$15 an hour: A higher wage, but hardly a living
Amazon’s move to boost the e-commerce giant’sstarting next month could spur other large retailers to follow suit as companies compete to attract workers. Experts say that would help improve living standards nationwide.
But what kind of life does $15 an hour really buy? Here’s a look.
Calculating a “living wage”
Economists look at a range of figures when calculating a “living wage.” They include costs for food, child care, health care, housing, transportation, taxes and other basic expenses.
One recent study shows $15 an hourto secure affordable housing in most U.S. states. Nationally, someone would need to make $17.90 an hour to rent a one-bedroom apartment or $22.10 an hour to cover a two-bedroom home, according to analysis from the National Low Income Housing Coalition.
Renters across the country earn an average hourly rate of $16.88, the report estimated, showing that people earning well above the $15 level often struggle to afford housing. Those findings are based on the standard budgeting concept of spending a maximum of 30 percent of one’s income on housing alone.
Another analysis from Massachusetts Institute of Technology researchers Carey Anne Nadeau and Amy K. Glasmeier found in the U.S. as a whole, it took $16.07 an hour before taxes in 2017 for a family of four with two working adults to reach the living wage threshold. That’s up from $15.84 in 2016.
Location matters — a lot
How far that living wage goes financially can vary tremendously according to where you live. In San Francisco, a family of four would need to earn $39.33 an hour combined to reach the threshold. In Charleston, West Virginia, that threshold is $23.03 for a family of four, though a single adult needs to earn $10.02, according to MIT.
The current federal minimum wage of $7.25 an hour “does not provide a living wage for most American families,” according to the MIT analysis. A family of four with two working adults and two children “needs to work nearly four full-time minimum-wage jobs (a 76-hour work week per working adult) to earn a living wage,” the report said.
Single-parent families have to work almost twice as much to reach the same mark.
A single mother with two children earning the federal minimum of $7.25 per hour would need to work nearly 24 hours a day for six days a week, or 144 hours a week, to earn that living wage, the researchers found.
But even at $15 an hour, life doesn’t get a whole lot easier. Two adults who work 40 hours a week each and earn $15 an hour make $62,400 before taxes.
That’s below what the Economic Policy Institute calculates as a living wage for most of the country. Brownsville, Texas was the least expensive, according the EPI’s calculator, at $58,906. For Madison, Wisconsin, the EPI calculator shows that a family of four, with two working adults, would need to earn $88,283. The figure gets higher along most of the coasts and many places in between, with San Francisco topping the list at $148,439.
In announcing its pay hike earlier this month, Amazon also said it will lobby for an increase in the federal minimum wage. In the meantime, with unemployment at a, other employers may have to follow Amazon’s lead on wages because it’s such a big company it can force them to compete for workers, said Heidi Shierholz, senior economist and director of policy at the EPI.
An across-the-board national pay standard could blunt arguments by competitors that hiking their wages hurts them competitively, she said in an interview with CBS MoneyWatch.
“That’s the beauty of a labor standard — everyone is doing it,” said Shierholz, formerly chief economist at the Department of Labor during the Obama administration. “When you raise your wages in a vacuum — when no one else is doing it — then you have to worry about a competitive disadvantage. Not when everyone is doing it. That’s the argument for raising the floor nationally.”
Many states, however, aren’t waiting for Washington to act. At least 33 states proposed minimum wage increases in 2017, according to the National Association of State Legislatures. Rhode Island was the only state to pass an increase. Another 32 states are proposing a boost in 2018. As of July, only Massachusetts and Delaware had completed the measures.
Working without a net
The gap between minimum wages and a real living wage leaves many Americans depending on the country’s social safety net to provide needed help. But the U.S. doesn’t offer enough support to pick up the slack in many cases.
Food insecurity — or not having enough food because of a lack of money or other resources — is a data from the U.S. Department of Agriculture.for almost one in eight Americans. That rate remains higher than before the Great Recession, when the figure was slightly more than one in 10, according to recent
Other costs are rising as well. The average price of regular-grade gasoline in the U.S. has spiked 7 cents a gallon over the past two weeks, now costing $2.97, according to the Associated Press.
“We have a really feeble safety net,” Shierholz said. “We don’t have a lot of other supports that mean $15 would be a decent standard of living.”
Even if families bring home enough to cover daily living, they’re not saving for retirement or their children’s education, she added.
“The idea we have in this country is that people can live, not extravagantly but comfortably, month to month and put something away for their retirement, in case there’s an emergency and for their children’s education,” Shierholz said. “None of that’s possible at this wage.”
Fight for $15, a coalition of fast-food, retail and other workers, sprung up in New York City in 2012 and has since expanded into a global movement with activists in more than 300 cities around the world. Workers who rally in support of the wage hike, like those, now have an unexpected ally in Amazon.
The Fight for $15 campaign also recently said activists plan to knock on hundreds of thousands of doors in 11 states in an effort to elect candidates in November that will support workers’ rights.
— CBS MoneyWatch’s Kate Gibson and the Associated Press contributed to this report.