The Rent Eats More: Residual Income Housing Cost Burdens from 2019–2023

Rising housing costs are cutting into renter households’ incomes, threatening their ability to afford a modest standard of living. While the traditional housing cost burden measure reflects the share of income dedicated to rent and utilities each month, it fails to account for whether households have enough money after paying rent to meet all other expenses. In this paper, we use a residual income cost burden measure to estimate the number of renter households who fall short of a modest standard of living. With data from the Economic Policy Institute’s Family Budget Calculator and the US Census Bureau’s American Community Survey, we calculate residual income cost burdens for 2019 and 2023, highlighting how rates vary by household characteristics, by geography, and over time. We further explore three policies to examine how much they would decrease residual income cost burdens, including a universal subsidy that caps rent at 30 percent of income, a $500 per month cash allowance, and a $1,000 per month cash allowance. 

We find that the financial pressure on renter households has increased compared to pre-pandemic conditions. Nearly two-thirds (65 percent) of working-age renter households were cost burdened under the residual income measure in 2023, substantially higher than the 50 percent of renters in our sample who are burdened according to the standard measure. A full 5.3 million renter households have residual income cost burdens but are not represented in the standard cost burden measure. Despite having relatively low housing cost burdens, rural areas have higher rates of residual income cost burden, widening the geography of housing unaffordability. Conditions are also worsening. While the share of renters with residual income cost burdens increased by just 0.7 percentage points from 2019 to 2023, the amount of income left over after meeting all expenses declined by a substantial $2,000 as the cost of living rose. 

The residual income measure underscores that unaffordable housing is not the only financial hurdle to achieving a modest standard of living. A universal housing subsidy that caps housing costs at 30 percent of household income would alleviate the pressure on household budgets, but it would not move the needle much on residual income cost burdens because incomes are still too low relative to the price of all other non-housing expenses. Flexible and generous cash supports would do the most to put households within reach of a modest standard of living.