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Michael considered fate at 18:40   |   Permalink   |   Post a Comment

To follow up on a post I made recently stating that "A MINIMUM WAGE employee who works 40 hours a week for 51 weeks a year goes home with $10,506 before taxes." I thought I would delve into what that means, exactly, for that minimum wage earner.

To start, it means that after taking the 2006 standard deduction of $5,150 for a single, your taxes are roughly $535, not including FICA. Your net is below $10k.

Now, pretending that it is possible for a minimum wage earner to have no debt whatsoever, with the best possible situation being that they live in walking distance to work and therefore have no transportation costs, that leaves them with $9971 to live on. The normal recommendation for housing is no more than ~35% of your income. Unfortunately, that would leave only $290 a month. I once paid that in Montreal in the late 90's but I had five roommates and Montreal was dirt cheap. This isn't exactly a realistic number. Let us be generous and pretend that you could find a decent place to live alone for $400. This is basically ludicrous in many urban areas unless you're willing to live in a sewer, but let us just pretend. Add a phone line, heat, and electricity and you would be looking at a minimum of $500 a month. That leaves $3971 left for the year to pay for food, clothing, and other incidentals, or $330 a month. It is possible to live on $50 a week for food but difficult at best, and would still cost you $200 for the month.

The result? $130 of leftover to work with per month or just $32.50 a week. Consider that even the poverty stricken need clothing and the occasional ice cream cone, this is not much to work with. There is little wonder that it is difficult to climb out of this hole and the rich get richer.

Certainly, this could be done. Yet one single mishap, a sickness, a week long flu, or loosing your job could result in shear disaster. Every week of work missed is ~$200 down the drain. That can mean going without food or heat. What is more concerning is that, at $32 a week in extra money (that must be used to put clothes on your back, remember), it is almost impossible to generate any kind of savings. If you drink (8 pints a week at $3 a pint) or smoke (at $5 a pack 5 times a week) you are broke. If you buy the newspaper ($1.50 a day) you're using a third of your incidentals.

Sure, this can all be done. But it takes extreme discipline and leaves no room for insurance. I haven't even discussed what it would take to provide your own health insurance if indeed you needed it. I haven't discussed how hard it could be to come up with a security deposit for an apartment. I haven't discussed how difficult it would be to stick to such a low budget indefinitely. I haven't discussed how much more difficult all this would be if debt was involved. I haven't discussed how hard it would be to get an extra job, juggle two schedules, and try to maintain at least one of them full time for health benefits. I haven't discussed the purchase of soap, laundry costs, and other hygienics.

And finally, I haven't discussed whether this should be considered an acceptable way for people to live in the western world - the "blessed" society where all is paved in gold. Is it? Should we be thankful for even this opportunity in a world so wrought with conflict? Is this the low bar we are setting our standards at? The worst of the best?

You tell me.