How Increasing Minimum Wage Rates Affect Homelessness

    According to a 2022 report by the City of Portland and rent.com, the average monthly rent for a one-bedroom apartment in the Portland area is $1572. At the time of this study last year, the minimum wage for the Portland Metro area was $14/hour, which means that the average minimum wage employee would need to work over 112 hours just to be able to afford their rent alone. When it comes to income, a general rule is that housing should not exceed 30% of your monthly income, however these prices in Portland force workers to pay significantly more than that 30% on a month-to-month basis. In fact, using this rule, affordable housing for minimum wage workers should be around $750 monthly in order to fit into that 30% rule, which is less than half of the actual average rent prices in Portland. 

    This heavy wage-to-housing disparity forces many low-income individuals and families to spend an excessive portion of their income on housing, which leaves them with smaller budgets for food, healthcare, transportation, and education. In some cases, those in poverty also have additional financial needs such as case management services or additional health-related issues that require money to be addressed. The consequences of such high housing costs not only increases the chance of individuals not being able to afford housing, but also prevents them from being able to afford their other basic needs. 

    It has been announced that next month on July 1st, the minimum wage in the Portland Metro area will increase again to $15.45 per hour. While the minimum wage increase is intended as a step towards economic fairness for hourly workers, it causes housing prices in the city’s area to continuously rise, and results in a widening of the gap between income levels and affordability. Historically, these wage increases have resulted in an increase in homelessness and deeper strains on social services.

For more information on this topic and the numbers mentioned in this post, as well as the graphic included, you can visit the Portland.gov website here: Help for Portland's Homelessness Crisis

For more information on the correlation between minimum wage increase, and how this could affect housing prices, visit this website: Oregon's Increasing Minimum Wage Rates