Serious debates over what the minimum wage should be in various U.S. locales and jurisdictions should start with information on what it actually costs to live in the different places where Americans live. One common reference point, the U.S. federal poverty level, is sorely inadequate to the task. It has two basic flaws. First of all, it is absurdly low, based as it is on a hopelessly antiquated 1950s formula that multiplies a minimum food budget three times. The formula made a certain miserly sense when it was set in 1955 (when the average U.S. family actually did spend one-third of its budget on food), but it is wholly inappropriate today. The minimum required outlays for rent, transportation, child care, health insurance, and medical care have since risen significantly both in absolute terms and as a percentage of U.S. household expenditures.
The curent federal poverty level is:
one person in a household: $11,770
two persons: $15,930
three (one parent and two children): $20,090
four (two parents and two children): $24,250
five: $28,410
six: $32,750
I defy any household that does not grow its own food and manufacture its own clothes and medicine while foregoing modern health care, insurance, telecommunications, and transportation, to try to live with minimum basic level of comfort and health at these levels. A second major flaw in the U.S. poverty level is that it is not adjusted for significant geographic variations in the cost of living across U.S. metropolitan areas. It costs considerably more to get by in Chicago or New York City than it does in ādownstateā rural Illinois or āupstateā New York. It is much more expensive to live in San Francisco than in Bakersfield, California.
What does it cost just to get by in the U.S. today? It depends on where you live to no small extent. In an all-too-rare example of real social use value resulting from the labor of intellectuals, researchers at the Economic Policy Institute (EPI) have done some remarkable work on this topic.
They have calculated the varying minimum no-frills āincome required to afford an adequate standard of livingā for 6 family types living in 615 specific U.S. communities, taking into account the varying costs in each community of 7 basic expenditures: housing, food, transportation, child care, health care (premiums plus out of pocket expenses), āother necessitiesā (clothing, personal care, household supplies, reading materials, school supplies, telephone), and taxes.
According to the EPI Family Budget Calculator, the real cost of a minimally adequate no-frills standard of living for one parent with one kid in Iowa City, is $48,235āmore than 3 times the official U.S, poverty level for a 2 person household. That sounds high until you add up the monthly expenses: housing ($853), food ($369), child care ($684), transportation ($459), health care ($891), other necessities ($313), and taxes ($450), for a total monthly outlay of $4,020. Go to the San Francisco metropolitan area and the cost of a basic family budget for one parent with one kid is $70,929 (compared to $46,989 in Bakersfield), more than 4 times higher than the federal poverty measure. In the Chicago area, itās $53,168. Even in depressed Rockford, Illinois, its $48,936. In rural Illinois, its $48,129. Make it 2 parents and 2 kids in Iowa City, Iowa, and the cost is $66,667ā275 percent of the federal poverty level for a four-person household. With most Americansā wages stagnating for more than a decade and with the lowest paid workersā wages shrinking, is it any wonder that half of the more than 24 million Americans who rely on food banks for basic nutrition are employed? The EPIās figures are worth keeping in mind the next time you hear the Chamber of Commerce or the American Enterprise Institute express horror at the notion that the minimum wage should go as āastronomicallyā high as $15 an hour. Even such a dramatically increased minimum wage translates into just $30,000 a year for a worker fortunate enough to stay employed full time.
Put 2 parents with 2 children successfully in the job market full time and you still come up $6,667 short in Iowa City, where the local Proctor and Gamble plant is currently hiring (through an employment firm called Staff Management/SMX) warehouse and production workers for just over $10 an hour ($20,000 per year if able to get full time hours year round). Considering all this, I can be forgiven, perhaps, for not showering praise on my local county (Johnson County, Iowa) board of supervisors for agreeing (under pressure from local labor activists) to consider a proposed ordinance that would raise the countyās minimum wage from $7.25 to $10.10 an hour by 2017 in 3, 95-cent increments. To be sure, the current U.S. minimum wage of $7.25 an hour is another bad joke. (If it had kept pace with increases in U.S. labor productivity since the 1970s, it would be $18 an hour today. At its current level, it translatesāassuming full-time year round workāinto $14,500 per year, well below the horrific federal poverty level for a 3-person family.) Itās good to see local city councils and now even (in this case) a county board experiment with going beyond the federal minimum wage. The precedent is most welcome. But, please, just ten dollars an hourā¦$20,000 a year, assuming full-time year round work (which many workers cannot attain)ā¦and this just by 2017? Forget for a moment that many employers in the area are already at or above $10 an hour. That aside, the EPIās carefully calculated basic family budget even just for one parent and one kid in Iowa City (Johnson Countyās biggest municipality) is over $48,000 per year. Thatās more than 240 percent of what someone can make at a measly $10 an hour.
The so-called Peopleās Republic of Johnson County is currently āfeeling the Bernāāthe passion for Democratic presidential candidate Bernie Sandersāmore intensely than any county in America. Could its whole county board please join one of its members (Mike Carberry) by having the basic decency to Fight for Fifteen?
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Paul Street is an author living in Iowa City. His latest book is They Rule: The 1% v. Democracy (Paradigm, 2014). This article was first published on ZNet (see zcomm.org).