The current federal minimum wages is $7.25 an hour.
That’s about $15,080 per year( before taxes ).
A lot of people think we should raise the minimum wages to $15 an hour.
That’s about $31,200 per year( also before taxes ). Now, how big of a deal is that extra $7.75 an hour? Let’s find out.
We’ll start with the monthly costs of simply a few basic living expenses. And to keep things simple, we’ll focus on the average costs for a single person.
BIG DISCLAIMER: Everyone’s experience is different. These are crudely assembled hypothetical scenarios to help us simply consider the relative impact of a $15 minimum wage.
FOOD: The U.S. Department of Agriculture says the food costs for a single man are $188 to $373 per month. The scope for single girls is $167 to $331 per month. Since I’m a guy, I’ll simply use the above figures.( No offense, ladies .) And let’s assume some serious penny-pinching here by going with the low objective.
HOUSING: There’s a general rule of thumb that affordable housing should be no more than one-third of a person’s income. That’s getting harder to achieve in an age of flat( or declining) incomes and skyrocketing housing expenses, but let’s simply run with it for the sake of comparing.
FUEL: The average consumer expended just over $2,400 on gasoline in 2013, according to the Consumer Expenditure Survey( divided by 12 months ).
Food, housing, and fuel expenses alone soaked up nearly two-thirds( 64%) of the monthly earnings of the $7.25 -an-hour employee.
The $15 -an-hour employee expended less than half( 48%) of their income on the same needs.
Again, this is PRE-TAX. So these figures are a little more generous than current realities. But food, housing, and fuel aren’t the only things we spend money on, right?
We have utilities, phone bills, vehicle pays, insurance premiums, and medical bills. We pay for all sorts of small necessities that can really add up. And if you do have a family, then you definitely don’t need me to tell you that raising a kid is not inexpensive.
And what about savings and planning for a better future that whole “pursuit of happiness” thing? It’s seeming pretty impossible on $7.25 an hour.
A $ 15 minimum wages would lift millions of people out of poverty.
But it wouldn’t simply be a win for the workers it would be for all U.S. taxpayers:
According to Americans for Tax Fairness, “Walmart pays its employees so little that many of them rely on food stamps, health care and other taxpayer-funded programs” to the tune of $6.2 billion a year.