A 2023 QUESTION
Minimum Wage, An Abandoned Philosophy
OPINION - $15 an hour is useless when the ideals that minimum wage was created for no longer exist
Oct 17/2023
LOST IN THE SEA OF BEING SO BROKE IT HURTS.
Have you ever had a conversation with life that goes something like this…
You “I have $0 in my bank account.”
Life “Yup, same as last time you checked it.”
You “If only minimum wage was $15/hr, we should fight for that”
Life “hahahahahahahahhahah”
Alright, that title and opening are a bit click bait-y, I admit it…. So first off, what do I mean by fighting for $15/hr is useless? Aside from it being a bit of an attention grab? Fighting for $15/hr isn’t completely useless, people would be better off if minimum wage was $15/hr, it just won’t bring people to a state where minimum wage is working as it was intended to.
Let’s dive in.
The first minimum wage (in America) was introduced in 1933 by FDR (President Franklin Roosevelt). What was the point of it? What was he trying to do? To answer this, lets read it in his own words. In his ‘Statement on the National Industrial Recovery Act’ on June 16,1933 FDR said…
“Nobody is going to starve in this country.
It seems to me to be equally plain that no business which depends for existence
on paying less than living wages to its workers has any right to continue in this country.
By “business” I mean the whole of commerce as well as the whole of industry;
by workers I mean all workers, the white collar class as well as the men in overalls;
and by living wages I mean more than a bare subsistence level – I mean the wages of decent living.”
Sounds pretty awesome, doesn’t it!
Well certain people didn’t agree and two years later, minimum wage and fair hours were ruled ‘unconstitutional’ and the act was repealed.
Luckily, law makers didn’t give up on it and in 1938, minimum wage was reinstated and was here to stay!
The idea was everyone should be able to afford a house, transportation and to raise 2 kids and support a spouse while working no more than 44 hours a week at any job. Wages started at 25 cents an hour ($4.82 in today’s wages).
“$4.82/hr!” I hear you say “that’s way under today’s minimum wage, no matter what state you live in! We have it way better today that’s capitalism working for everyone!”
Let’s take a quick detour for some fun… Math.
With this excellent addition to society, the average income of a family was $1,731/yr or $37,786.01 by today’s standards (adjusting for inflation), the average cost of a rent was $27/month or $589.38 by today’s standards, the average car was $860.00 or $18,772.95 by today’s standards and tuition to Harvard was $420/yr or $9168.18 in today’s standards.
And what do all those things cost today with our minimum wage at $7.25?
Median average salary – $56,420 per year (49% increase with inflation taken into account)
Rent – $1739/month (295% increase with inflation taken into account)
Car – $48,008 – (255% increase with inflation taken into account)
Harvard Tuition – $79,481- (866% increase with inflation taken into account)
So even for the cheapest thing on that list, with inflation accounted for, it will cost the average American 3x more of their salary to afford everyday necessities than it would have cost them in 1938.
Well that’s not ideal. How bad is it?
As you probably guessed from the picture to the left, not great. As of 2021 if you make minimum wage, you can’t afford an apartment anywhere in America. Not just in big cities like New York or LA, saying again for dramatic effect, you can’t afford an apartment in any city or state in America.
It’s so bad in fact that people in only 218 counties out of more than 3,000 nationwide can afford a 1 bedroom apartment without falling under what a ‘housing wage’ would pay.
Housing wage? What’s that?
It’s recommended that you spend no more than 30% of your pretax income on your housing needs. This is to account for everything else you need (food, bills, savings, etc) while still being able to save at least a little something for retirement. So basically, if you pay more than 30% for your housing, you have to start taking from one of those things in order to pay for it. So retirement funds start going unfunded leading to poor and unable to work elderly, that kind of super inspiring stuff.
“These amounts are far higher than many Americans — including seniors, people with disabilities, and working families — can spend on housing,” wrote Marcia L. Fudge, secretary of the US Department of Housing and Urban Development.
In 2021, the ‘housing wage’ aka a wage that would allow you to rent a 2 bedroom apartment and spend no more than 30% of your income is $28.58/hr. And if you wanted to keep up with 1938 standards where they consider ‘rent’ being able to house a family, $30.09/hr would be the absolute minimum wage.
So, going all the way back. Minimum wage was designed so anyone could work any job and afford a house, a car, raise 2 kids and retire. In America, in 2023, just to be able to rent a 2 bedroom without it technically eating into money you don’t have (or that is reserved for other needs) you need to make $30.09/hr and that’s just an average. If you live in an expensive city like NYC or LA… You’d need much, much more.
So why is fighting for $15 minimum wage ‘useless’? Because in order to bring minimum wage back to where it should be and where it started…
We should be fighting for a hell of a lot more.
As always, transparency is a key goal of ours. Here’s our references for the write up.
https://www.cnn.com/2021/07/15/homes/rent-affordability-minimum-wage/index.html
https://www.businessinsider.com/the-cost-of-living-2014-10
https://policyadvice.net/insurance/insights/average-american-income/
https://www.marketwatch.com/story/this-is-now-the-average-price-of-a-new-car-11613683827
https://college.harvard.edu/financial-aid/how-aid-works
https://work.chron.com/deal-reprimand-1781.html
http://docs.fdrlibrary.marist.edu/odnirast.html
More links available by clicking the links in our fun math section.