‘Residual Income’ Study Reveals Two-Thirds of Working Age Renters Struggle to Make Ends Meet

A new report from the Harvard Joint Center for Housing Studies looks at “residual income cost burdens,” defined as “not having enough income left after paying rent to cover all other necessities.”

The two-thirds of working age renter households that have residual cost burdens is higher than the 50 percent with traditional housing cost burdens. This analysis also reveals geographic differences in cost burdens. For example, “Lower-cost states such as Arkansas, West Virginia, and Wyoming have some of the highest residual income burden rates in the country but don’t make the list of states with the highest housing cost burden rates.”

The paper explores three policy interventions that could reduce the residual income burden: capping rent at 30 percent of income via a subsidy, giving renters a $500 monthly cash allowance, or giving renters a $1,000 monthly allowance. According to the JCHS analysis, the $1,000 allowance would produce a 15.2 percent drop in the residual income burden, while the rent cap would only reduce it by 1.3 percent.