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BookmarkA $15 minimum wage could become a reality in the U.S.
While millions would get a pay boost from a higher national wage floor, it would still fall short of paying many workers a “living wage” — the salary a person or family needs to cover their basic expenses.
That’s especially true for families, largely due to higher living costs like childcare, relative to single adults.
Even with a raise to $15 per hour, a typical family of four couldn’t afford the basics in any U.S. state, according to a CNBC analysis of cost-of-living data assembled by researchers at the Massachusetts Institute of Technology. (This example assumes two kids and two adults working full-time for minimum pay.)
The data weighs costs like food, childcare, health care, housing, transportation and other necessities. It doesn’t include income from safety net programs for the poor.
Single adults without kids would generally fare better than families, according to the analysis. But, in about half of states, the cost of living would still eclipse earnings for workers paid $15 an hour.
The shortfalls would generally be greatest for workers in the West and Northeast — in states like California, Hawaii, Massachusetts and New York, as well as the District of Columbia — where the cost of living and taxes tend to be higher.
“When people are screaming [that a $15 minimum wage] is such a radical proposition, the radical thing about it is, quite frankly, how low it would actually be,” said Judy Conti, government affairs director at the National Employment Law Project, a worker advocacy group.
President Joe Biden has called for a $15 hourly pay floor. House Democrats aim to attach the policy — which would gradually raise the wage through 2025 — to a $1.9 trillion pandemic aid package.
President Joe Biden wears a protective mask while speaking during a meeting with labor leaders on coronavirus relief in the Oval Office of the White House in Washington, D.C., on Wednesday, Feb. 17, 2021.
President Joe Biden speaks during a meeting with labor leaders on coronavirus relief in the Oval Office on Wednesday, Feb. 17, 2021.
Pete Marovich | Bloomberg | Getty Images
The Covid pandemic has thrust the concept of a living wage into starker relief, as advocates claim frontline and essential workers (often women and people of color) are underpaid for their labor while putting their health at risk.
Democrats are trying to pass more pandemic aid by mid-March, though survival of the minimum-wage measure isn’t assured. Biden reportedly told state officials last week that the pay hike was unlikely to survive in the near term but promised to continue pursuing the policy.
‘Not surviving’
Service industry workers speak in support of the introduction of the Raise the Wage Act, which includes a $15 minimum wage for tipped workers, on Jan. 26, 2021 in Washington.
Service industry workers speak in support of the introduction of the Raise the Wage Act, which includes a $15 minimum wage for tipped workers, on Jan. 26, 2021 in Washington.
Jemal Countess | Getty Images Entertainment | Getty Images
A $15 minimum wage would more than double the current federal standard.
The current national rate — $7.25 an hour, or about $15,000 a year before taxes for a full-time worker — was set in 2009. It doesn’t rise with the cost of living, so its purchasing power has eroded over time.
Many states have adopted a higher pay scale. Some cities and businesses have done the same.
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But 21 states were using the federal minimum as of January this year, according to the Department of Labor. (Some, like Virginia, recently passed laws to raise it.)
The U.S. minimum is less than half the “living wage” for a single adult ($15.41 an hour, or roughly $32,000 a year before tax), according to national data compiled by MIT. It’s a third of what a family of four needs to live — around $21.50 per hour per parent, or almost $90,000 a year combined. And the effects are compounded for single parents.
