I hear the federal minimum wage in the United States is being raised to $7.25 by 2009. Celebrate good times! I think I’ll do a little dance in the street. Right.
While this is a nice little step forward it isn’t really anything most people could hope to actually live on. Why is the minimum wage so low? I’m not really sure of the specifics, but I do know that it isn’t a livable wage. For those who are mathematically challenged, someone working at that rate full time would make slightly more than $950 per month, after taxes.
It’s very, very difficult to live on $950 per month. Almost impossible for most, and even if you can just barely squeeze by, good luck amassing any savings or paying for an unforeseen expense or emergency.
How to Live on Minimum Wage
Let’s break down where $950 per month will get you, just for kicks.
We’ll say that you are renting an apartment, which is shared with a roommate. The price of rent has gone up quite a bit recently, so we’ll assume you live very modestly ($600 per month together) and split this amount. That’s $300.
Heating and electric amount to $100 total, so that’s $50.
You have a phone. $30.
You also have to eat, right? If you cook a lot and never eat out, you MAY be able to get by on $100 per month. That would be very, very frugal.
Transportation. We’ll say that you can’t afford a car, so you take the bus. $80 per month for this.
We’ll also assume that you are one of the lucky ones with health insurance. Even so, this probably will cost you $100 per month, minimum. We’ll say that you have a “good” employer who offers health insurance (but for some reason pays minimum wage!)
Finally, we will assume $100 per month for incidentals, like toothpaste, band-aids, medication, toilet paper and perhaps some new socks.
We have come to a grand total of $760. Congratulations. You can put an amazing $190 into savings every month. You are really living the American Dream now.
Of course, this thriving lifestyle is only possible if you:
- Have no kids
- Live with a roommate (at least one)
- Have no credit card bills, college loans, or other outstanding bills of any kind
- Have no car
- Really, really like to cook or hunt for your food
- Never eat out, and never really have any entertainment of any kind
- Rarely shop for any new clothing
- Never have any medical emergencies of any kind
- Never miss work for any reason
- Never travel
- Never update any of your furnishings at “home”
If you are very good at simple living though, you might be able to pull it off.
But why should life be this difficult for the working class?
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