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The $ 15 minimum wage does not cover the living expenses of many Americans

Activists are wearing “fight for $ 15” T-shirts at a press conference prior to voting for a wage increase law at the US Capitol on July 18, 2019.

Alex Won | Getty Images

A $ 15 minimum wage could become a reality in the United States

Millions of people raise wages from higher national wage floors while still paying many workers the “living wage”, the salary that an individual or family needs to cover basic costs Not enough.

This is especially true for families. This is mainly because living expenses such as childcare are higher than those of single adults.

According to CNBC’s analysis, a typical family of four couldn’t afford the basics in any state of the United States, even if it was raised to $ 15 per hour. Living expenses data Collected by researchers at the Massachusetts Institute of Technology. (This example assumes that two children and two adults are working full-time at the minimum wage.)

This data assesses the cost of food, childcare, health care, housing, transportation and other necessities. Income from safety net programs for the poor is not included.

Analysis shows that single adults without children will generally outperform their families. But in about half of the state, living expenses still exceed the income of workers who paid $ 15 an hour.

Shortages are generally greatest for states such as California, Hawaii, Massachusetts, and New York, as well as workers in the western and northeastern parts of the District of Columbia, where living expenses and taxes tend to be higher.

“When people are screaming [that a $15 minimum wage] It’s such a radical proposal, and the radical thing about it is, frankly, how low it really is. ” Judy Conti, Secretary-General of the National Employment Law Project, a workers advocacy group.

President Joe Biden Requested an hourly floor of $ 15..House of Representatives Democratic Party Attach policy — Gradually raise wages until 2025 — $ 1.9 trillion pandemic aid package.

President Joe Biden speaks during a meeting with Labor leaders on the Oval Office on Wednesday, February 17, 2021 about coronavirus bailouts.

Pete Maravich | Bloomberg | Getty Images

As an advocate, Covid’s pandemic pushed the concept of living wages into the rescue of star cars. Claim Frontline and essential workers (often women and people of color) have low wages for work while endangering their health.

Democrats are trying to get more pandemic aid through by mid-March, but the minimum wage will continue Not guaranteed..Biden Reportedly Last week, he told state officials that wage increases were unlikely to survive in the short term, but promised to continue the policy.

“Not survived”

Workers in the service industry speak in Washington on January 26, 2021 in support of the introduction of a wage increase law that includes a minimum wage of $ 15 for tip workers.

Countess Gemal | Getty Images Entertainment | Getty Images

The $ 15 minimum wage is more than double the current federal standard.

The current national tax rate ($ 7.25 per hour, or about $ 15,000 per year excluding tax for full-time workers) was set in 2009. Purchasing power declines over time because it does not rise with living expenses.

Many states have higher wage tables.With some cities business I did the same thing.

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However, 21 states were using the federal minimum as of January this year. according to To the Ministry of Labor. (Some people, like Virginia, recently passed a law to raise it.)

Nationally, the US minimum wage is less than half the “living wage” of an adult ($ 15.41 per hour, or about $ 32,000 per year without tax). data Edited by MIT. That’s one-third of what a family of four needs to live, about $ 21.50 per parent per hour, or about $ 90,000 a year in total. And the effects are compounded for single parents.

“People haven’t survived at the minimum wage,” he said. Amy Grassmeier, Professor of Economic Geography and Regional Planning at MIT Database The 2004 Community Living Wage Calculation and updates it annually.

It can be difficult to get daily necessities. For example, using mobile phones and broadband Internet access, which is closely related to the ability to acquire and retain jobs in the digital age, costs about $ 120 a month, Grasmeyer said. This is almost 10% of the budget of low-wage earners.

According to Grasmeyer, low-wage workers need to do extra work to pay their bills, save money in case of emergencies, or save money to buy assets like homes. Often you can’t do it.

And if people consistently buy low-priced processed foods, she said, it could have a spillover effect on areas like health because that’s all they can buy.

Regional differences

Current wage shortages for living expenses are generally the largest for workers in the South and Midwest. Living expenses tend to be lower there, but the minimum wage is also lower.

In these regions, data show that a $ 15 minimum wage is more effective than closing the living wage gap.

Of course, the state mean masks fluctuations at more micro levels.

For example, with exceptions, living in the suburbs or rural areas may be less expensive than in the city, Grasmeyer said.

Workers in certain professions and industries are also often at a disadvantage due to regional differences in wages, she said. For example, the job of preparing meals in rural areas pays much lower wages than in urban areas — creating a greater shortage of such workers in rural areas than in urban areas.

It doesn’t make any sense to say that the minimum wage of $ 15 an hour is the living wage.

Rachel Gresler

Economist, Heritage Foundation

Even between metropolitan areas, there are significant differences.For example, in San Francisco and San Jose, California, a family of four necessary About $ 130,000 a year ($ 31 per hour) to pay the base. Jackson, Mississippi and Memphis, Tennessee are approaching $ 79,000 ($ 19 per hour).

By comparison, in the rural areas of northern Jackson, Holmes County, Mississippi, family living wages are less than $ 17 per hour, according to MIT. data..

Due to regional differences, some conclude that the federal government should not adopt a uniform national minimum wage.

“It doesn’t make sense to say that the minimum wage of $ 15 an hour is the living wage,” he said. Rachel Gresler, The Heritage Foundation economist, a conservative think tank.

“In some places, if you’re talking about wages to support your family, it’s not really enough,” she said. “Other places may be enough wages to support a family.”

If Washington decides to raise the wage floor, federal lawmakers will also need to adjust the regional minimum wage to the median wages in the region, Gresler said.

However, this approach would curb wages in certain areas of color, which are disproportionately earning the minimum wage, said Conti of the National Employment Law project.

“We don’t want to put more systematic racism in it,” she said. “It will enshrine the regional minimum wage at the national level.”

Wage vs. unemployment

Critics argue that raising the country’s salary will potentially outweigh the benefits of rising labor costs, which will help businesses cut jobs.

About 27 million Americans Raise salary By the middle of the decade, a minimum wage of $ 15 will free 900,000 people from poverty. according to To the Congressional Budget Office. However, the CBO predicted that the policy would also reduce employment by 1.4 million.

Also, childcare costs increase by an average of 21% to about $ 3,700 for a family with two children. Greszler Predict, Deny some of the wage increases.

“It will increase the income of one person, but will lose the income of another,” Gresler said. “I don’t think these are very good trade-offs.”

However, some economists disagree with the Congressional Budget Office’s analysis.

“We believe that the CBO’s assumptions about the scale of unemployment are wrong and inadequately inflated compared to what the state-of-the-art economics literature shows.” according to Became an economist at the Institute of Economic Policy, a left-wing think tank.

One meta-analysisExamining evidence of various minimum wage increases, written by Arindrajit Dube, an economist at the University of Massachusetts Amherst, found that the impact on employment was near zero.

Higher wages also significantly reduce government spending on programs that support low-income earners, such as food stamps and earned income tax credits, according to EPI.

The $ 15 minimum wage does not cover the living expenses of many Americans

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