Minimum Wage Versus Living Wage

According to Wiki, minimum wage is defined as "the minimum rate a worker can legally be paid (usually per hour) as opposed to wages that are determined by the forces of supply and demand in a free market. In most cases, the mimium wage acts as a price floor. Each country sets its own minimum wage laws and regulations, and many countries have no minimum wage." In Texas, along with three of the four contiguous states, all follow the federally mandated minimum wage of $5.15 an hour. This is by no means a living wage as the federal government originally designed this law to mandate. "Living wage refers to the hourly wage that one deems necessary for a person to achieve a basic standard of living. In the context of developed countries such as the United Kingdom or Switzerland, this standard is generally considered to require that a person working forty hours a week, with no additional income, should be able to afford housing, food, utilities, transport, health care and a certain amount of recreation. "

In America, there is no consideration for health care or recreation when calculating the minimum wage. Part of the government's claim is that the minimum wage was designed to help more people survive without the need for governmental assistance. This, as with most federal mandates, falls a day late and a few hundred dollars short. This minimum wage barely covers the cost for housing without utilities, transportation or food. A non-exempt worker in Texas, making $5.15 an hour, working full time (but usually sent home before they get a full 40 hours because their employer is scared of paying even a minute's worth of overtime), without taking a vacation can Gross about $10,650 dollars in one year. We, of course, will give the federal government its share of our money in taxes (relishing in the fact that we do not have to pay state taxes in Texas) which will lower our actual take home pay to approximately $9,052.50. In Dallas, Texas where the cost of living is considered "comfortable" at 17% below the national average, one will still find themselves handing over an average of $450 for a studio apartment. Now, let's do the math: $450 per month at 12 months per year comes to $5,400. Take that away from my so-called yearly living wage and I now have $3,652.50 left to pay for all my other expenses for the rest of the year.

Let's keep in mind that this minimum wage was also designed to support a family of four. Now my family of four people, living in my studio apartment, need to eat at least twice per day. The state of Texas uses approximately $122 dollars per month per person when allotting food stamps. $122 per person for 4 people per month for 12 months in a year totals about $5,856. That already has surpassed my total income from my minimum wage job.

Now, let's be a little optimistic, that since I have a family of four, let's assume that it includes at least one other wage earner who is also making minimum wage. Now our yearly income doubles to a gross income of $21,300 and a take home pay of approximately $18,105. Now we subtract our rent and food costs we are left with $6,849 left for the year. That may seem like a whole lot of money but now we need to figure in how we are going to get to work each day. Under a budget crunch, we will assume that my spouse's job and my job have similar schedules that allow us to share one vehicle to get the kids to school and us to work. In an article about the cost of owning a car, financial correspondent, Dan Carter, states that the average American will spend approximately $7,000 a year on a vehicle, including unexpected repairs, maintenance, insurance and nearly $1,000 a year on just gasoline. What? We are out of money again? That can't be! The government is supposed to set the minimum wage where we can live without governmental assistance. Oh! Wait, it's still the first part of the year and our income tax refund came in the mail today. We had paid $2,185 in taxes and with our two kids (and that wonderful Earned Income Tax Credit) we will get all of that back. What is our balance now? $2,034.

Has anyone noticed that although we have a roof over our heads, food on the table and dependable transportation, we don't have any electricity or water with which to cook said food or to bathe said kids? Guess what! We have to pay for that too. According to the formula the state of Texas uses to determine food stamp eligibility, they average $120 per month for electricity, $50 for water and $30 for gas (for cooking and heating.) Utilities are going to run us about $200 a month, which quickly adds up to $2,400 a year. That comfortable $2,034 we thought we had is now gone and we are about $34 short from being able to pay our utility bill for November, and I guess we just wont have water or electricity in December, besides it doesn't get that cold in Texas, does it?

Health Insurance? Nah, we just pray none of us get sick. Recreation? We let the kids play with the stray cats who live in the parking lot of our studio apartment. School supplies? Well, our kids are still in day care so hopefully one of us will get a raise or the government will raise the minimum wage before they get old enough to go to school. Ooops, did I say day care? Oh, we can't afford day care, the kids have to stay with grandma at her assisted living facility while we are at work. It works out pretty good, they get recreation attempting to push grandma around in her wheelchair and they have learned to play dominoes, which is a dying art.

To be fair, let's look at the other side of this issue, the businesses that would have to pay if the federal minimum wage was raised. In the spectrum of the hospitality, restaurant and food service industry, an increased labor cost could potentially be not only detrimental but deadly. As we pay our workers more our profits go down. Of course, those holding stock in our company will be shaking their silver spoons in the air demanding that we either lower the quality and/or quantity of our food or raise our prices to compensate.

It's Noon on a Friday afternoon and only three patrons in our restaurant? Where is everybody? Oh, you mean they quit coming because I raised my prices, or because I started using frozen green beans instead of fresh? Guess I will have to just send a couple of waitresses home instead of having them just stand around. Oh Lord, now I have to listen to the peanut-gallery, some of my kitchen staff are complaining that I'm sending them home early because they were only scheduled 39 hours to begin with. I will definitely have a talk with management about laying off some more of our least productive employees so that our hardest workers can still get their 40 hours per week. You know, curtail redundancies in the workplace. Phone call, it's the Unemployment Office; we didn't pay enough unemployment insurance taxes last month? How could that be, we paid what we always have. I guess I didn't realize that I had to pay more when I started laying off employees who wanted to collect on their unemployment benefits.

Well, at least I can take advantage of the fact that our industry has a massive lobby when it comes to laws and I only have to pay my tipped employees $2.13 an hour (or half of the previous minimum wage). There is always an exception to the rule when the government is concerned. They can raise the minimum wage as much as they want but the tipped minimum will stay at $2.13, or at least it did in 1996 and 1997 when they gradually moved the minimum wage from $4.25 to $5.15 an hour.

I'm sorry I have to answer the phone again, I'll be right back.

"Hello? What do you mean the hospital; what do you mean a heart attack? Uh, no we don't have insurance? What do you mean he can't work for three weeks? He hasn't taken a vacation in 3 years. What do you mean that's the problem? The government is supposed to make it where we can survive on minimum wage. Well, hold on a second I have another call coming in."

"Hello? What do you mean grandma's dead? No, we don't have money for a funeral? Babysitter? Day Care? Where am I going to get money for that with my husband in the hospital for a heart attack? Well, ok I will come get my kids on the way to the hospital."

"Ok I'm back, my grandma's dead and I have to go pick up the kids before I can come to the hospital. What do you mean I can't bring my kids to the hospital?"

Back. Now where was I? Oh yeah, the government says that the minimum wage is a guideline for a living wage for non-exempt workers. Well, it looks like it's not a living wage to me.