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Could You Live on Minimum Wage?

Could YOU live on minimum wage? This is an extremely interesting mental exercise that forced me to challenge every line in my budget and think about my own life, spending patterns and debt. Living on minimum wage is definitely challenging, but is it doable? Definitely read this post and think about it.

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.


  1. I lived on minimum wage in the past. Solution… 4 roommates and lots of patience.

  2. I think the statistics on the average rent price is thrown off by all the ritzy $1000-4000 1 bedroom rentals in big cities. I lived right outside of STL for 5 years and you could rent a 1 bedroom for $350-500 easily but if you wanted to live right in the city you were going to pay $800+. If you used a real rental price that someone living on min wage actually would live in you would find you have more money left over. Additionally a lot of people with low wages can live in income based housing. I know a girl who makes $9.75 an hour and thats over $1 over min wage in Illinois and she lives in a sliding scale complex has a 2 bedroom apartment and pays $150 a month and it includes water sewer trash. She also gets food stamps not very much around $80 last I knew so she has to pay some ouy of pocket but not much.

  3. Sorry didnt get to finish my reaponse. Anyways so that girl makes roughly $1400 monthly after taxes. Minus $150 for rent, $50 for cell phone, $80 for electric, $45 for insurance (on her paid off car), $100 for cable and internet, and $100 for the rest of her groceries…. That leaves her with $875 to do with whatever she wants each month yet somehow she is ALWAYS broke. Sigh.

    • She sounds rather fortunate that she is able to live in subsidized housing. Here in the Detroit area I know people (under the age of 62 and without disabilities) that simply do not qualify for it. Believe me, if it was that easy to obtain we wouldn’t have the homeless population that we have here. Even my retired grandparents, when they still lived in Michigan, lived on social security and very little in savings…yet they still paid $500 a month in rent…that was subsidized housing too.

      I do agree that rental statistics are often skewed…but speaking as a person who lived in 5 different apartments before purchasing a home, the average 1 bedroom in our area is about $650 – $750, that is a regular ole apartment, probably a bit aged, but in a safe neighborhood! You could find $400 – $500 a month in unsafe areas.

  4. I like this one! I have been thinking to write it for the UK and my estimate is that it may be possible to live on minimum wage pay but it locks you in a very difficult existence from which it is impossible to advance. Once I mentioned something like that in a comment and got a bad response by someone saying that he is fine on minimum wage and people like me make him feel bad. I think that we should fight together for increase of the minimum wage – people should be able to earn a wage on which they can live and develop.

  5. I’m counting my blessing that I live in the UK. The same person, if they had children would get: free unlimited health and dental for all their children and free healthcare for the adults. Subsidised medication. Housing benefit towards the rent, also tax credits to bring up the family income also the statutory right to paid holidays.

    • Sounds like the UK has a much better system than we do here in the US. I know our tax rates a bit lower, but it seems like your tax dollars are used for the people.

  6. Once upon the I did live on minimum wage the thing is unless you had been in that situation before it almost impossible to believe that people could get by

  7. I used to make barely over the minimum wage. There is no way that I could have survived off of that. I ended up having to take a second and a third job just to make ends meet and pay my bills.

  8. I haven’t done the charts for a single person because it’s so obvious one would need a roommate to make the finances work. But I do have a recurring theme on the cost of living for a family of four: two adults and two small children, cost of living based on expenses for Michigan families.
    Two people working full time at Michigan’s (Sept. 1, 2014) minimum wage of $8.15 an hour would earn $33,904 a year. At that salary range, they make too much money for free school lunches, food stamps or Medicaid coverage in Michigan but can get reduced-price school lunches.
    They probably could afford a two-bedroom apartment but likely only one vehicle as Michigan’s car insurance is very high. Public transit availability is hit and miss in southeast Michigan.
    Michigan League for Public Policy is among the agencies saying that a family that size needs to earn at least $52,000 to “make ends meet” on the assumption day care would be needed.

    • I live in metro Detroit myself…so your analysis doesnt surprise me in the least. Public transit is all but non existent here. You have to have a car. It is a shame that school lunches aren’t provided when two people are making minimum wage. My wife is a teacher so I am well aware of the lunch policies. $52,000 isn’t as much as people think it is, and as the years go on and inflation starts kicking in again, we will see an even greater hardship for those earning minimum wage.

  9. If miminum raised was raised, what would you have it raised too?

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