Who Can Survive on Today’s Minimum Wage?

Since 2009, the federal minimum wage has been $7.25, or $15,080 a year, placing many workers well below the poverty line.

The minimum wage is meant to be a living wage. In 1933, five years before the first minimum wage became law, President Franklin Delano Roosevelt said: “By living wages, I mean more than a bare subsistence level. I mean the wages of a decent living.”

Today, full-time employees earning the federal minimum annually pocket just $15,080, placing them well below the $23,850 poverty line — even for families of two. And minimum-wage earners with families of four fall almost $9,000 below the poverty line.

Pay is not the only problem. Many companies don’t offer full-time hours, even when workers want them. Fluctuating schedules, split shifts, and the dreaded “clopening” (closing the store at night, then reporting back to work early the next morning to open it), make it difficult for employees to work second jobs, attend college classes or arrange child care.

Minimum-wage employees are also vulnerable to pay reduction from wage theft, which includes lack of overtime pay, erased time cards, and unpaid time employees spend going through lengthy security bag-checks.

The Typical Minimum Wage Worker

According to the CBO, Census Bureau data shows that 88% of minimum wage earners are adults 20 or older, and 55% of them are women. For these adults and their families, proper housing is unaffordable, which explains why so many of them require some measure of public assistance. A University of California, Berkeley, study found that more than half of fast-food workers are enrolled in one or more public programs.

According to David Cooper, an analyst with the Economic Policy Institute, raising the minimum wage to just $10.10 would annually reduce government expenditures on current income-support programs by at least $7.6 billion.

The Bottom Line

The minimum wage in the United States is no longer a living wage. At $7.25, the federal minimum hasn’t kept up with the cost of living since the late 1960s, and there’s a growing movement among workers, policy analysts, state and city governments, and even some employers, to raise it.

  • The typical worker who would benefit from a $15 minimum wage is a 35-year-old woman with some college-level coursework who works full time
  • Fewer than 10 percent are teenagers, and more than half are prime-age adults between the ages of 25 and 54.
  • More than half (58 percent) are women.
  • 60 percent work full time.
  • Nearly half (44 percent) have some college experience.
  • 28 percent have children.
  • The average worker with a spouse or child who would benefit from a $15 minimum wage provides 52 percent of his or her family’s total income.
  • Raising the minimum wage to $15 will be particularly significant for workers of color
  • Nearly two-fifths (38 percent) of African Americans and one-third (33 percent) of Latinos would get a raise if the federal minimum wage were increased to $15.

Not just on the coasts, but all across the country, workers will soon need at least $15 an hour

By 2024, in areas all across the United States, a single adult without children will need at least $31,200—what a full-time worker making $15 an hour earns annually—to achieve a modest but adequate standard of living. Workers in costlier areas and those with children will need even more, according to projections based on the Economic Policy Institute’s Family Budget Calculator.

For example, in rural Missouri, a single adult without children will need $35,706 ($17.17 per hour for a full-time worker) by 2024 to cover typical rent, food, transportation, and other basic living costs.

Our economy can afford a $15 minimum wage

Today’s low-wage workers earn less per hour than their counterparts did 50 years ago. We can afford to pay the lowest-paid worker in America today substantially more than what her counterpart was paid half a century ago.

The economy has grown dramatically over the past 50 years, and workers are producing more from each hour of work, with productivity nearly doubling since the late 1960s. If the minimum wage had been raised at the same pace as productivity growth since the late 1960s, it would be over $20 an hour today.

Research confirms the benefits of the minimum wage

High-quality academic scholarship confirms that modest increases in the minimum wage have not led to detectable job losses.

The highest national minimum wages that the U.S. experienced raised wages and closed racial earnings gaps without adversely affecting the employment opportunities of the overall low-wage workforce.

New research on 138 state-level increases shows that all low-wage workers benefit from minimum wage increases, not just teenagers or restaurant workers.

Multiple studies conclude that total annual incomes rise significantly after a minimum wage increase.13 Low-income workers and their families benefit the most from these income increases, reducing poverty and income inequality.

The benefits of raising the minimum wage to $15 by 2024 far outweigh the costs

Opponents of a $15 minimum wage are likely to rely on a Congressional Budget Office analysis of the likely impact of President Obama’s proposed $10.10 minimum wage. Serious analysis has called CBO’s assumptions into question.14 But even CBO’s methodology implies that the benefits of a gradually phased-in $15 minimum wage vastly outweigh its costs.

If job growth does slow, some workers who work less can still come out even. There is significant churn in the low-wage labor market; as many as 10 percent of the lowest-wage workers leave or start jobs every month. So some of any decrease in the number of new jobs created will mean that there are workers who will take more time finding a new job, or have to work fewer hours, but who will not see a drop in their annual earnings because of their wage increase.

The potential benefits of a $15 minimum wage—$120 billion in higher wages for 40 million U.S workers—far exceed the potential costs. It is time to support a bolder increase.

Employers that pay low wages force their workers to turn to safety-net programs for support, at significant cost to taxpayers

Safety-net benefits for low-wage workers and their families make up more than half of spending on Medicaid, welfare (TANF), food stamps (SNAP), and the earned income tax credit, and cost federal and state taxpayers more than $150 billion a year.15

Check out this wage calculator: www.epi.org/multimedia/wage-calculator. How much money should you be making?

 

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