The current Federal minimum wage is $7.25 an hour. A family of four, with both parents working for minimum wage brings home $580.00 a week before taxes. This amounts to $2640 a month for a family of four. The poverty line for a family of four is 1862.50 per month and extreme poverty is 931.25 per month.
With a before taxes income of $2640 this family must first pay Federal, State, and local taxes. If we give them an overall rate of 20% their tax bill is $528 leaving $2112. Rent for a 3 bedroom for this family of four can run from $450 to over $1000 per month. We will assume they are somewhat frugal and are paying $600 a month for a roof over their heads. That leaves $1512. The family needs transportation to get to school and work and assuming they own outright an old but usable car they must pay insurance gas and maintenance. Car insurance can run $100 a month for minimum coverage and that plus gas, round trip for work and errands, $105, (assuming gas at $3.50 a gallon and an average of 20 miles a day), and $50 a month for repairs and transportation costs can be as high as $255 a month leaving our family $1257.00.
Water and power can run around $30 and $150 respectively per month on the low end leaving $1177. Provided these minimum wage workers are getting health insurance from their employers, highly unlikely as minimum wage workers, they are making co payments at the doctor and praying nobody gets sick. Co payments can run high but lets just say a couple of visit's a month at $30 each and we are down to $1117.
Our family of four must eat and a family of four, even being frugal, can easily spend $200 a week on food and necessities leaving our family with $317.00. School costs, child care, clothing, higher costs for food, gas, power, all must be covered by the leftover money.
One can easily see the precarious position our family is in, one crisis and they are over the financial cliff! The car needs a new motor or some other extensive repair, a hospital procedure requires a $2000 co pay , one parent gets sick and loses work time or their job, any one of these things can spell disaster.
We have gone from an economy where a single breadwinner could support a stay at home wife and 2 kids to an economy where both parents must work just to keep the family barely above the poverty line. Business has squeezed every penny it could from employees salaries to the point where to make salaries any lower the jobs had to be shipped overseas. The great middle class, the economic engine that built America's economy over the last 60 years has been decimated by corporate greed and an attitude among the business elite of profit at all costs. If you cut salaries you cut the people's ability to purchase the products you are producing. Kind of killing the goose to get the golden egg.
What can be done to rebuild and strengthen the middle class and enable more of our poor citizens to join it and share in America's riches? We could start by restricting business from shipping jobs out of the country for one. Require employers to pay a living wage as opposed to a minimum wage, say 5% above the reasonable costs of supporting a family of four as determined by the Government Accounting Office. Wait , you say, wouldn't that increase the cost of goods and services across the market? Yes it would but it would only matter if our family of four, and everybody else, is getting a minimum wage . Were our family getting a living wage, the increased costs would be absorbed by the economy and the ability of these families to meet their needs without falling behind. Business has been pushing more and more people to the edge of poverty in the name of profits. Their greed is even more immoral as the rest of us are forced to use our tax dollars for a social safety net that would not need to be so large if business were required to pay a living wage instead of a minimum wage. A "minimum" wage is a recipe for an economy in decline and stagnation. A "living" wage is a bright path toward the growth of our middle class, increasing the power and strength of our economy thereby increasing the power and strength and of America.