Demands to raise the minimum wage have boomed around every corner of the country. Proponents of an increase have cited a gap between the minimum wage and a living wage in real dollars. Arkansas recently increased its minimum wage hourly rate, but was it enough to meet the living wage standard for Arkansas?
The
minimum wage in Arkansas rose from $7.25 to $7.50 per hour on Jan. 1, 2015, but the boost only incrementally helped to bring workers at this level in line with a “living wage” in the state,
research from the Massachusetts Institute of Technology showed.
The 50-cent raise meant $1,040 more per year for minimum wage workers, which afforded them an extra $15,080 per year before taxes. While the raise was welcome, a single person actually needed to make at least $19,875 before taxes to have met the typical living expenses in Arkansas.
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And that’s being frugal. MIT’s estimated expenses per month included housing costs of $458, transportation costs of $391, food costs of $252, average medical expenses of $163, and “other” expenses (clothing, cable, phone, a night out) of $188. With annual taxes of $2,444 deducted, that theoretical $19,875 is gone.
But it was only theoretical. Remember, the minimum wage worker faced the same costs, with only $15,080 of income.
The gap was greater if that person had children. According to MIT, a single parent with two children needed to earn $51,172, or $24.60 an hour for a full-time job (2,080 hours a year), to make a living wage.
All costs are higher. Plus, there’s $205 per week day care costs because the parent worked; that alone added another $10,687 per year. This put the single-parent, minimum-wage earner with two children in a deficit of $36,092, and needing a much better job to make what is considered a living wage in Arkansas.
Two parents (one working) with two children needed $44,516 as a living wage, according to MIT’s study. The child care cost disappeared, but all other costs rise to accommodate the second adult, and transportation costs zoomed up to $963 per month. MIT assumed the expense of a second car.
Two parents (both working) with two children needed income the most of all the scenarios so far. They both had transportation needs (two cars) and child care needs, plus the higher levels for everything else of the four-person household. Their living wage in Arkansas was estimated at $56,702. If the parents both made minimum wage, they brought in a combined $30,160. The annual gap between that and a living wage was $26,542.
Of the household sizes presented in the study, a two-adult household with no children came closest to making a living wage on the minimum wage. Its living wage was estimated at $32,621 (with one car), and its income with both working was $30,160. That left a gap of $2,461.
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