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A lot of conversation has occurred about the minimum wage movement popularized by the recent victory in the City of Seatac, Washington that spread across the state and has now gained the attention of President Obama.

Employees across the country are staging strikes, pickets and walkouts. They are protesting low wages and slave-like working conditions.  Walmart employs people to teach their employees how to apply for welfare, an admission they refuse to pay a livable wage.

The U.S DHHS, Office for the Assistant Secretary for Planning and Evaluation publishes federal poverty guidelines.  These guidelines are used by programs to determine eligibility for financial assistance.  For a single person, living in the continental United States (Excluding Alaska and Hawaii), the poverty level is $11,490 a year.  This amount represents approximately 7.3 months of gross income working full time, at $9 per hour. A month of employment, for purposes of this article, being defined as 173 hours of work.

After tax deductions, and before receiving a tax return, the net income (or take home pay) is actually somewhere between 8 and 9 months of work, based on a single individual claiming zero or one on their withholding statement.

For a family of four, the poverty line is $23,550.

It would be useful to have some sort of realistic measurement of necessary costs associated with maintaining a household at a reasonable level, rather than the poverty level alone.  Fortunately, the IRS has adopted collection and financial standards that define what it considers to be necessary living expenses.

For 2013, in King County, Washington, the IRS states necessary housing and utility costs for a single person are capped at $2106 per month with food, clothing and other necessary expenses being capped at $583 per month, with out-of-pocket healthcare being capped at $60 per month, for a person under age 65.

It’s math time again.

To be able to be able to pay just the IRS defined necessary living expenses in King County, Washington, this single person would need to earn $2,749.00 a month ($2106+$583+$60=$2,749) minimum.  This amounts to $15.89 per hour.  After considering tax deductions on gross income, the necessary hourly wage is higher.

These expenses do not include car payments or costs associated with keeping necessary career skills up to date, such as college or technical education.

These numbers, to me, represent a reasonable livable wage for a single person.

The Alliance for a Just Society recently published a report called the 15th Annual Job Gap Study.  The study’s findings included the following:

  • A single person needed to earn $16.04 per hour to pay for necessary living expenses.
  • There are 7 job seekers for every open job that pays a livable wage being defined at $15 per hour or higher.
  • In 2012, 39.45% of all jobs in the United States paid below the $15 per hour livable wage standard.

Not earning a livable wage is unsustainable.

If the 39% of employers above continue remain unwilling to pay a livable wage to their employees, they are going to contribute to a potential social services disaster.  By some statistics, between 16% and 20% of Americans now live in poverty.

However, I believe, if employees start earning a livable wage, it will strengthen the economy, locally and nationally, by virtue of these additional funds being used to consume goods and services.  This will create increased revenues for both the public and private sector.

Employers are starting to wake up.  Costco figured this out some time ago.  They pay a livable wage and are not only profitable, but remain competitive.  Henry Ford, the automaker, figured this out a long time ago: he paid his employees enough so they could afford to purchase his cars.

Spread the word, help your friends, family, neighbors and communities and support a livable wage across the country.

References

  1. http://aspe.hhs.gov/poverty/13poverty.cfm
  2. http://www.irs.gov/Individuals/Collection-Financial-Standards
  3. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/National-Standards-Food-Clothing-and-Other-Items
  4. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/National-Standards-Out-of-Pocket-Health-Care
  5. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Washington—Local-Standards:-Housing-and-Utilities
  6. http://jobgap2013.files.wordpress.com/2013/12/wa_2013-job-gap_final.pdf
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