Close to Home: Minimum wage isn’t a living wage
In January, California raised its minimum wage to $15.50 per hour. However, four cities in the North Bay have set higher minimums. For example, Santa Rosa and Petaluma employers must pay their workers $17.06 an hour.
Forty-one California cities and counties have established minimum wages higher than the state. Mountain View’s is highest at $18.15 an hour. Congress has not raised the federal minimum wage of $7.25 an hour since 2009, but 30 states set their minimum above the federal minimum.
Moreover, according to the National Employment Law Project, 12 states and 56 cities and counties have mandated phased-in $15 wage floors. Last year Hawaii became the first state to approve an $18 an hour minimum, phased in by 2028.
Nevertheless, the minimum wage is still not a living wage. A minimum wage is the lowest an employer legally must pay its workers. A living wage is a self-sufficiency wage, or the minimum amount a worker must earn to cover the basic costs of raising a family where they live — including food, transportation, child care, housing, health insurance and miscellaneous expenses — without relying on any government assistance.
The federal minimum does not address the varying cost of living from one state or region to the next, and it is not annually increased for inflation. Only when pressured by the grassroots nationwide “Fight for $15” movement have high-cost states and local jurisdictions legislated higher minimum wage rates, including automatic annual cost of living adjustments.
What is a living wage for Sonoma County?
Researchers at the Massachusetts Institute of Technology have developed a living wage calculator for every county in America. A self-sufficiency wage is calculated based on family type and each county's actual cost of living. A self-sufficiency budget is one in which a family is not reliant on government assistance and that one basic need, such as food, is not sacrificed to pay for another, such as housing.
To make ends meet in Sonoma County, according to the MIT calculator, two parents with two children, employed 40 hours a week year-round, needed $31 an hour or an annual family income of $126,946 before taxes. Two-thirds of the county’s low-income families earning less than $55,500 annually include two parents and two children; hence $31 an hour is the appropriate living wage benchmark.
Consider the following typical monthly expenses:
— $2,092 for fair-market rent — including utilities — as estimated by the U.S. Department of Urban Development for a two-bedroom apartment.
— $1,150 for food for meals prepared at home, according to the U.S. Department of Agriculture nutritionally adequate low-cost food plan.
— $784 for medical insurance, including copays, deductibles and premiums, supplies and medications, according to the Bureau of Labor Statistics’ consumer expenditure survey.
— $1,172 for transportation, including gas, insurance and maintenance for a used car, according to the Bureau of Labor Statistics. Most Sonoma County workers drive to work alone and do not use public transit.
— $2,121 for child care, an amount derived from state and county data for the lowest cost options for in-home licensed day care. This cost estimate assumes that a 9-year-old child requires after-school care and a 4-year-old needs full-time care.
— $865 in miscellaneous costs for housekeeping, phone, clothing, personal care and internet services, also based on Bureau of Labor Statistics data.
— $746 for civic engagement costs related to participation in community activities, including fees and admission and newspapers and education.
— $1,646 for federal and state taxes.
The MIT self-sufficiency standards do not include estimates for other expenses such as retirement and education savings and life insurance, which many consider necessities.
Thirty-one dollars an hour is a conservative estimate but does provide a yardstick for an ongoing community dialogue about what it costs to make ends meet. Raising the state and local minimum wage, implementing free universal prekindergarten and establishing rent control laws are all policy pathways to living wages. Most important, there is an upsurge of workers at Starbucks, Amazon, the University of California and other workplaces unionizing to bargain for a living wage.
A living wage should be the right of all working Americans.
Martin J. Bennett, an instructor emeritus at Santa Rosa Junior College, is a consultant for UNITE HERE Local 2.
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