Saturday, March 26, 2016

California to Raise Minimum Wage to $15/hour

Lawmakers are in discussions to raise California's minimum wage to $15/hour by 2022. While this sounds like great news for the poorest workers in this economy, one has to consider the cost-of-living in California to be able to properly assess what difference this will make in the lives of those affected.

A one-bedroom apartment goes for about $1,190 in California. If you are making $15/hour working full-time (40 hours/week) that translates to about $2000/month, after taxes.

That leaves you about $810/month left over after paying rent. This amount is all you would have to pay for food, utilities, insurance, transportation, cell phone, internet, education and any other expenses you may incur. Clothing and entertainment would also need to fit into this $810/month figure.

Of course, these numbers assume you are able to find 40 hours/week of work. Many low-paying jobs fail to offer 40 hours/week of work so it is possible one would have to work multiple jobs to reach the 40/hours week that would get you near to $2000/month of take-home pay. Obviously, working two jobs may also cause one to incur additional expenses that would need to be factored in.

Finally, the cost-of-living will likely rise in the next six years before this $15/hour is phased in. That means full-time minimum wage workers will be looking at even less than $810/month for expenses once 2022 rolls around.

In the event that the poorest full-time workers in California make $15/hour by 2022, they will earn barely enough to cover basic living expenses.

Put yourself in this person's shoes: how would you cope with earning just enough to cover your expenses, perhaps not even knowing if you would have enough for unexpected costs? What if you knew you absolutely could not afford to go on vacation? What if you knew you couldn't fly out for a friend's wedding or to attend a relative's funeral? Clearly, this would not be a very fun situation to be in- stressed out all the time, feeling stuck.

The Equal Life Foundation proposes a two-pronged approach to ending this suppression of Life. The first step would be to implement a basic income guarantee indexed to the cost of living to ensure that every person always has access to an income sufficient to cover their basic needs. This would be granted to anyone who desires it on an unconditional basis.

The second step is to make the minimum wage double the basic income. For simplicity's sake, let's say that $2000/month is a good target for a basic income. The minimum wage would be double this: $4000/month. This comes out to about $25/hour after taxes.

Put yourself again in a minimum wage worker's shoes. Now you have $4000/month to spend. $1,190 still goes to rent. But now, you have $2,810 left over for expenses. Suddenly, you have enough for gas, utilities, etc. Not only that, but you have money left over! You can buy that special item you've been eyeing. You can travel. You can save. You can contribute to the economy. The stress related to money is gone.

This is what you would like if you were in that position.

For more from the Equal Life Foundation:
Living Income Guaranteed Proposal
Living Income Facebook Group
@LivingIncome on Twitter 

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