Article 43


Living On Minimum Wage


Paying Rent on Minimum Wage

By Andrew Rosenthal
NY Times
May 30, 2012

As part of its 2012 report on rent affordability, the National Low Income Housing Coalition released a chart thats been FLOATING AROUND THE INTERNET. It shows that there isn’t a single state in the country where its possible to work 40 hours per week at MINIMUM WAGE and afford a two-bedroom apartment at Fair Market Rent. In West Virginia and Arkansas, you’d need to work at least a 63-hour week, and thats as good as it gets. In California, Maryland, D.C., New Jersey and New York you’d need to work 130 hours or more. Hawaii comes in last place: 175 hours.

I can anticipate a few no-big-deal arguments, starting with the definition of affordability. By “affordable,” the Coalition means paying no more than 30 percent of income for housing costs (rent and utilities). And why a two-bedroom apartment, as opposed to a one-bedroom?

Both of these choices seem reasonable to me. Thirty percent is a generally accepted standard, and there are plenty of single-parent households as well as families where, for various reasons, only one member is able to work.

But even if you quibble with how exactly the Coalition put the chart together, its clear that there’s a mismatch between the minimum wage and the cost of living (or at least a decent cost of living). In New York, which is in the midst of a fight over raising the minimum wage, two individuals would need to work 68 hours a week each to manage the rent on a two-bedroom unit. If they have kids, the 70 percent of their paychecks left after rent won’t get them very far.

When he was campaigning for the presidency, Mr. Obama promised to raise the federal minimum wage annually. That hasn’t happened. Its the same as it was in January of 2009: $7.25 an hour. According to Bloomberg View, that amount, adjusted for inflation, “is actually lower than what a minimum-wage worker earned in 1968.”

Somehow I doubt MITT ROMNEY will highlight this particular broken promise in an attack ad, but that’s no reason for anyone else to give the president a pass.




Minimum Wage in U.S. Fails to Beat Inflation

By Ilan Kolet & Bob Willis
December 28, 2011

Workers in the U.S. earning the minimum wage are worse off now than they were four decades ago.

The CHART OF THE DAY shows that after adjusting for inflation, the federal minimum wage dropped 20 percent from 1967 to 2010, even as the nominal figure climbed to $7.25 an hour from $1.40, a 418 percent gain.

The decline would have been worse if not for increases that took place from 2008 through 2010 in how much employers were legally obligated to pay. Combined with more stable consumer prices, those adjustments helped trim the reduction in earnings from 41 percent at the end of 2007, following a decade of no change in minimum pay.

Hardship is increasing for lower-income levels, and the minimum wage reflects those at the lower end of the payroll spectrum,Ӕ said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York. With those meager wages in place, it makes it hard to imagine families doing with even less.Ӕ

A jobless rate that has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948, is one reason why workers have little leeway to press for higher wages. Adding in part-time workers who would prefer full-time jobs, and discouraged workers who would take a job if one were available, pushes the rate up to 15.6 percent as of November.

The loss of better-paying manufacturing jobs in the last three decades and the growth of service industries may be another reason why wages have failed to keep up with inflation, Zentner said.

Eighteen states and the District of Columbia have minimum wages above the federal level of $7.25 an hour, which is just over $15,000 per year for a full-time worker. Eight states—Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington—will increase their minimum wage by between 28 cents and 37 cents an hour on Jan. 1, according to the National Employment Law Project, a non-partisan, not-for-profit organization that conducts research on unemployment.



Raise The Minimum Wage

The minimum wage of the past was a stronger standard, providing significantly more buying power than it does today. After its creation in 1938, the value of the minimum wage rose relatively steadily until its value reached a high point in 1968 (when its nominal value was $1.60 an hour).  Thereafter, it suffered dramatic erosion as Congress failed to adequately correct for inflation over time.

The minimum wage of $1.60 an hour in 1968 WOULD BE $10.59 today when adjusted for inflation.

See the Bureau of Labor Statistics’ Consumer Price Index INFLATION CALCULATOR.


Posted by Elvis on 05/31/12 •
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