miodrag ignjatovic / Getty Images 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:
GeorgiaIdahoIndianaIowaKansasKentuckyNew HampshireNorth CarolinaNorth DakotaOklahomaPennsylvaniaTexasUtahWisconsinWyoming
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. 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. 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. 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.
