Unless you’ve been living under a rock the past the year it’s hard to miss the ongoing debate over minimum wage! Here in the United States the minimum wage paid to employees is determined by each individual state government, provided it is above the federal mandated minimum of $7.25 per hour. That being said, there are several states that have long exceeded the federal minimum, 22 of them to be exact. There are several states, like New Jersey and Virginia, that are over $8.00 per hour. In my home state of Michigan we have a minimum wage of $7.40 per hour, just a tiny bit over the federal amount, but there is a bill sweeping Congress at the moment that very well could make minimum wage as high as $9.20 an hour here. Of course this bill and many others have some serious detractors who want it nixed.
The only time I worked for minimum wage, at least with a non-tipping job, was when I turned 16 years old and worked at the local K-Mart. They paid me a whopping $5.50 an hour. Minimum wage was actually hiked up from $4.25 that year, but obviously much lower than it is today. After a 40 hour work week I pulled in $220 an hour before taxes, and that was without any benefits or insurance. Now I understand that was back in 1996, but after you adjust for inflation it comes out to a measly $330 per week in today’s dollar. Let’s look at a little financial analysis of this below:
If I worked 40 hours a week, and let’s say 50 weeks a year, (two weeks unpaid vacation).
Salary = $16,500 per year
Federal Taxes = $2.021
State Taxes = $718
Net Pay = $13,761 per year
Now based on that amount per year I would only take home $1,147 per month. I want you to really think about that number. This is without any 401k plan, health benefits, paid time off, etc. You earn an hourly rate per each hour you work and that’s that! Welcome to the world of minimum wage.
Now I’d like you to consider some basic needs, and what they cost.
Avg. Apartment Rental (1 bedroom) = $9,000 per year ($750 per month)
Food = $1,200 per year (unhealthy foods, and basically starving yourself)
Utilities = $1,200 per year (electric, gas, water, and internet)
Car Payment = $1,800 per year (try to find a lease under $150 per month…)
Gas = $1,200 per year (if you only drive to and from work)
Total Bills = $14,400 per year
And there you have it, you will have a negative $639 dollars left over to spend frivolously as you please! Oh wait… you can’t spend negative dollars. And we wonder why this country is sinking deeper into credit card and student loan debt. The above is a very rough outlook on how difficult, nay, impossible it is to live on minimum wage. It’s come to the point where your basic needs aren’t even met as a single person living alone. It’s no wonder there are so many families living under the poverty level.
There are two basic arguments I always seem to run into when discussing minimum wage increases with anybody. First, they ask me why these people don’t better themselves to begin with. Go to college, get a better job, and try harder. My answer to them is this…
If EVERYONE went to college and always strived for high paying jobs then who would cash you out at Wal-Mart? Who would serve you your food at McDonald’s? Robots?
The truth is that somebody needs to fill these jobs, and they shouldn’t have to be paid pennies in order to do them. I’m not suggesting that we align a heart surgeons pay with that of a McDonald’s employee, but both occupations should still be able to properly support themselves.
The other argument I often receive is that we will experience job loss as a country, which would be highly detrimental given we are just now climbing out of a multi-year recession that still has consumers shaky. My answer to them is this…
Would it be so bad if we passed along some of those costs to the consumer? I mean, do we need to get our cheeseburgers for $.99? Can’t McDonald’s and Burger King just create a $2 menu instead of the $1 one? Likewise, would it hurt executives who make in excess of $1 million per year to give up a few thousand dollars of salary? There are ways to redistribute the costs that go along with paying higher wages.
So what do you think…could you live on minimum wage? Maybe you already do, and maybe you do it well, please tell us how. I’m fortunate in that I haven’t had to work for minimum wage since 1996, and I’m thankful for it. Today I am married, contemplating having children soon, I own a home and have a mortgage payment, and I diligently save for a retirement that I hope is comfortable and secure. It makes me wonder how those less fortunate can ever hope to achieve any of those milestones without a decent paying job.