The minimum wage sets an earnings threshold under which our society is not willing to let families slip; nonetheless, it fails to approximate the basic expenses of families in 2017. 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 living wage in the United States is $16.07 per hour in 2017, before taxes for a family of four (two working adults, two children), compared to $15.84 in 2016.
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 76-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, nearly the equivalent of working 24 hours per day for 6 days, to earn a living wage.
State set their own minimum wages. No state’s minimum wage covers the cost of living based on estimates of the living wage tool. For two adult, two children families, the minimum wage covers 64.6% of the living wage at best in Washington and 41.6% at worst in Virginia. This means that families earning between the poverty threshold ($24,793 for two working adults, two children on average in 2017) and the living wage ($66,842) on average for two working adults, two children per year before taxes), frequently fall short of the income and assistance they require to meet their basic needs.
For families with children, the cost of childcare and housing exceeds all other expenses. On average, in each state, the typical family of four (two working adults, two children) spends 21.0% of its after-tax income on housing and another 20.2% on childcare. Faced with tradeoffs, to justify entering the workforce, a second working adult must earn at least $11,443 on average in order to cover the costs of childcare and other increased expenses.
The living wage varies based on the cost of living and taxes where families live. Families of four (with two working adults, two children) in the North ($72,210) and West ($69,787) have higher average living wages before taxes than the South ($63,955) and Midwest ($63,715). Within region, the largest variation is between Southern states, where the living wage ranges from $55,240 in Mississippi to $75,666 in Maryland.
In most metropolitan areas, where the US economy and jobs are increasingly concentrated, the living wage is higher than the national median. Consistent with overall regional variation, of the most populous 100 metropolitan areas, San Jose ($87,777), New York City ($89,248), and San Francisco ($92,139) have the highest living wages for the typical family of four, before taxes.