According to new analysis by Zillow, nearly half of all renters in the United States are rent-burdened. The term refers to renters who spend more than 30% of their annual income on rent. Independent Gen Z adults (those born after 1996) spend the highest proportion of their income on rent, largely because their starting salaries have not kept pace with rising rents.
In the US, about 59% of Gen Z renters overspend their income to pay the rent. In twenty-nine of the thirty largest metropolitan areas in the US, more than half of all Gen Z adults spend more than 30% of their income on rent. That makes it more difficult for these young adults to afford to live in pricier areas.
Overall, fewer Gen Z adults are rent burdened in the 30 largest metro areas than Millennials were at the same age, but not by much. And in a dozen of the largest US cities, this isn’t true at all. More Gen Z adults struggle with the cost of renting compared to their Millennial counterparts at the same age. This suggests rising rents and lagging income have been around for decades without a viable solution.
The consequences of not addressing rent costs that rise faster than the rate of inflation are harsh. Areas that are too expensive will begin to lose an important segment of their prime-age workers. These workers are unlikely to return once they have moved away. This sets up the area for intense worker shortages in key occupations like healthcare, public safety, and K-12 education.
Gen Z not the only renters who need a break
Safety net programs that target housing costs don’t offer significant relief. For example, Section 8 housing vouchers, which Congress funds annually, are largely unavailable, even though residents may qualify for this kind of assistance. Right now, according to data collected by the US Census Bureau, about 25 % of households in Washtenaw County qualify for Section 8 housing vouchers, based o the program’s income criteria. Qualifying applicants can wait for years, however, for the opportunity to use these vouchers. Additionally, landlords are not required to accept Section 8 funds.
Washtenaw Community College could help Washtenaw County better insulate itself from this phenomenon by increasing the economic value of its degree programs and reducing the number of certificates it offers. Currently, associate degree and certificate programs do not offer economic value that is sufficiently different from that of a high school diploma.
This is true, in part, because employers have significantly increased the wages they offer to high school graduates to ensure adequate staffing. When this happens, associate degree programs need added economic value to persuade students to school instead of entering the workforce directly. When they don’t, there is little financial incentive to pursue an associate degree and even less incentive to actually complete one.
Photo Credit: James Jeffrey, via Flickr
