One economic snag benefit programs face in helping workers

Employee financial wellness, health and retirement savings all face a single threat that can derail any or all of them: rent.

As employers look to bolster health care, financial wellness programs and retirement savings to cut employee stress, improve productivity and open up opportunities for younger workers to advance, their best-laid plans may go awry because of one single factor that holds true from coast to coast: the high cost of rent.

Workers who don’t own their own homes, particularly younger workers, face a dilemma their parents or grandparents never had to deal with. According to a Huffington Post report, “There’s not a single state, metropolitan area or county in the U.S. where a full-time worker earning the minimum wage can afford the rent for a modest two-bedroom apartment.”

Financial stress takes a toll on workers, cutting productivity and impairing their health. It also gets in the way of retirement savings, which tend to come in last compared with other day-to-day expenses, particularly when the immediate issue is paying the rent.

When employers and plan providers consider employee well-being—particularly among the fastest-growing jobs today—they need to give more attention to both housing insecurity and retirement preparedness, particularly for lower-echelon workers, since affordability is not likely to get better any time soon.

Says the report, “The median wage for eight of America’s 10 largest occupations—from retail salespeople to fast-food workers to home health aides—is not enough to cover a one-bedroom rental. And these are the jobs that are likely to see the biggest growth over the next decade, further entrenching the disparity between wages and housing costs.”

And as debates arise across the country about increases in the minimum wage—which Congress has now failed to raise for the longest period since the minimum wage was instituted—the National Low Income Housing Coalition’s annual Out of Reach report demonstrates that at the current federal minimum wage of $7.25 per hour, a worker would have to work at more than three full-time minimum-wage jobs, for a total of almost 127 hours a week, to be able to have that little two-bedroom apartment and not sink more than 30 percent of their income into it.

So what about a one-bedroom? Still needs lots of hours per week—103 of them, in fact—to make the rent each month. And that’s the “fair market rent” as determined by the Department for Housing and Urban Development’s best estimate of what a family moving today can expect to pay.

Devote more than 30 percent of your income to the cost of your housing and you run the risk of not being able to cover other expenses—little trifles like food, clothing, commuting, utilities… and certainly not have a whole lot of change left over to drop into the “retirement” jar. And according to the report, “the number of renters paying more than half of their income toward housing costs increased by 3.6 million from 2001 to 2016.”

To get that two-bedroom apartment with an affordable portion of his income, a renter would have to make an average of $22.96 per hour; for a one-bedroom, it would be $18.65. And if you live in San Francisco? Even software developers could have a hard time getting by, making an average of $50.51 per hour but looking at apartments that would require them to make $60.96 per hour to afford.

Where does retirement fit into that picture?

It probably doesn’t, and that in turn circles back to intensify the negative effects on financial wellness and health.

Workers—40 percent of whom already spend more than 30 percent of their incomes on rent—may stress over their lack of preparation for retirement, but in the end at some point late in life they’ll still have to leave the workplace, whether from layoff or ill health.

And they still won’t have a roof to call their own.