MIT Living Wage Calculator Explains Why You’re Always Broke

The MIT living wage calculator, created by Amy Glasmeier, a professor of economic geography and regional planning at MIT, makes a compelling argument for raising the federal minimum wage. Instead of simply stating that the cost of living has increased since the federal minimum wage was last raised in 2009, the calculator provides a detailed look at how the minimum wage stacks up to a household’s actual expenses across the United States. The results are shocking.

If you browse through the site, you’ll see that the minimum wage does not provide a living wage for most households. In most parts of the United States, a family with two working adults and two children would need each adult to work 68 hours per week earning the federal minimum wage of $7.25 in order to earn a living wage. A single mother supporting two children with a minimum wage job would need to work 125 hours per week–which is more hours than there are in a 5 day week, even if she never stops to sleep or see her children.

Even those who do not have children will struggle to make ends meet on minimum wage in many parts of the country. The MIT living wage calculator reports that a single adult would need an hourly wage of $12.83 to make ends meet in San Francisco, $10.48 in Chicago, and $12.75 in New York City. Even in a very small, rural area like Butler County, Iowa, the living wage for a single adult with no dependents is still $7.80.

A living wage is defined as the minimum income a person needs to adequately support their family without government assistance. It includes the cost of food, healthcare, housing, transportation, and child care, but does not include the cost of saving for retirement, repaying debts such as student loans, or enjoying any type of recreational activity. Most of us would not say anyone with this bare minimum lifestyle is truly living the “American Dream.”

MIT’s living wage calculator recently made headlines when Ikea announced that its new wage structure would be using the calculator to determine the base pay for new employees. Since it would be too complicated to pay people different wages based on the size of their family, Ikea plans to use the living wage for a single person with no children as the base for their pay structure. This means their average hourly minimum wage will be raised to $10.76 per hour in 2015.

What’s your take on the MIT living wage calculator? Do the wages listed seem accurate for your area?

[Photo courtesy of photologue_np via Flickr.]