Few people would argue that it’s easy to make ends meet with a minimum-wage job. Given that the federal minimum wage makes no allowance for different costs of living, it’s been left up to states in some instances to boost the amount they make employers pay their workers. Yet even with efforts like the recent D.C. measure that would raise minimum wages to $12.50 for certain large retailers — and was targeted specifically to include Wal-Mart Stores, Inc. (NYSE:WMT) while excluding other stores including Safeway Inc. (NYSE:SWY) — minimum-wage earners still have trouble earning enough to cover even basic living expenses.
Researchers at the Massachusetts Institute of Technology recently created a living-wage calculator intended to show the minimum amount that families can earn in order to cover basic costs that low-income families have to bear. Using a methodology similar to the Economic Policy Institute’s metropolitan living wage tool, the MIT calculator puts a new spin on affordability and regional differences across the nation. Let’s look at the highest-cost states in the country for a family of four to see how well minimum-wage workers are able to make ends meet.
Families of four need to earn wages of $21.47 an hour to cover basic living expenses in Connecticut, according to the MIT calculator. Even with a minimum wage of $8.25 that’s $1 above the federal minimum, families with two adults in full-time minimum-wage jobs would fall 23% short of covering basic expenses. Costs are even higher in certain parts of the state, especially those closer to New York City. Living wages in Stamford would need to be $4.25 higher to meet the difference, and beyond professional occupations, most jobs don’t come close to providing enough income.
Living costs in California are even higher, at $22.15 an hour, and an $8-an-hour minimum wage leaves double-income families 28% short of covering those costs. As you can expect, city-specific costs are often much higher, with San Francisco requiring more than $3.25 in additional hourly wages to make ends meet. High-paying computer and technical jobs cover those higher costs, but supporting service workers stand little chance of earning enough to reach a living wage.
In Maryland, a living wage would be $22.41 an hour, yet the federal $7.25 minimum that applies leaves a two-income family even further behind, fully 35% below basic living expenses. Areas close to Washington have even higher expenses, but even at statewide levels, few basic occupations approach what would be necessary for families to make ends meet.