How Much Rent Can Americans Afford on Minimum Wage?

Where Can You Afford to Live?

Young man smiling while holding his phone and sitting in his apartment

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The minimum wage is the lowest legal wage that businesses can pay to their employees. Many argue that the minimum wage should provide a living wage that pays for a decent level of food, clothing, and shelter. One general rule of thumb is that you should spend no more than 30% of your income on housing. How much housing can you afford if you're earning minimum wage? The answer depends on which state you live in.

The U.S. federal minimum wage, as of 2022, is $7.25 per hour. Congress established the minimum wage in 1938 to prevent employers from exploiting workers. The U.S. Bureau of Labor Statistics (BLS) found that 1.1 million workers were paid the federal minimum wage or less in 2020. They were more likely to be young, female, part-time workers, and employed in the service industries.

The minimum wage would have been $10.15 per hour in 2018 if it had been indexed to the consumer price index since 1968. It would have been $23 per hour if it had kept pace with executive-level pay increases.

Minimum Wage and Housing

As of 2022, 15 states use the federal minimum wage:

  • Georgia
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • New Hampshire
  • North Carolina
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • Texas
  • Utah
  • Wisconsin
  • Wyoming

Five more states—Alabama, Louisiana, Mississippi, South Carolina, and Tennessee—have no minimum wage of their own. They default to the federal minimum wage.

Someone who earns $7.25 per hour and works 40 hours per week for 52 weeks of the year would earn about $15,080 annually if they lived in one of these 20 states. That works out to more than the federal poverty level for a single person, so they would not be eligible for federal benefits.

It's probably not enough to pay your rent without exceeding 30% of your income, which works out to $4,524 of $15,080. You would have only $377 per month for housing if you were to divide that number by 12 months.

Where Could You Live on the U.S. Minimum Wage?

You may be able to find studio apartments in rural small towns, older areas in some cities, college towns, and states with a low cost of living if you can pay only $377 per month.


The most feasible options for most people who are looking for housing on this budget are sharing a place with roommates or renting a room in someone's home.

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

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

You may also be able to find apartments in your price range in the four least expensive states: Arkansas, Mississippi, Kentucky, or West Virginia. Some of these states have the lowest incomes in the U.S., but the average studio apartment will likely cost you more than 30% of your income, even there.

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

States With Higher Minimum Wages

Thirty states, plus the District of Columbia, have minimum wage rates above the federal level as of 2022. You could afford to pay more for rent, but the cost of living is also higher in many of those areas. You may not be able to afford even a small studio apartment.


The state that comes closest to meeting the 30% budget rule is Arkansas: Those who earn the minimum wage in Arkansas could likely afford a studio apartment, because the average cost of rent is only about $25 more.

Multiply each state's minimum wage by 40 hours per week and 52 weeks per year, and divide by 12 months to find 30% of that amount.

This chart will tell you which states have housing options that are closest to meeting the 30% budget.

Minimum Wage by State in January 2022
 State  Minimum Wage  Affordable Rent  Avgerage Studio Rent
 DC  $15.20  $790  $1,513
 WA  $14.49  $753  $1,158
 MA  $14.25  $741  $1,377
 CA  $14.00*  $728  $1,394
 NY  $13.20*  $686  $1,453
 CO  $12.56  $653  $1,040
 AZ  $12.80  $665  $847
 ME  $12.75  $663  $802
 CT  $13.00*  $676  $962
 NJ  $13.00*  $676  $1,180
 OR  $12.75*  $663  $992
 MD  $12.50  $650  $1,125
 VT  $12.55  $652  $866
 RI  $12.25  $637  $862
 AR  $11.00  $572  $575
 IL  $12.00  $624  $877
 NM  $11.50  $598  $644
 AK  $10.34  $538  $870
 MO  $11.15  $580  $622
 HI  $10.10  $525  $1,358
 MN  $10.33*  $537  $782
 MI  $9.87  $513  $675
 SD  $9.95  $517  $567
 DE  $10.50  $546  $851
 NE  $9.00  $468  $610
 NV  $9.75*  $507  $772
 OH  $9.30  $484  $598
 WV  $8.75  $455  $585
 MT  $9.20  $478  $645
 FL  $10.00*  $520  $938

Average studio (zero bedroom) rent prices are provided by the National Low Income Coalition for calendar year 2021.

Some employees in the starred states can earn even less, and some states are scheduled to increase their minimum wage rates in 2022:

  • California’s $14 minimum wage applies only to businesses with 25 or fewer employees. Those with more employees must pay $15. All employers must begin paying $15 per hour in 2023.
  • New York workers in Nassau County, Suffolk County, Westchester County and New York City earn a minimum wage of $15 per hour.
  • Connecticut will raise its minimum wage to $14 on July 1, 2022, and to $15 per hour in 2023.
  • Those in New Jersey who perform seasonal work, who work on a farm on an hourly or piece-rate basis, and those who work for a business with six employees or fewer earn only $11.90 per hour.
  • Workers in the Metro Portland area of Oregon earn a $14 minimum wage, increasing to $14.75 on July 1, 2022. The $12.75 rate for most others will increase to $13.50 on July 1, 2022. The rate in rural areas is less at just $12, but it increases to $12.50 on July 1, 2022.
  • Small businesses in Minnesota are required to pay their employees only $8.42 per hour.
  • The $9.75 minimum wage in Nevada applies only to employees who don’t receive health benefits. This drops to $8.75 for those who do. These rates are slated to increase to $9.50 and $10.50, respectively, on July 1, 2022.
  • Florida’s minimum wage will increase to $11.00 on September 30, 2022.

Frequently Asked Questions (FAQs)

What was the first minimum wage established by Congress?

The first minimum wage was established in 1938 at $0.25 per hour. It was raised by $0.05 the following year and raised again in 1945 to $0.40 per hour.

When was the minimum wage last raised?

There was a series of three federal minimum wage hikes in 2007, 2008, and 2009. The 2007 increase was the first in a decade, and it raised the minimum wage from $5.15 to $5.85. The minimum wage was raised to $6.55 in 2008 and to $7.25 in 2009.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Labor. "State Minimum Wage Laws."

  2. Cornell Law School Legal Information Institute. "Minimum Wage."

  3. Bureau of Labor Statistics. "Characteristics of Minimum Wage Workers, 2020."

  4. Economic Policy Institute. "Raising the Federal Minimum Wage to $15 by 2024 Would Lift Pay for Nearly 40 Million Workers."

  5. U.S. Department of Labor. "Consolidated Minimum Wage Table."

  6. National Low Income Housing Coalition. "How Much Do You Need to Earn to Afford a Modest Apartment in Your State?"

  7. National Low Income Housing Coalition. "Out of Reach: Arkansas," Use the "Select State" search box for each state.

  8. National Low Income Housing Coalition. "Out of Reach 2021: District of Columbia," Use the "Select State" search box for each state.

  9. Wolters Kluwer. "More Than Half of U.S. States to Institute a Minimum Wage Increase in 2022."

  10. Department of Labor. "History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009."

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