Rising Income Inequality Makes Living Wages All The More Important
America's middle class families steadily lost share of the nation's income over the 2000-2014 period. http://www.pewsocialtrends.org/2016/05/11/americas-shrinking-middle-class-a-close-look-at-changes-within-metropolitan-areas/. The financial crisis saw incomes erode to levels not seen since 1999. Our new data provide a glimpse into where the cost of living and wages paid to specific occupations allow individuals and families to cover their basic costs. Our results clearly demonstrate that the minimum wage long ago stopped serving as a basis for Americans to get by.
While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2015. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, clothe, house, and provide medical care for themselves and their families.
Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enable the working poor to achieve financial independence while maintaining housing and food security. When coupled with lowered expenses, for childcare and housing in particular, the living wage might also free up resources for savings, investment, and/or for the purchase of capital assets (e.g. provisions for retirement or home purchases) that build wealth and ensure long-term financial security.
An analysis of the living wage, compiling geographically specific expenditure data for food, childcare, health care, housing, transportation, and other basic necessities, finds that:
The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to work nearly four full-time minimum-wage jobs (a 75-hour work week per working adult) to earn a living wage. Single-parent families need to work almost twice as hard as families with two working adults to earn the living wage. A single-mother with two children earning the federal minimum wage of $7.25 per hour needs to work 138 hours per week, more hours than there are in a 5-day week, to earn a living wage.
Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. State minimum wages provide for only a portion of the living wage. For two adult, two children families, the minimum wage covers 64.8% of the living wage at best in South Dakota and 40.8% at worst in Hawaii. This means that families earning between the poverty threshold ($33,091 for two working adults, two children on average in 2015) and the living wage ($62,260on average for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs.
By: Carey Anne Nadeau, OpenDataNation.com
Checked for accuracy on 6/8/2016; Numerical values are consistent with living wage 2015 estimates published on 6/7/2016.