Without my freelance income, I make what would be considered a “living wage” at my day job. This amount still seems very low to me. Some weeks, the income from my day job doesn’t cover my already bare-bones budget.
I’ll admit it: there’s even been a time or two when I’ve thrown a pity party for myself. (Not proud.)
Since I have such a hard time getting by on my income, which pays more than minimum wage, it makes me wonder how people who are actually earning minimum wage can survive. Let’s take a look.
My $1,600/Month Budget
My budget comes in at around $1,600 per month. While there might be an area or two where I could cut back if need be, I don’t have much wiggle room. Here’s how my monthly budget breaks down:
- $226 = housing
- $19 = phone
- $300 = groceries
- $300 = babysitting
This adds up to $845. The remainder goes to utilities, internet (no cable), gas, car insurance, and some entertainment spending. Note that this budget doesn’t include a car payment, debt repayment, health insurance, or life insurance, which I’m currently without.
How Do Minimum Wage Workers Do It?
Minimum wage in Ohio (where I live) is $7.85 per hour. My hourly wage is a little higher than this. (Not double, but somewhere in between.) I can barely, and I mean barely, pay my bills on my wage. How does someone making minimum wage pull it off? Let’s make some calculations.
A person earning $7.85 an hour and working 40 hours a week would gross $314 a week. Let’s say a conservative 10% is withheld for taxes, which leaves us with a net pay of $282.60 a week, or $1215.18 a month ($282.60 x 4.3 weeks).
Please note that my budget is low — a lot lower than the average in my area. But, if this minimum wage worker was living on my $1,600 a month budget, he would be $384.82 in the red! So, what are his options?
How a Minimum Wage Worker Might Get By
1. Use Credit Cards
Credit cards could be used to fill the almost $400 budget deficit. Over a period of a year, this worker’s credit card debt would be nearing $5,000 — AND when you factor in this new credit card payment, his budget increases.
2. Government Assistance
Let’s say the worker qualifies for food stamps. This would save him $200 a month, leaving a $184.82 deficit. If he qualified for food assistance and daycare, he’d be in the green by $116.18.
He could work two minimum wage jobs; if he worked almost 60 hours a week, he’d bring home enough money to survive without debt or government assistance.
4. Go Back to School
This isn’t always feasible, but he could go back to school and learn a new skill or earn a degree in order to get a new, better-paying job. However, if he’s currently working 60 hours a week, or working 40 hours a week plus caring for children, this might not be do-able.
To me, it doesn’t seem like there are many good options for the minimum wage worker. What are your ideas?
What’s the best solution for minimum wage workers? Do you think the minimum wage should be raised?