A fourth of renters in Little Rock make less than $20,000 a year, according to census data that also suggest most of those low-wage earners have a difficult time finding affordable rental housing.
Of the 8,426 renting households that fall into that low-income category, the U.S. Census Bureau reports that 85 percent of them can't afford to abide by the conventional housing affordability indicator that says a household shouldn't spend more than 30 percent of its income on housing costs.
Financial brokers and mortgage lenders often use the 30 percent threshold -- derived from the federal Housing and Urban Development Act -- in formulas when deciding whether to approve home loans.
The Department of Housing and Urban Development's website explains that "families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care."
The agency goes on to say that a single, full-time worker earning the federal minimum wage of $7.25 per hour cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.
Real estate data firm Zillow recently tested that statement with a study of most of the nation's metropolitan areas. Zillow reported that in the Little Rock-North Little Rock-Conway metropolitan area, someone would have to make at least $19.66 per hour to afford what Zillow estimated was the area's average monthly rent to avoid going over the 30 percent threshold.
Indeed, the study found -- like HUD -- that a single earner making the federal minimum wage couldn't afford an "average priced" rental property in any of the 15,099 metro areas studied without spending more than the recommended amount on rent.
While some Arkansas-based real estate experts dispute the amount Zillow used for the area's median rent -- (it used $983, while the census reports Little Rock's median rent at $780) -- data from other sources show that housing costs still consume a large chunk of low-wage earners' income.
Keeping the lights on
M. Reshonne Bell said she doesn't need to see any of the data; she lives it.
A little more than a month ago, she was a recent divorcee working two jobs, seven days a week, to support her daughters -- ages 11 and 15 -- in an apartment in Maumelle. Even with a state job at the Arkansas Health Services Permit Agency making $10.49 an hour and a weekend job at the Little Rock Marriott hotel making $9 an hour, Bell was still spending 37 percent of her pretax income on the apartment's $835 monthly rent.
On top of that, her 2001 Mazda, which was paid off, was vandalized beyond repair and she bought a 2007 PT Cruiser at a high interest rate, leaving her with a $500 monthly car note.
Then in November, she was fired from the state job and laid off from the hotel.
Bell, an Army Reserve veteran, is contesting her termination at the state agency, but in the meantime she draws unemployment benefits while she searches for a job. She and her daughters moved into a lower-priced rental home in Little Rock off Fair Park Boulevard, but the percentage of income she spends on rent has hardly changed.
Counting the $1,040 she gets each month in unemployment benefits, $500 for child support and $70 in food stamps, Bell still spends 36 percent of her pretax income on the home's $585 monthly rent. That's not counting the utilities she pays -- which she's seeking assistance with through the Central Arkansas Development Council.
"I struggle with that right now," Bell said. "For now, to get by I need assistance from places like CADC. If they don't help me, we won't have lights and gas."
Friends helped the family get a washer and dryer after Bell was concerned about their safety when trekking back and forth to a nearby laundromat where people often loitered.
"Little stuff like that is a really big deal for me and my girls," Bell said.
Census data show that the more money a household takes in, the less difficult it is for that family to stay at or below the 30 percent threshold.
For example, 61 percent of Little Rock's renting households that take in more than $20,000 per year, but less than $35,000 spend more than 30 percent of their income on housing. That number drops to 15 percent for those who make between $35,000 and $50,000 and falls further to 10 percent for those who make more than $50,000.
In all, more than half of Little Rock renters -- 51.5 percent or 16,279 households -- spend 30 percent or more of their income on rent, according to Census.gov.
Aid line a mile long
Michael Pakko, the chief economist and state economic forecaster at the Institute for Economic Advancement at the University of Arkansas at Little Rock, said it's important to point out that central Arkansas is still one of the more affordable places in the nation to live.
"Rents in Arkansas are far lower than the national average. As a result, any given hourly wage has greater purchasing power here than in other places around the country. This is one aspect of minimum-wage legislation that is often overlooked," Pakko said.
He said there's "nothing magical" about the 30 percent threshold, and that it's possible for a household to live comfortably while spending more than that. Less money is simply spent in other areas, he said, adding that it's a trade-off.
Pakko also said that the Zillow study seems to imply that "a minimum-wage earner somehow should be able to live within the 30 percent rent margin."
"That is really somewhat different from what the minimum wage is intended to accomplish," he said, adding that it is intended to be a starting wage, and society expects most workers to work their way up.
Arkansas voters recently passed a ballot issue that will increase the state's hourly minimum wage of $6.25 to $8.50 by January 2017. The first phase kicked in Thursday, setting the state minimum wage at $7.50.
HUD's fair market rents for Pulaski County start at $536 for a studio apartment and go up to $1,155 for a four-bedroom unit.
But even using HUD's numbers, a person would need to make more than the minimum wage to afford a studio apartment without going over the 30 percent threshold. They would need to make $10.72 per hour, according to HUD's calculations.
HUD's Section 8 voucher program supplements housing costs for people who earn less than half of the area's median income, but those eligible can spend years on the waiting list. In the Little Rock metro area, a single person must make less than $10.14 per hour (assuming a 40-hour work week and getting paid for 52 weeks per year) to qualify for assistance.
As of the beginning of December, the Metropolitan Housing Alliance in Little Rock's waiting list had reached almost 985 people.
The North Little Rock Public Housing Authority's waiting list had about 950 names on it.
A section on 01/02/2015