President Obama’s proposal to raise minimum wage to $9.00 an hour has reintroduced a common controversy to the public. Currently, the minimum wage is $7.25 an hour. Contrary to popular belief, the majority of minimum wage employees are not high school students trying to earn extra money. They are over 20 years old and work full time.
Minimum wage has not been adjusted to include rates for inflation since 1968. If it had been, the current rate would be $10.56 an hour. In comparison, our $7.25 rate has 30% LESS buying power then it’s 1968 counter part. With an economy that grows on consumer spending, how can we expect a recovery, let alone growth, without giving employees (who as so many forget are also shoppers/buyers/consumers) the ability to spend?
But beyond consumerism, $7.25 an hour simply does not meet the demands of living.
I live in Arizona, a state with notoriously low standards for living, and this is a quick break down of some of my monthly expenses, and what it would look like on minimum wage.
I recently got a quote on health insurance from United Healthcare. As a 24 year old, non-smoking female, my monthly premium would cost $160.00. That is 22.07 hours of work, over half of my working hours in one week to just pay for health insurance.
I drive a Subaru Forester 2006, which averages 28 mpg, and my fill up costs around $45.00. It would take me 6.21 hours of work to just be able to DRIVE to work. I usually fill up about 3-4 times a month, but let’s just say for this example it averages to 3 times a month.
The car I need to get to my job costs me $90.00 a month to insure, or, 12.41 hours of work at minimum wage.
My rent, in a very low end complex I might add, is about $560 a month. This means that 77.24 (almost two weeks), goes strictly to putting a roof over my head and not sleeping in the streets or living with my parents.
Now let’s add my electric bill, which averages at about $110.00 a month (for the record, I am very energy conscious). This is 15.17 hours of work.
Let’s exclude other expenses like food, children, medication, etc. My monthly cost of living for just health insurance, gas, car insurance rent, and electricity is $965.00, which at minimum wage, means I need to work for 120 hours to afford these bare essentials of life in the U.S. This means that my remaining 40 hours of work I have a left over, paying $200.00 BEFORE taxes, would have to cover everything else. Again, my break down of living did not include:
-Credit card payments
-Cell phone/house line
Many argue that raising the minimum wage to $9.00 would hurt the economy. How? How is allowing people in the richest country in the world to meet the essentials for living a negative thing? Fun fact, cities and states with minimum wage closer to that of the newly proposed federal level have less unemployment than the national average, indicating a stronger and healthier local economy.
One can argue that a wage increase will encourage employers to lay off employees. However, do you really think that managers and executives at Walmart are going to descend from on high to do the menial tasks of store personnel? There is no business which is flush with companies. Most prefer to operate at the fewest employees possible to provide the minimum of services with the most profit. These companies would not be able to cut employees without cutting their bottom line, as they would have to reduce services to customers.
In the 21st century United States, anyone who works full time should not live in poverty. It is a testament to our truly twisted morals and corrupt political system of corporate incentive trumping the common good, that has created such a paradox.