I like Facebook. If anything, I like the political and social debates that go on there. You can really see the different viewpoints that your friends have on a number of different issues. Just in the last week, I have seen ranting and raving about minimum wage, military retirement benefits and welfare. The posts are sometimes unfounded and others choose to use facts and stats to back it up. Either way, you see a multitude of pro- and anti- opinions on all forms of issues.
The posts have been so entertaining that it has caused me to come out of my pseudo-hibernation as far as writing is concerned. Those who really know me understand how much I hate math or rather; how bad I am at it. However, this recent argument about minimum wage got me doing some math.
Before anyone asks my opinion on minimum wage, I will tell you that I have no opinion. A job is a job and money is money…especially for people who truly need it. Many employers know this and know that there are people who will take minimum wage rates. Recently, I have seen many people blasting minimum wage reform for fast food workers. What irks me is that people see something and nod and yell with great gusto: “Yeah! I agree” before even thinking about the most basic, simple details of something.
I mentioned doing some math but first, I want to throw out some statistics to show where I am coming from and set the table, if you will. According to the Bureau of Labor Statistics, in 2012, 75.3 million workers in the United States age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum. Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers. A full breakdown of these stats can be found here.
Now let’s do the math. Someone please correct me if I’m wrong. For argument’s sake we’ll use the minimum wage rate for the state of Ohio which is $7.85, which is $0.60 more than most states’ wage rates. Now let’s assume that the employee worked a full 40 hours a week.
7.85 X 40 = 314 dollars per week.
Let’s multiply that by 4 for the number of weeks in a month.
314 X 4 = 1256 dollars per month.
We haven’t even figured out what the taxes will be. After some research and asking my 9 year old how to do it, let’s use the Social Security tax of 6.2% and the Medicare tax of 1.45%. These numbers were taken straight from this website. That equals 7.65%.
314 X .0765 = $24.02 worth of taxes per paycheck.
314 – 24.02 = 289.98 after taxes.
289.98 X 4 =1159.92 monthly after taxes.
289.98 X 12 = 13,919.04 annually.
Let’s assume this person is a single parent and they have the bare minimum essentials to live. For argument’s sake let’s say this person uses a plan from Cricket, which after researching offers one of the cheapest monthly plans at 35 dollars a month. Then they can purchase a Kyocera Domino phone for 19.99 a month. That amounts to:
35.00 + 19.99 = 54.99
Then there is an activation of 15.00 dollars, so:
54.99 + 15.00 = 69.99 one-time fee.
Activation fee withstanding we’ll just add the 35.00 a month since the activation fee was only once.
They need somewhere to live. For purposes of this article, we will look for a one bedroom in the Dayton, Ohio area. The parent and child can share a bed. A quick Google search tells me that the average rent for a one bedroom apartment in Dayton is 567 dollars a month. We’ll remember that for the big math problem at the end of this all.
This apartment is going to need water, air conditioning/heat, electricity, and the garbage needs to go out as well.
For all this we’ll estimate about $110 for all of these utilities combined. We will not estimate for cable or internet because those are not “must needs”; those are luxuries. Since this person works they will need a car, insurance, and day care (either all day or before and after).
This person has a used car and doesn’t have car payments, but we need to make sure they have full coverage auto insurance. Their driving record is good and they don’t have any tickets or accidents but they are younger than 25 because most minimum wage workers are younger in age based on the Bureau of Labor Statistics website I provided earlier.
The average car insurance for all drivers aged 25 is 1605 dollars a year.
1605 divided by 12 = 133.75 monthly
This is estimated from this website.
As far as medical insurance goes, we’ll use state-funded Medicaid instead.
Let’s talk about daycare, The Dayton Daily News reports that school age daycare can cost on average 4732 dollars a year.
4732 divided by 12 = 394 dollars a month
394 divided 4 = 98.50 weekly
Wait, there’s still food that needs to be bought. Let’s assume this person cuts coupons, doesn’t buy the name brands and they shop weekly. The child is of school age based on the day care rates we are paying and WIC (Women, Infants and Children) benefits stop on the child’s 5th birthday. Meaning, there is not any supplemental help to offset the cost of groceries. We’ll say this family only buys what they need and they spend 50 dollars a week. My wife says this number is way too low but, in order to solidify my argument we will under estimate.
50 X 4 = 200 a month on groceries
The child qualifies for free lunch at school, so there is no need to pack a lunch or send lunch money. But, we still need gas money to get to and from work. Gas in Dayton tonight is 2.99 a gallon. They fill up once a week and they have a 10 gallon tank. To make the math easier we will round up to 3 dollar a gallon.
3 X 10 = 30
30 X 4 = 120
This single parent, minimum wage worker is cutting it close so, we won’t even get into maintenance of their car and we will assume they are debt free (though, we know that is a hard assumption to make).
I think we have everything so let’s do the math:
Monthly income after taxes: 1159.92
Rent – 567.00
Utilities – 110.00
Phone: – 35.00
Car Insurance: – 133.75
Child Care: – 394.00
Groceries: – 200.00
Gas: – 120.00
Total: – 399.83
After all is said and done, the minimum wage worker is 400 dollars in the negative, with the basics. No cable, no internet, no luxuries. But, let’s try to fiddle with some of these numbers and attempt to get this person in the positive.
This person can apply for Section 8 housing or HUD housing. This is housing that is offered to low-income families. Typically, the tenant will pay 30% of their income as the rent. For this person who as we stated makes 1159.92 a month will pay approximately 347.70 in rent.
567.00 – 347.70 = 219.30
We can re-apply the extra 219.30 to the negative 399.83 and we will come up with:
-399.83 + 219.30 = -180.53
This person has gained some ground to making back into the positive side but, they are still in the negative. We can find some more money by switching from full coverage to liability only. The national average for liability is 471 dollars a year.
471 divided by 12 = 39.25 a month
Full coverage was 133.75 and month. Liability coverage is 39.25. Let’s crunch these numbers.
133.75 – 39.25 = 94.50
-180.53 + 94.50 = -86.03
This isn’t even my situation, this is “hypothetical” and it is frustrating as heck to “find” more money. However, we are slowly creeping back into the positive side of the ledger. There are still a few options we can use. Although, they all lead to the same point: there is not enough money to go around.
This person can find out if they qualify for the welfare program. This is a wonderful option for them, even though they now they face the stigma of being “lazy, good for nothings who spend all my tax money buying soda, chips and stuff they don’t need” by the keyboard gangsters on Facebook and get the strange looks from the customers in the grocery line.
Unfortunately, the hard-working adults who are cutting corners, living on the essentials get lumped in with all of the abusers and get blasted daily on Facebook by people who probably never have worked minimum wage or who have never actually thought out the daily cost of living.
The point is, it is very easy to spout off and yell about the injustice of minimum wage workers when you have never thought about what they are going through. Most people don’t care to look into the issue, it’s easier to just bitch about it.
Minimum wage, welfare they’re basically one in the same. Not everyone is the same. And to pigeonhole all minimum wage workers and welfare recipients is a terrible and irresponsible thing to do as an adult. Honestly, my issue isn’t to advocate for higher minimum wages; my issue lies with people NOT willing to take an honest look at an issue before they crap all over it.
There is a documentary by Morgan Spurlock, called “Minimum Wage”, it was part of his 30 Days series. It highlights the difficulties of living on minimum wages. It is a must watch for anyone who thinks that it’s as simple as telling them to live within their means. It will cause you to reevaluate the entire way you think. Many minimum wage workers live within their means and to be completely fair; some don’t, they take advantage of a program meant to help.
You can’t punish the using it for what it’s for because some people don’t. Some people embezzle money and become rich, some don’t. Some people rob banks, some don’t. It’s not all encompassing with welfare and the minimum wage rate either. I challenge anyone to take a long, hard look at the welfare system and minimum wage and tell me that there isn’t more work that can be done to make it better for both sides. Instead of complaining…do the math.