How do people survive on minimum wage?
You know it's not much, but once you crunch the numbers you see just how meager it is.
This guest post comes from Andrea at So Over Debt.
One of my clients recently reported getting a job at a fast-food restaurant. Since she's been unemployed and desperately looking for work for nearly a year, I was thrilled for her. She was very excited that she'll be making $7.50 an hour -– a whole quarter more than minimum wage.
After she left my office, I got out a calculator. I've never worked for minimum wage, so I didn't know exactly how much -- or how little -- money that is.
Assuming 80 hours per pay period, my client will be bringing home around $462 every two weeks. That's with no health insurance or retirement contributions.
If I brought home $924 a month, would I even be able to survive? I decided to find out.
My minimum-wage budget
First, I decided which of my expenses are absolute necessities. This is what I came up with:
- Rent (My parents own my home, and I don’t currently pay rent, but most people do)
- Phone (People will say this isn't necessary, but I have a child. No way would I go without a phone.)
- Car insurance
Note that I left out my car payment. If I were making minimum wage, I know I'd have to drive something, but not something with a huge monthly payment. So I'm pretending my car is paid off.
The budget in action
Here's how those costs would add up:
- Rent: $400 (the amount I would be paying if my parents would let me -– I realize it would be much higher in some areas)
- Utilities: $200 (current average of electricity, water and gas for my house)
- Food: $200 (assuming we could survive on $50 a week)
- Phone: $25 (prepaid phone)
- Car insurance: $100 (full coverage)
- Gas: $140 (this is what I currently spend to drive to/from work)
- Total: $1,065
OK. I ignored my car payment. I don't have anything fun, like cable or Internet access. And I'm still over budget by about $100.
What about government assistance?
I checked on that. In Kentucky, a family of two making $1,200 a month before taxes qualifies for $165 in food stamps. Even if I could make that cover all the groceries for the month, that leaves me with only a little more than $100 a month for everything I didn't list above.
Post continues below.
My son would qualify for Medicaid, but as an able-bodied adult, I wouldn't. So if I got sick or had to take a prescription medication every day, I'd fly through that $100 in no time.
How the heck does this work?
There are so many things I didn't account for in my minimum-wage budget. Clothing. Car maintenance. Birthdays. Christmas. School field trips. Toilet paper and toothpaste.
With these numbers, is it any wonder so many people are in debt? Personally, if I knew I was going to spend more than I made just to exist, I’d try to drown out that misery with TV or Internet access at home, even though I know I couldn't afford it. I'd probably use store credit cards to buy clothes (if I could even get approved for them). Payday loans would be my backup plan for emergencies. And retirement? Pfft, what's retirement? I couldn't even afford to get my oil changed!
Honestly, the first thing I would do is drop my car insurance. This would free up another $100 a month, but I would risk getting a ticket or totaling my car in a wreck. I don't even want to think about what would happen if I was injured while driving and had no insurance of any kind.
I complain about my student loans constantly, but if I hadn't gone to college and could qualify only for minimum-wage jobs, there is simply no way I could make it. Even if I made stellar financial choices at all times, I would run out of money every month. I can't figure out how any single parent could make this work.
Could you make it on minimum wage?
I feel like I must be missing something here. With 4.4 million American workers making at or below minimum wage (and remember, I gave myself an extra quarter an hour), there has to be some kind of secret I don't know about. It hurts my soul to think that there are people struggling with this every day -- not because they are curious but because it's their reality.
Have you ever worked for minimum wage? How about doing it while supporting a household? Could you find a way to alter your budget to make it work?
More on So Over Debt and MSN Money
I make a bit above minimum wage right now running a bed and breakfast in Santa Fe, New Mexico also have my housing taken care of and left-over breakfast. Work between 50-65 hours a week.
Just a few years ago I had a house with 7 toilets, a 6 figure salary with a big corp , fancy cars, 30 year marriage, and even owned a small hotel. Laid off from the Corp job. Lost the hotel to bad "partners" led by a crooked attorney--(we never did anything wrong--they stole my business and then ran it into the ground). Lawsuit--they filed one but never acted on it---just a hollow accusation, bankruptcy and lots of pain. Partners are good for dancing and one other thing. My life was "over"!
Thought about suicide...all my moorings were gone. 53 and can't find a "real" job despite having an knock-out resume and 30 years sales/management experiance .Had a meltdown and drove off with some carpentry tools to New Mexico. One of the poorest states in the US--but fantastically beautiful and full of positive energy. Had to start over from scratch.
I sold my car, did some painting work and got an old truck. Saved money working at the B&B and bought 20 acres of land in Northern New Mexico. Got a payment of $600./month on the land for 10 years--owner financed. Have a nice fire-pit and a 34 foot travel trailer for $3800. Going to build a solar home--very small, grow veggies and maybe learn to create something--art, crafts, small farming--whatever.
"SO WHAT" YOU MIGHT BE THINKING---so now is the time for the people in the US to reinvent ourselves. I can see it in these posts and in the trends going on....tiny houses, low energy use, grow your own food, stop the mass consumerism, redefine success, DO WHAT YOU ARE HAPPY DOING instead of just working to pay the mortgage and keeping up with the Jones'. My pain has been a gift to help me change. I am lucky and I appreciate still being alive.
Many, many many people here in Santa Fe and Taos, etc work for minimum wage...yes it is hard---but we drive old beater cars, help each other out and don't have to keep up a false pretence to impress others. Here it is about what you create instead of what you buy. Santa Fe is the 2nd largest art market in the US. Lots of folks cut wood to keep warm and spend the winter doing their brand of creativity. Working with their hands and souls instead of...what I used to do in order to keep living in my McMansion. (Worked for a large consulting firm)
I have no insurance (except car), have few possessions and am learning that happiness doesn't come from external sources. Don't get any handouts, working so I can pay my land bill and enjoy being in the New Mexico wilderness. I have a new appreciation for my fellow beings. I was within a few weeks of being homeless. I know now how much work it takes to be poor. We did everything "right" college, wonderful kids, 401k, perfect credit score--we were "millionaires"!! BFD!
Now I focus on being compassionate, volunteer helping others and limiting my "waste trail".
Don't dumpster dive----but understand how that can happen. Next time you see a poor person try to be compassionate and loving instead of judgmental. It could be you who are hungry and tired in a year!
I have a strong feeling that if people had to live in the real world- a world where someone's hard work gets one what one has and does not include parents or others to prop them up- then the world would be in a much better shape because people would have more empathy. You think it is hard playing the How To Survive Game? Try living it. Suddenly people might understand why those who work the hardest appreciate things the most instead of having the world handed to them and having to find reasons to be miserable.
The people with all the smart @$$, easy answers haven't had to deal with the problems so many of us are dealing with- YET. Wonder how they'll feel when it happens to them. This country NEEDS a Revolution !
If you are on min wage, an apartment by yourself is a luxury - you need to share housing. If you are driving an older beater, full coverage car insurance is likely excessive. Like the other posters mentioned, you need to work more than 40 hours a week-maybe much more. I have a good paying professional job, but I didn't advance my career by working 40 hour weeks. I don't think most people did. Most skilled laborers and trade people I know work quite a bit more than 40 hours a week. And for the min wage workers who are dependable, hard working, and pleasant, they are not condemned to minimum wage for life. When I used to work in fast food, the business men and small business owners would often offer jobs to those workers who fit that description - seems there is always a shortage of clean, pleasant, hard working people who can please the public.
first, you're assuming that you had enough to buy a car (even one that is "cheap") up front. you can sell just about anything on 4 wheels for $1000, and since everyone needs $$ these days, they're going to try to get as much for a vehicle as they can. I don't know many people who have even $500 saved up.I've seen some for less than that, but if it is cheaper, it should be a flag and not worth the savings you might have. you'll spend more on repairs to keep the crummy car running than if you'd buy a better car to begin with
second, save $$ by nixing your gas $$ by buying a buss pass. I know many folks have opted to do this given the distance they need to commute and the cost of gas.
food wise, you make soups, stews and pasta, etc. they can be stretched far and really don't require much in the way of $$ per meal. meat goes farther if cut and served properly. Oddly enough, those dishes are some of the favorites in our house. Comfort food is really comforting. If you have extended family with whom you share meals, ask them to buy a loaf of bread to go with the spaghetti... something inexpensive (under $5.00) and everyone will feel better about the meal.
for clothing, check 2nd hand stores and garage sales. I have found new clothes (tags still on) quite often by going to the better stores. the thing is, kids grow so fast that it's not worth spending a lot . most likely they will be grown out of before they get worn out.
and last.. realize that what you have is more than someone else. When you lose income or never really had it to begin with, it makes you realize that things really could be so much worse than how it is in your life. Believe me, I had to get over my ego and learn to work with what I've got. And get on with it!
As I see it, it's IMPOSSIBLE to live on only $7.25/hour!!
I am glad to see the writer of this article did not try to Sugar-Coat living on minimum wage. Trying to live on the minimum means many things: roommates, no healthcare, coin laundromats, a lot of walking/bicycling, and a fast track to the Permanent Underclass. One you've been forced to live this way for awhile, your clothes are worn and shabby, your skills are defunct, you grow older - all of it adds up to: UNEMPLOYABLE, with little or no marketable skills. Any education you had, becomes stale.
There is no silver lining to this story. More independent, adult Americans are forced to work for minimum wage now than since the 1950s, and costs of everyday living have skyrocketed, putting many things out of reach, even by 1950s standards. The 1%, of course, does not care. They want ALL of the 99% forced down to minimum wage, so they can be pushed around at will. Many people are still "doing well" financially, in the $40K - $100K income range, but it is only a matter of time, before THEIR jobs are "outsourced", and they are faced with a barren job market. It's only a matter of time, for many millions of Americans.
First, persons in the $1000 income range are usually using public transportation, biking and walking.
Second, face it parenthood is wonderful but it can also make the lives of the youngest persons much worse. Take the necessary measures to plan your family.
Third, face it everyone needs some training beyond high school in order to make a living. It doesn't have to be a $100k bachelor's degree. Community college tuition runs $100 an hour sometimes and two years spent there in a well chosen major will bring in $30k quickly. School bus drivers get a commerical driver's license and training for free. Hiring yourself out as labor to a small contract can help you learn plumbing and electrical and a night course at the tech college can get you into HVAC work. These all pay very well and are even in high demand in small communities. A forklift course will get you a cushier job with better pay at the factory. A aircraft manufacturing course can easily get you $25 an hour starting. The public university bachelor degrees run $32k. There is financial help, especially for the people in the biggest pinch.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Hurricane season is coming. But storms can happen at any time. Here are six smart things to do to get your home ready before the storm hits.