Why Is Rent So High And Wages So Low? (11 Reasons Why)

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Oberon Copeland

Oberon Copeland is a graduate of Southern Illinois University Carbondale, with a degree in economics and HR.

Throughout the world, rent has been increasing in staggering amounts. Unfortunately, the wages given to the average worker have fallen behind, not averaging even close to the increase in living costs.

There are many reasons why this is the case. People will have their own views on why this is happening. You will soon discover some facts for yourself so you can decide which version is correct.

Why Rent Is So High And Wages Are So Low?

1. Power Of Money Makes Wages Lower

When you think about how powerful money is, you may assume that it would make it possible for the average worker to make enough to cover their rent. And other living costs.

That does not seem to be the case, though, because much of the money is made by upper management, business owners, property owners, and specialized industries such as lawyers.

Those who work average jobs have a hard time making ends meet. When the upper wage earners are asked about their financial situation, they are told that most of the wages go to them.

When the payroll budget starts getting depleted, the workers on the lower end of the earning curve will be the first to lose wages. Anyone can be replaced, especially entry-level workers.

2. Rentals Are More In Demand Than Ownership

Demand means that more people want to get themselves into a rental. Ownership is something they will leave for later in life when wages are a little higher and more consistent.

This circles back to workers’ low wages compared to the housing cost. Buying a house is accessible right now because of the low interest, but prices are out of this world.

This means one thing. Wealthy people maintain control over the housing market because they are the only ones who can afford to make the high mortgage payments consistently.

3. Lack Of Affordable Housing Boosts Prices Even More

One of the biggest problems in the world today is the lack of affordable housing. This has increased the number of homeless people because they simply cannot afford to pay rent and buy food.

This is by no means a problem that has just crept into the lives of the nation’s citizens, but it is an epidemic of massive proportions because you can see more families living in their cars than ever before.

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Strangely enough, this downfall of the average worker has not affected the living wage issue that is being compounded by the lack of affordable housing.

It has, in effect, caused a monopoly within the rental housing market because demand is so high. That demand comes from the people who usually opt to purchase their homes.

4. Lack Of Morals Or Human Compassion

Human compassion is something that people throughout history have been fighting for. Even today, generations of people fight for the rights of those that cannot stand up for themselves.

Maybe the increase in demand has gone to the heads of the already wealthy property owners. Perhaps they have increased their prices because their living costs have also increased.

You can look around you at the people that own the rentals and see that many of them lack one of the most important aspects of life, which is human compassion.

When you lack something as crucial as compassion for your fellow human, it is safe to say that you also have a lack of common morals that all people should be following.

As long as the main driving force of the nation is money, greed will continue. Uncompassionate and unethical actions go together, and when you add in greed, you have a volatile situation.

5. Rentals Have Been Handed Over To Property Managers

Property managers are companies that handle all the aspects of a rental, including gathering the rent. This is basically a person in the middle of your rental transactions.

You all know that when someone else has a hand in the pot, the prices will go up to cover their expenses and wages.

Property owners today are handing over their rentals to companies that specialize in renting them out. Specializing means they can use their resources to screen all potential renters.

The average worker is generally pushed aside to allow the people with higher incomes, better credit, and fewer bills to move in.

This leaves the people who earn smaller amounts of money, the essential workers that continued working through the pandemic, without an affordable place to live.

6. Essential Workers Still Earn Bottom Level Wages

Essential Workers Still Earn Bottom Level Wages

Throughout the coronavirus pandemic, the world has realized one major thing. Essential workers commonly mistreated by employers and the public are genuinely critical to the world.

This makes it seem a little strange that the average pay for this group of people is 18.2% less than those in industries that are not essential.

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It brings up the point of why there is such a shortage of workers when there are so many people that are out of work. The actual reason is that there is a lack of good wages, so people opt to stay home.

7. Essential Workers Are Becoming Collateral Damage

Throughout the global Covid-19 pandemic, you could easily see a lack of goods on the shelf for you to buy. If the shelf was stocked, you had a limit on how much you could purchase.

People that were high risk and afraid to get sick, or those that were already sick, took more time off than most companies could handle, which increased the demand for essential workers.

Since there is such a lack of workers, the employees in positions have already become overworked. Many work over forty hours a week to cover the lack of employees, with little to no days off.

This much work causes employees to burn out. Even the best employees began walking away from their jobs because they were simply worn out. Tired from being overworked and underpaid.

8. Automation And Artificial Intelligence Keep Wages Low

If you are a middle or bottom-earning worker, you can bet that your wages will not increase very much, if at all. Industries that have embraced the technological era are making sure of that.

Large companies have already started converting to technology such as Automation and AI systems that can run the entire operation, except for repairs and managing.

Low-level workers are told by management that it is a favor to them that they even have a job. Companies will replace them with technology if they keep demanding more money.

9. Decline Of Worker Power Keeps Wages Low

When the world was first struck by the global pandemic, it appeared as if the essential worker had gained some power over the companies that were trying to abuse their strong work ethics.

That may have happened at first, with large cooperations giving people paid time off if they had even the mildest of COVID-like symptoms.

Worker’s power quickly fell to the side as technological advances gave companies more options. Power swung heavily back to the owners and the upper management, who were pushing for more productivity.

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10. Free Money For Those Not Working

Government officials thought it would be a good idea to give the people of the county free money to help them get through the pandemic.

This would have been a great idea if it had been given to the people that needed it. Instead, the average worker struggling to survive was only given enough to allow them to get by for another month.

So-called free money from the government hit the essential workers, the low-paid workers, the hardest. Free money is never free, and this group of workers paid more taxes to supply it to the nation.

11. Low Wages And Higher Rent Collides

As you have seen, high rent is a product of demand. Property owners will take advantage of the situation when demand is through the roof and raise the rent costs.

Those rent increases make the low-wage workers crunch numbers even more, with many having to decide whether rent or food and clothes are more important.

To get around this issue many families across the nation have started sharing home with other generations of family. It is now common to see two or three generations living under the same roof.

This causes another effect on the rent costs because owners see it as an opportunity to increase the rent even more because there are more people available to pay for it.

To learn more, you can also read our posts on why rent is so high and wages so low, why your Venmo is not working, and why it is rude to talk about money.

Final Thoughts On High Rent And Low Wages

It is a common misconception today that people do not want to work. That is far from the truth. People do want to work, but not for peanuts.

Sympathetic companies find that raising wages creates a better working environment. More productivity means more money for the companies and better living for low-wage earners.

It is a practice that the rest of the corporations need to embrace. This would make the living wage of essential workers an actual living wage, and not one that is still well under the poverty line.


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