Can You Live On Minimum Wage?
If you want to liven up any gathering, start a discussion about the minimum wage. People have very passionate opinions about the purpose of the minimum wage, and at what amount it should be set. One thing about the minimum wage that many people wonder is, can you live on minimum wage?
Let’s do some analysis together, using the example of a single person making the federal minimum wage. Let’s set the parameters of our experiment.
What Is The Minimum Wage?
The federal minimum wage is currently $7.25, however many states have set their own minimum wage that is higher. You can see the minimum wage by a state on the IRS’s website. A person who has a job that is subject to both federal and state minimum wage laws, they receive the higher amount.
Average American Consumer Spending Breakdown
According to the United States Department of Labor Bureau of Labor Statics, for the year 2016 the average single person spent the following percentages on major life expenses:
- Food (both at home and dining out) 12.4%
- Housing (shelter, utilities, insurance, taxes) 36.7%
- Transportation (vehicle, gasoline, insurance) 15.9%
- Healthcare 7.3%
- Personal Insurance and Pensions (life insurance and retirement) 8.9%
The percentages of these major categories only add up to 81.2%. The remaining 18.8% would be for things such as clothing and entertainment.
What Would A Minimum Wage Budget Look Like?
As mentioned, for the purpose of a simplified example, we’ll use the federal minimum wage of $7.25. If a person worked 40 hours a week earning the federal minimum wage, they would earn $290 a week, or $15,080 a year. Plugging that income level into several tax calculators, they would owe the following taxes for the year:
- Federal Income Tax: $468
- Social Security Tax: $934.96
- Medicare Tax: $218.66
Total Tax: 1621.62
*Note: State taxes are variable and not included in this example.
Gross income – taxes results in the following net income amounts:
- Net Annual Income: $13458.38
- Per Month Net Income: $1121.53
Using the percentages above, here’s how our minimum wage worker’s monthly budget looks:
- Food: $139.07
- Housing: $411.60
- Transportation: $178.32
- Healthcare: $81.87
- Personal Insurance and Pensions: $99.81
- Other: $210.85
Analysis: Can You Live Off Minimum Wage?
The problems with the minimum wage budget as shown are obvious. The food budget is woefully low even for one person, and the housing budget would likely require living in a roommate situation. Even then, housing plus utilities for $411 is going to be extremely if not impossible to find. Our minimum wage worker would likely have to make some sacrifices such as forego life insurance or any retirement savings to boost other parts of the budget. There wouldn’t really be much if any, funds left for entertainment to enjoy life, or save for an emergency fund or retirement. Our minimum wage worker would likely be looking for a second job to make ends meet.
People have strong opinions about the idea behind what minimum wage is supposed to accomplish, and what it should be set at. What is clear is it would be extremely difficult if not impossible to live off the federal minimum wage.
What do you think, Clever Friends, do you know anyone living off of the federal minimum wage? How about their state’s minimum wage?
Related Posts
-
Car maintenance isn’t always at the top of your to-do list. Life gets busy, and…
-
Not redeemable with any other sale or offer How many times have you turned over…
-
Frances McDormand is an award-winning American actress who made headlines for winning an Oscar…
-
Sleep apnea is often thought of as a men’s health issue, but it affects women…
-
Weight-loss injections continue to reshape conversations around obesity treatment and metabolic health. Men across different…
-
Self-hate doesn’t always scream... it whispers. It shows up in casual conversations, quiet apologies, and…
Who the hell is living off the minimum wage FOREVER? That is supposed to be an entry level wage anyway, and theoretically your wages should go up. If you don’t like your wage, the proper thing to do is not demand that the government force your employer to give you a raise but to improve what you offer so that you can get more. We’re not stuck in a caste in America like we were in the old country, so you can make something else of yourself than be a chimney sweep if you want. Ironically enough, I live on $20,000 a year (even though I earn FAR more), and I own a house and two cars (really old ones mind you), so it can be done if you’re willing to sacrifice and not luxuriate like you’re in a Pitbull song…
The minimum wage is for teenagers and retirees. It most often applies to entry level positions for people with little or no training. If people choose to stay in those jobs and make a career of them, then they should accept low pay. Otherwise, do what the rest of us do. Educate and train yourself for a better paying job. It’s supposed to be a Capitalist system, not a Communistic one. Single mothers supporting a bunch of kids should have thought of that before they had their litters.