One important fact that not many people understand is that the minimum wage is not a living wage. The difference is quite simple though – the minimum wage assures a minimum income on which an employee can count on as a result of their work while a living wage is the amount of money they actually need for living.
The minimum wage might be comforting for people as they know that no matter what happens the employer is not allowed to pay them less than that. However the minimum wage might not be – and it usually isn’t – enough to make a living.
For example Illinois, which is the fifth most populous state of the U.S. has a minimum wage which is not matching the living wage even if it’s $1 over the federal minimum wage.
The minimum wage in Illinois is $8.25 per hour ($10 in Chicago) while the estimated living wage for a single adult is $11.08 per hour. If the adult is raising a kid by themselves the living wage should be $22.96 per hour.
The Massachusetts Institute of Technology (MIT) created a calculator which uses factors such as costs related to food, transportation, housing, child care and medical expenses, to calculate the living wage for each of the 50 states.
The calculator is also taking into account the number of family members, the number of working adults in the family and whether or not a single parent raises one or more children to calculate the income a family would need as a living wage.
According to the calculator, the minimum wage in Illinois is $8.25, the living wage would be 11.08 and the poverty wage is $5.00 for one adult. For two adults of which only one is working and who are raising three children the minimum wage is still $8.25 while the poverty wage is $13.00 and a living wage would be $25.99.
Other cases of families living in poverty even if they have a minimum wage are when a single adult is raising 2 children, in which case the poverty wage is $9.00, one adult with 3 children for which the poverty wage is $11 and all the families raising one or more children with only one adult working.
This provides a clear image of the fact that in most instances the minimum wage might not be enough not even to get above the poverty line. In this moment the minimum wage is barely covering single adults and doesn’t take in consideration the cases in which people are caring for other persons.
Image source: Flickr, Meraj Chhaya