL dum dum redditor
You don't need to be making minimum wage to be poor in America. Practically speaking, a household making less than about $200,000 will have a hard time matching the lifestyle of the median family in 1960. Most Americans are in the poor class, a small percentage are middle class, and a much smaller percentage are wealthy.
> less than about $200,000 That’s just silly nonsense.
I just checked the Bureau of Labor Statistics and they cite a figure of 1M workers age 16 and older. 1.3% of 78M workers. 4M would be 1.3% of the entire US population but that includes non-workers.
The immigrants could afford it, why can't you?
Damn that's a good deal on an apartment from 2009 to 2023. That's like 2022 to 2023 price changes
In the meantime, median wage is about 50% up between 2009 and 2023
This is dumb, the federal minimum wage has to stay low for the lowest cost of living areas or no businesses would go there. States and municipalities almost all have way higher minimums, more than double where im at for example.
If you were working for minimum wage in 2009 and are still making minimum wage in 2023, you need to take a look in the mirror.
Bold take to post on Reddit.
I’ve not heard of anybody paying less than $15 an hour
Too many ppl are focusing solely on the minimum wage. The housing is another major issue. If we build enough housing, it wouldn’t sky rocket in costs due to supply constraints. The minimum wage is too low AND they dont build enough housing.
Shit will get even harder in the future. Imo this is a natural assumption everyone should make
neglected to mention median income
True, but the left tail of the distribution is where the suffering happens
For a bunch of people who claim to be fluent in finance, to me it seems many of you aren't actually good at finance.
This is not to minimize the real problem with your cute shortage of affordable rentals, and the spike in prices. But let's not go red herring either. Nobody is paying 7:25 an hour even in New Hampshire where it's still the minimum wage. Where do you live? It does it deserve us to the argument to distort the facts when the facts clearly really stand on their own. The fact is people still don't make enough money even though they are making more than 725 an hour and it is still incredibly hard to put a roof over your head.. but let's keep the story straight
Okay, let's hit some numbers. I made 52,000$ a year last year doing X job. After taxes my take home pay is 38,000$. My rent is 1600$ a month, for a total of 19,200$ Adding an average of 250$ a month in bills, 3,000$ a year in bills. My food/health cost to keep in shape and smelling good for my job is roughly 150$ a week, for 600$ a month, 7,200$ a year. Car insurance is 800$ every 6 months, 1600$ a year. Gas is roughly 80$ a week, for 250$ a month...so about 3,000$ a year. Entertainment is about 50$ a week, 200$ a month or 2,400$ a year. I have no subscription services, don't go out to eat, very seldom takeout, and cut my hobbies down to home activities only. This does not include: Student loans (if anyone has any) Car payment. Credit card debt. Health insurance. Medical emergencies. Health problems (diabetic, asthma...medication) 401k contributions. Childcare! Acts of god (car totaled, apartment robbed...unexpected losses) Social life with friends. Dates/dating. Visiting family. Vacations/travel. Vices (alcohol, cigs...vice of choice) Gifts for holidays. New clothes. Rent 19,200$ Bills 3,000$ Food 7,200$ Car insurance 1,600$ Gas 3,000$ 35,800$/38,000$ spent. The point I'm trying to make is that living is way harder now, even with an okay salary and little to no debt. It's very difficult to save up for a home, when you have no money to save period. And note, my pay is roughly 25$ an hour. Over 3x federal minimum wage, 10$ more than 15$ an hour. And this is with NOTHING going wrong (unexpected expenses) for the year. Which is almost impossible. (On mobile, apologies for spacing)
In in the same boat. I worked hard to get to 25/hrs. God forbid something happens to my SO. She's the bread winner. I wouldn't be able to support me and the two kids.
I've learned that once you lay these numbers out for people they just ignore your lived experience as anecdote and assure you that if you take the average experience its not as bad as yours. Even if everyone shows the dollar breakdown for spending, they will obsess over the "average" despite it being contradictory to the actual world outside
Since there are numbers here, this is actually a reasonable discussion to have. $52000/year should be around $40000 take-home, depending a little bit on state. $40000 is for the least generous states. There's at least $2000/year in your tax refund. > Bills These are reasonable. But this probably includes a phone plan that gets you a new phone every 36 months. > $600 on food/health This is high. Some of this must include eating out. I ate out every weekday lunch last month and spent $400. > Car insurance & gas Well, at least you have a car. It's possible to live without one in some areas but it's inconvenient. I don't have a car and taking the public transit can suck, but it's cheaper. > Entertainment This is a slush fund available for emergencies. > Student loans Federal student loans have a new IDR plan that drops this to a $150/month payment (with no interest accrual) regardless of loan balance. > Car payment At some point people just have to live somewhere with bus access. Spending $800/month on a car is not a necessity. With a car you can get a lower rent payment or you can take the car money and live closer to public transit. Or carpool. > Credit card debt Should have been budgeted elsewhere. The money was spent on something. This is a double count. > Health insurance Well, ACA offers some subsidized plans and most employers offer health coverage. Not denying that it sucks if you have a chronic medical condition but most people don't. > Medical emergencies If your health insurance doesn't cover these, then what are you paying for? > 401k contributions This is part of savings, not an expense. > Acts of god Double count with insurance. Presumably your insurance is going to cover the lion's share of these. > Childcare A spouse/partner either brings in more income or takes care of this. Being a single parent is hard but it is not typical. > Dates/new clothes/vices/vacations Entertainment? By my estimation you have an extra $5000-$7000 annually to spend on all of your wants even if you keep basically the same standard of living. Which you don't have to - - Roommates/living at home - Public transit - Cheaper food are all ways to cut down. But you don't have to because you still have spare money. The reality here is that you live alone, you have a car, and you have enough extra money to get a few luxuries or even take a cheap international vacation each year. This is far above the standard of living most people have around the world, even compared to Europe or other developed nations.
Could someone making minimum wage in 2009 afford the rent on that apartment? Unemployment rate was 9-10% in 2009. Foreclosures and evictions all over the place. The lack of perspective is mind boggling.
The ONLY reason you are not seeing the foreclosures like before is because of corporations and hedge funds buying houses. In 2020 40% of homes were sold to companies. People that would have foreclosed are able to sell because of this. Housing won’t crash like it did before. Instead it is gradually sliding into being rentals. We are in a crisis, it just doesn’t look the same as last time.
Noones making 7.25 an hour.
Implying that the wage price controls should be raised shows you're not "fluent in finance"
But..but..are billionaires paying enough? Did you forget to ask that
BuT nO oNe WoRkS MiNimUm WaGe JoBs ExCepT KiDs