In the United States today, the federal minimum wage is $7.25 and hour. If a worker happens to land a full-time job at the minimum wage level, 40 hours a week, they would make $290 a week. That doesn't include taxes, which after federal and pay roll taxes the worker would take home around $250 a week, give or take a little depending on if there is a state tax in their area. If you multiply that by the average of 4 weeks in a month, the worker would take home $1000 a month. Tea Party favorite, Michele Bachmann, spoke in Florida and was asked about the federal minimum wage. She said she wouldn't be against lowering the rate to equal the cost of labor overseas. The Tea Party and their war on workers continues and to help Michele and her friends out, let's break down the cost of living for a single worker in America.
Let's say this average American worker lives in Florida. Florida is a low-cost state compared to north-east states like New York or a western state like California, so these numbers will reflect an average central Florida life style.
The ballpark range for a 1 bedroom apartment to rent in Florida is around $600 a month. This home is taking into consideration that it's in a fairly decent area, not expensive, but not in a dangerous neighborhood either. For arguments sake we will include water and/or gas into the equation. The electric bill will change depending on the season, but we will average the costs out and put your average electric bill at an even $100. In today’s lifestyle people have TV and the internet, some might say it isn't a "necessity," but we can all agree that it's the way the world is going. Putting together a package of cable, internet and home phone, the cost of all three would be around $150 for the month. Everyone has and probably needs a cell phone, so we can tack on a $50 a month Metro PCS phone for good measure.
So far we have taken care of the rent and utilities bills, now lets move on. Considering this worker only makes the minimum wage, we can assume that they are not driving a brand new car, so we will eliminate the car payment. However, even without a car payment, you still need to have car insurance. With an older car and minimum insurance, the cost of decent car insurance could be as low as $75 a month to around $125. We will split the difference and average it in as another $100 for the month. We will cut this worker a break and place their job near their home and only add in $100 a month in gas, which considering gas prices these days, is probably too low.
So we have a roof over their head, electric running, TV, cable, internet and a phone. The worker has a car with gas that is also insured. Everything seems nice so far, but we haven't eaten yet. Even with rising costs of food, we will continue to be generous and put an even $200 a month for food costs which can include the times when the worker needs or chooses to eat out as well as regular food shopping in the supper market. Knowing that this worker doesn't make much money, chances are they have a credit card, maybe even more than one. Taking care of those payments, we will have our worker be a fairly responsible one and we'll add another $100 a month in credit card bills. Add an extra $100 a month for extra spending that just naturally comes up throughout the month and we can finish up.
OK, let's get the calculator out and do some math.
Rent - $600
Electric - $100
Cable/Internet/Home Phone - $150
Cell Phone - $50
Car insurance -$100
Gas - $100
Food - $200
Credit Cards - $100
Add. Spending - $100
If you did your math correctly, the total amount of bills add up to be about $1500 a month. With the $1000 a month in take home pay, the worker who makes minimum wage but is still lucky enough to work full-time is in the hole $500 each month. That short fall doesn't even include the worker having any type of social life at all or account for any other spending. Now someone once told me that if you don't have 6 months bills in the bank you don't have anything. However, if this worker was able to make a real minimum wage to pay for their very minimal expenses, I think they would be happy. If the worker was able to make enough money to pay their bills and have some extra money on the side in case of emergencies, they would be ok. Lets say that the worker would make the $1500 a month with an extra $50 a week in their check. This would equal to $1700 a month in take home, or $425 a week. If you take $425 and divide it by the 40 hour work week, it would equal to $10.65 an hour. Now you do have to consider taxes being taken out, so lets round-up a bit extra and say the pay would have to be around $13 an hour before taxes.
There you have it, a federal minimum wage, or a true living wage for a single worker should be $13 an hour. Now, there are a lot of things that need to be taken into consideration. A 16-year-old kid living at home with no bills to pay getting a job probably shouldn't have the same minimum wage as a 30-year-old who lives on his own or might even have a family to take care of. You also have to look at the business side of things. How could a business be able to afford paying their workers almost double the current minimum wage and still be able to make money? If the minimum wage goes up, more people would have money to spend. If the business raised prices, it still would work out in their favor because more people would have money in their pockets to put back into the business. In addition, if you are a business, both small and large, and you can't afford to pay your workers a decent salary you probably shouldn't be in business anyway. The minimum wage is something that needs to be addressed and it is obviously much less than it should be. In the end, if you factor in the overhaul that needs to take place in the tax code, our trade and bank policies, than maybe we might be able to see the middle class thrive again.
(UPDATE 3/19/2012: In 2012, Florida raised its minimum wage to $7.67/hr, still far below the rate that is needed to be considered a "living wage". The Federal rate remains the same at $7.25/hr)
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