Minimum wage hike helps, but is it a livable income?
This past Tuesday the federal minimum wage was raised for the first time in a decade. Workers who had been earning just $5.15 per hour will see their pay jump 70 cents to $5.85. That’s meager progress, but the law enacted for this year’s wage increase also stipulated jumps of 70 cents per hour for the next two summers to follow — meaning the wage will go to $6.55 in 2008 and $7.25 in 2009. But is it enough?<br /><br />A little math helps put the numbers in perspective: Someone earning $5.15 per hour and working a 40-hour week pulls in $10,712 per year; at $5.85 per hour, they’ll earn $12,168 annually; at $6.55, they’ll earn $13,624; and at $7.25, they’ll make $15,080. The net effect of the legislation, therefore, is an effective increase for minimum wage earners of $4,368 annually — a significant amount of money and huge percentage increase.<br /><br />Naysayers of the legislation, and of progress being made by this Democratically controlled Congress, should laud the positive aspects of the legislation before leaping to attack its deficiencies. (It should be noted, as well, that during the decade that saw no increase in the federal minimum wage there was a solid Republican majority touting their “moral” agenda the entire time.)<br /><br />While the increases in the federal minimum wage are significant (Vermont’s is $7.53 per hour as of Jan. 1, 2007), critics are right that such wages are far from adequate. The federal poverty level for singles is $10,210; for couples it’s $13,690, and for a family it’s $17,170. It’s not easy to imagine that there are many single moms and dads out there taking care of children who are working at full-time jobs and still living in dire poverty.<br /><br />The numbers support that: About 1.7 million Americans earned $5.15 or less in 2006, according to the U.S. Labor Department. And labor supporters, like author Beth Shulman, suggest that low wages are failing 30 million Americans — more than 10 percent of the nation’s population and a much greater percentage of working Americans. <br /><br />It’s not surprising, then, that the low-wage issue is gaining steam in the upcoming presidential race and Democrats are riding that bandwagon. John Edwards and Barack Obama have already outlined aggressive stances on the issue with Edwards advocating a federal minimum wage of $9.50 per hour by 2012 ($19,760 annually) and Obama calling for a yet-unspecified amount that would sustain a livable wage.<br /><br />Before charging that Democrats are too soft on the working poor (a reaction by conservatives in the 1990s), Vermont voters can get a sense of the fairness of this issue by looking at one factor: How much does it take to reasonably survive in Vermont with rent, heat expenses, food cost, transportation expenses, a clothing allowance, plus extraneous expenses. Let’s take a stab at assessing those basic costs for a single person: Rent $750 monthly for a modest two-bedroom apartment in Middlebury, plus $150 average for heat and utilities; phone and a cable hookup for computer access at $15 per week; food at $75 per week or just over $10 per day; gas and car payments at $50 for one tank per week, $50 car payment and $25 per week for insurance; and clothing at $25 per week. Extraneous expenses for household goods, the occasional gift, maybe a nearby yearly vacation at $10 per week. <br /><br />While that’s pinching pennies with the best of them (though allowing for a second bedroom), the total expense amounts to $24,700 annually — well above the minimum wage income, and that’s not including health care costs. (As a single person, the logical conclusion is to bring on roommates to share expenses and that works best for those still in their 20s, and not as well for those 30 and over.) <br /><br />If you think a frugal person could live comfortably with less than that, come up with your own budget and then reassess the minimum wage issue based on those numbers. Then send your budget to [email protected], along with an inkling of what a livable wage is. We’d love to know what you find.