Tuesday, March 4, 2014

What the $10.10 Minimum Wage Would Buy

I was curious how well a single parent might manage on the new proposed minimum wage of $10.10 per hour. This is $2.85 higher than the current federal minimum wage of $7.25 and $1.00 more than Oregon's minimum of $9.10.

I'm assuming full-time employment for a single adult with two children, one in public school and one in daycare. I've used Oregon averages for housing and utility costs and assumed no employer-provided health plan. This is likely since full-time employment at minimum wage typically requires multiple part-time jobs. I've also assumed an average commute of ten miles each way to work with an average mileage car.

Gross Pay per month: $1,616
Social Security contribution: $100
Medicare contribution: $23
Federal Tax Withholding: $0
State Tax Withholding: $90

Net Pay per month: $1,403
Net Pay per year: $16,836

Basic no-frills expenses for Oregon:

Utilities (Power and Water): $168
Groceries (moderately thrifty) for 3 People: $520
Telephone (no landline, cheapest cellphone): $35
Good used car ($7,500 on 4-year loan): $190
Gasoline only for non-SUV commute (at 22 mpg): $18
Medical Insurance (eligible for expanded Medicaid in Oregon): $0
 Child care for pre-school child: $866
Basic expenses per month:  $2,677



This budget presumes no meals out, no travel beyond home to work, no car maintenance, no savings or retirement contributions, no television or internet, no entertainment or vacations, no purchases of clothing, toiletries, toys, or household goods. Depending where the family lives, these costs could be higher or lower. Odds are, they would need to co-habitate with another family to survive.

Publicly funded supports are essential for this family and could include:

Medicaid
SNAP Food Stamps
Subsidized Child Care
Rent Assistance
Utility Assistance

Given that just the bare bones cost of living for a family on the NEW HIGHER minimum wage are nearly double what they earn, each of these minimum wage earners will continue to need subsidies. Many would like to escape the humiliation of public assistance but don't have a choice, in spite of working full time. Taxpayers will continue to subsidize low wages, even with the increase to $10.10 per hour.

What is the argument against raising the minimum wage?



3 comments:

  1. Also the school districts would have to adjust their pay scales for entry level jobs at the lowest end because they don't start at 10.10 an hour it is lower for several steps.
    Hmmmmmm--we keep trying to make the districts see what is happening to their own employees. Thanks for the great summary.

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    Replies
    1. A continual frustration. I remember administrators seeking to hire only 3.5 hour classroom assistants to avoid having to pay benefits. Then complaining that the children they served didn't come from families who could pay for dental care, transportation or other vital supports. We created the poverty then whined about it.

      Delete
  2. Actually it was Judy Christensen in the last comment on Dana's (husband) account

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I'm interested in your comments.