Expert reveals college graduates spend an alarming portion of their salary on rent, highlighting financial strain in today's time.
It has become a well-known and accepted fact that buying a house as a millennial or Gen Z is a herculean effort. One would need an extremely high-paying job to make payments for a house, which is simply not the case. Freddie Smith (@fmsmith319) shared a well-received video on TikTok breaking down how much money an individual who graduated college would pay on rent alone, leaving very little for savings and other expenses. The video has resonated with a lot of people on the platform, with over 6.5 million views and 15.4K comments.
He starts the video by pointing out, "The millennials and Gen Zers who are complaining that they can't buy a house are not working for minimum wage." Smith reveals how many of these people were making more than decent salaries, ranging from $60,000 to $80,000 a year, but still could not afford a house. Naturally, this made the situation even worse for minimum wage workers who are now struggling to pay rent and could not even think of buying property. To make his case against boomers who insisted that they bought a house even when the minimum wage was $3.10, he goes into his analysis of rent costs in 1980 contrasted against those in 2024.
According to him, the rent in 1980 came out to $243. A minimum wage of $3.10/hour meant that the monthly gross was $496. Therefore, renting an apartment back then would take up 48.9% of a minimum wage worker's salary. Moving on to 2024, the average rent was a whopping $1747, whereas the federal minimum wage had only increased to a miserly $7.25/hour. This meant that the monthly gross would be $1160, which showcased how minimum wage workers could not even pay for their apartments in 2024.
Smith is not done with his analysis, providing a hypothetical scenario where he doubles the federal minimum wage to $14.50 in 2024. He states, "Because people at Walmart and fast-food joints are making $14.50 to $15 an hour." The monthly gross would increase to $2320, but even then, most individuals would end up paying almost 75% of their income towards rent. This depressing figure was in an ideal scenario where the minimum wage was doubled.
He decides to take it a step further and makes a new column in his analysis where he assumes that people with a college degree would be able to secure a wage of $24/hour. So, they would have a monthly gross of $3840, which is a slight improvement. Unfortunately, even with such a high hourly wage, the rent of a one-bedroom apartment would be 45.4% of a college graduate's income. He points out, "A college graduate is spending the same amount of their income on rent as the minimum wage worker in 1980 did."
The creator goes on to highlight how minimum wage jobs were more straightforward in the 1980s as well. On the other hand, a person who did all the work to complete a bachelor's degree still wound up paying a high amount of their salary on rent and working much harder jobs. People agreed with Smith's analysis and put down their thoughts in the comments section. @kristina10181990 said, "And that's just rent. That doesn't account for food, kids, car insurance, car payments, and student loan payments." @_.brooke._skate added: "And let’s not forget; some apartments require you to make 3X the monthly rent." @cactusking2024 expressed: "Young boomer here, I've had this fight with older boomers..the math most certainly has changed...I feel for young people."