Minimum Wage and Cost of Living

[Rotku]

May 26, 2007
United States

An increase in the United States federal minimum wage was approved by Congress on Thursday as part of the military funding bill. The minimum wage increase proposal was supported by President Bush while it was in the legislative process, who is expected to sign it into law.

The minimum wage raise was a campaign promise made by Democrats in the 2006 and is cited as one of the reasons the Democrats won control of the Congress.

Any previous wage hikes passed at the U.S. state level will be superseded by the new federal law that boosts the minimum wage from $5.15 to $7.25 per hour in two years.

The wage raise will happen gradually, being completed in two years. "Within 60 days, those who make $5.15 an hour will receive $5.85. Within a year, it will be $6.55. Within two years, it will be $7.25" according to Monique Newton of MyrtleBeachOnline

The only reason I post this, is I'm curious about whether or not that is enough to live on, assuming one is working the standard working week (what ever that may be there - 40 hours? 48?). I've no idea what the cost of living is like in the states, but that minimum wage seems fairly low.

[Spider Jones]

It's enough if you've got roomates. Full-time employment is considered anything more than 40 hours. Definetly not going solo, unless you don't have to pay rent or buy your own groceries. A note: many states have their own minimum wage standards, it's actually $6.95 here in Michigan right now, and will be $7.15 in July, and then $7.45 next year in July.

There's a small house 3 bedroom house next door for rent for $1100 a month, if I could get two other friends who are also making around minimum wage (which will be $7.15 very shortly as noted above) working full-time, we end up with about $1000 a month each after taxes. Would be enough to live on, I think.

[Mulu]

If you are young and healthy, have no dependants, and have no debts, then you can make it on minimum wage. For anyone else it's poverty.

[dergon darkhelm]

If it comes with health care benefits, for an individual it is livable. Very few minimum wage jobs include health care benefits however.


The minimum wage is certainly not a "living wage" which usually implies that the wage earner is the primary source of income for a family of 4. It is nowhere near enough money to support a family at a standard most of us would consider acceptable for a developed country.

[danielmn]

Sure...if you can walk to work or take mass transit.

[sgould72]

Full-time employment is considered anything more than 40 hours.

Actually, full time is traditionally defined as 40 hours. MORE than 40 hours is overtime. However, some industries in the past few years have begun revising their definition of full time to mean a minimum of 30 hours per week.

I would have to disagree with those saying that it is a "livable wage". To my way of thinking, it is a subsistance wage. You probably won't starve to death, but you aren't going to have much of a quality life-style either. Heaven help you if you are trying to take care of any dependants on that wage. This is why you hear of so many people working multiple jobs...1 minimum wage job just isn't enough.

[idoru]

For a bigger perspective, have a look at this table.

I could point out all kinds of fun things about those stats, but I think the overall picture is clear enough without commentary.

[Lusipher]

Its poverty. You cannot make it on minimum wage in the states and actually own much. If you have children or other debts you can bet your ass your getting some assistance or selling drugs to get by somehow. I never sold drugs, but I remember how bad it was living off regular wages before I managed to get the job I have now.

[Nekulor]

Good to see they're FINALLY raising it. Now lets get it to a level people can actually live on so we can eliminate welfare.

[NickD]

The only reason I post this, is I'm curious about whether or not that is enough to live on, assuming one is working the standard working week (what ever that may be there - 40 hours? 48?). I've no idea what the cost of living is like in the states, but that minimum wage seems fairly low.

$7.25/hr as a pure conversion is a little more than the NZ minimum wage, and the cost of living in America can be cheaper than it is here, if you don't live in places like New York. And you never get sick.

Myself, I lived on the dole for 2 years, and that was $115/week (which was about US$65 at the time... admittedly 12 years ago). I survived. I didn't eat any luxury foods, but I could pay the rent, flatting in a box apartment with a friend, get Sky and still have enough money left over to go out drinking once a week. It's just about lowering your expectations.

What I don't get is why is there a minimum wage in America but you still get lots of people who work below it, like waitresses? I mean what's the point of a legal minimum pay amount if not every seems to have to be paid that amount?

[kmj2587]

What I don't get is why is there a minimum wage in America but you still get lots of people who work below it, like waitresses? I mean what's the point of a legal minimum pay amount if not every seems to have to be paid that amount?

Waiters/Waitresses get tips. I had a friend who worked at the Olive Garden and on paper made like $3.00 an hour. After tips however, he averaged $10-15 per hour. While not all of them end up getting paid that much, they end up with more than minimum wage.

[NickD]

I realise that. However, if they got minimum wage or above - as per the law - you wouldn't feel so bad about not tipping them as much. Tipping is relatively rare in New Zealand, as people are supposed to be paid enough as it is, and good service is expected as part of the cost of a meal.

[kmj2587]

I realise that. However, if they got minimum wage or above - as per the law - you wouldn't feel so bad about not tipping them as much. Tipping is relatively rare in New Zealand, as people are supposed to be paid enough as it is, and good service is expected as part of the cost of a meal.

So I'm either going to tip the waiter, or pay more for the food as what was gratuity becomes a cost of production embedded in the menu prices. I think I'd prefer to just tip the waiter. Also, no one feels bad about tipping poorly for poor service. It's one of those considerations where the waiter likely has so many customers that a few poor tips means little to them in the end.

[Joos]

For a bigger perspective, have a look at this table.

I could point out all kinds of fun things about those stats, but I think the overall picture is clear enough without commentary.

No wonder USA has such an enourmous poverty rate. Since 1968 the minimum wage has only grown smaller.

[NickD]

So I'm either going to tip the waiter, or pay more for the food as what was gratuity becomes a cost of production embedded in the menu prices. I think I'd prefer to just tip the waiter. Also, no one feels bad about tipping poorly for poor service. It's one of those considerations where the waiter likely has so many customers that a few poor tips means little to them in the end.

Think of it all as part of the dining out experience. The cost of the chef is embedded in the menu prices, so why not the waiter? You don't get to pay less if the food is substandard, you show your disapproval by never returning.

I've lived in a tipping environment (England) and a non tipping environment, and I very much prefer the non-tipping environment. It removes the expectation that people will get a tip no matter how well they perform (I had to argue against paying more than the expected/minimum tip with people I was with when we had an hour wait - standing up, no waiting area - to get seated at a restaurant in London) and you don't have to think about what the right amount to tip is. Here, you can tip for good service, but nobody will bat an eyelash if you don't tip at all when the service is just adequate.