2016 grads could be paying 79% of their income on rent
Graduating from college and entering the job market is an exciting time – you’ll be given opportunities that you hadn’t had previously, like moving to a new city and figuring out how many times you can eat cereal for dinner in one month. So what do the 1.85 million students projected to earn a bachelor’s degree in 2016 have waiting for them when they walk across that stage and into post-grad life? We crunched the numbers to see what the median monthly rent for a 1-bedroom apartment across America is compared to the median entry-level salary in those cities (pulled from indeed.com) and (survey says!) there’s going to be a lot of cereal-for-dinner nights for many of our 2016 graduates.
On the lower end of the rent-to-salary spectrum, newbies in A-town can expect to spend about 36% of their $49,000/year entry-level salary on rent. Home to seven Fortune 100 companies (including The Coca-Cola Company, Home Depot, United Parcel Service, and AT&T Mobility), Atlanta has seen job postings decline by only 3% over the last year, compared to a national decline of 32%. The city’s most dominant job market lies with the trade, transportation and utilities sector, which employs 530,000 people.
There’s nothing weird about paying rent in Austin. The city has one of the best median rent costs in comparison to its entry-level salaries. Like its Georgia cousin, Austin residents entering the job market can expect to pay around 36% of their pre-tax salary on rent. Ranked by WalletHub as the third best city to find a job in 2016, college grads can expect to find many job opportunities in the management, business and finance sectors, as well as in Austin’s growing tech market.
With a $49,000/year entry-level salary, fresh-out-of-college Boston job seekers will be looking at 1-bedroom apartments costing around $2,300/month – 56% of their salary. Over the last year, Boston job postings have declined 20%, not ideal but still better than the 32% decline of job postings nationally. The city’s economy is significantly powered by its colleges and universities, which contribute $4.8 billion annually, and attract 350,000 students per year.
Behind the curve in job growth, Chicago’s $47,000/year median entry-level salary isn’t ideal when it’s compared to the $1,857/month in rent (47% of salary). Home to 29 Fortune 500 companies, Chicago’s top economy-boosting industries are manufacturing, printing, publishing, insurance, and food processing.
Coming in as the best city for college grads who like their money, Houston’s low median rent ($1,060/month) and relatively high entry-level median salary ($44,000) mean newbies are spending about 29% of their salary on rent. Once ranked one of the best cities in the country for finding a job, Houston recently lost out to nearly every other major Texas metro on WalletHub’s 2016 Best and Worst Cities to Find a Job. As jobs in the once-booming energy sector dwindle, other lists have ranked Houston among the best cities for lawyers, nurses and engineers.
The City of Angels doesn’t have the best median rent ($2,140/month) compared to its entry-level salary ($42,000) meaning college grads could be spending 61% of their income on rent. With employment levels soaring past those before the recession (LA County regained the 300,000 jobs it lost during the recession plus another 100,000) and an unemployment rate essentially cut in half, college grads can expect job openings in Los Angeles, but with wages that are lagging.
New York City
Maybe the City that Never Sleeps is so named because it can’t afford to. Clocking in at a median $3,000/month in rent, compared to a $47,000/year entry-level salary, New Yorkers who are new to the job market would be spending 77% of their income on rent if their living arrangements were “average.” With job postings that have increased over the last year, as opposed to the standard decline across the U.S., the Big Apple is hot for jobs in digital marketing, management consulting and hotels and hospitality.
While its median rent price is better than the majority on this list ($1,275/month), Orlando’s low entry-level salary ($35,000) means newcomers are paying 44% of their income to have Cinderella as a neighbor. That said, a recent survey showed that 89% of Orlando companies had a job opening in March 2016, and 97% plan on hiring at least one person in 2016. With an unemployment rate at 4.4%, college grads can expect to find more job openings in Orlando than many other cities.
It probably comes as no surprise that newbies looking to break into the San Francisco job market are going to be shelling out a lot to live near some of the biggest tech startups in the U.S. With a median monthly rent of $3,500/month, and median entry-level salary of $53,000/year, recent college grads are expected to pay 79% (!!!!) of their yearly pre-tax income on rent – a number that is essentially impossible to accommodate. Similar to the California Gold Rush’s effect on the banking and finance industries in San Francisco, the startup boom has created tons of jobs in technology, which just 26 years ago held only 1% of the job market.
For those college grads looking to make their careers as a Seattleite, the $42,000/year entry-level salary could go toward the $1,795/month rent, a 51% chunk of income. In 2015, Seattle employed 1,981,802 people, exceeding job growth expectations, and a recent study found that Washington state has also seen strong growth in wages.
With rent costs high as they enter the job market in 2016, this year’s college graduates are going to need to hunt for pads that let them save a little dough. Skipping out on amenities like a pool, on-site laundry, dishwashers – even A/C in decent climates – will help keep monthly rent costs low while entry-level employees work their way up the career ladder.
The last thing college grads (or anyone) want to do is worry about paying rent on time every month. Pay rent with your debit card (totally free!) or credit card (as low as 1.99% fee) and we’ll send your landlord a check one time, or every month on your due date. So you can finally say goodbye to your checkbook.