I’ve gotten some flak for this chart that I put up this morning:
The problem is that this chart uses median income for everyone, including homeowners. How about income just for renters instead? There’s no single series for renters that everyone agrees on, but here it is using data from the Consumer Expenditure Survey:¹
If the CES is to be believed, the average income of renters has increased at the same rate as rent since 2001, and after a dip during the Great Recession it’s increased faster than rent. This is mean income, not median, which I’d prefer, but the growth rate of the two is probably pretty similar, especially over the short time frame of the past decade.
I have reason to be a little suspicious of the CES income figures, but only by a little bit. I wouldn’t be surprised if renter income is a little lower than this chart shows, but I have no reason to think it’s different enough to change the basic story here.
¹I’m also using a BLS series for rent that I think is more accurate than the one I used this morning. It shows rent growing faster than my original chart.
POSTSCRIPT: And just to make this clear, there’s no disagreement that families at or below the poverty line have to spend a big percentage of their income on rent. However, this is not a failure of the market. Builders could put up shelter in the middle of Los Angeles for $500 per unit, but not anything that would meet the building code. I’m pretty sure no one wants low-income housing that’s little more than a one-room hut with a sink and a couple of electrical outlets, which means that if we want more housing for the poor the only real answer is more public assistance. And this is something we should do.