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Message
What's your definition of a livable wage?
Posted on 6/1/15 at 7:52 am
Posted on 6/1/15 at 7:52 am
MIT has a livable wage calculator on their website that determines what households need to function as regular ole Americans. This is not to be confused with determining the poverty level. It's more about the wage required to live a minimum standard of living.
A few examples:
Birmingham, AL:
1 adult needs $21k to meet the minimum standard of living for the area.
2 adults need $34k.
2 adults with kids need about $45k if one stays home and $57k if both work.
New Orleans, LA:
1 adult needs $23k.
2 adults need $37k.
2 adults with kids need about $50k if one stays home and $56k if both work.
I understand that these numbers reflect the minimum standard of living costs, but for me, they are incredibly low.
When working my budget and determining the minimum numbers I would need to survive without any excesses, I need about $4200/month without daycare costs and $4900/month with daycare costs.
That's ~$50k or ~$59k before taxes.
What gets me here is that I would never allow myself to define this as a livable wage. Sure, it's the minimum. Cheapest TV option, no smart phones, food budget, no vacation funds, very low retirement investments, and not much savings.
But when I really look at my budget and what I would accept as a middle class, educated (two master's degrees in the house) family who desires safe, reputable schools, healthy food options, a savings account that can be used for six months worth of emergencies, proper retirement investments, good health insurance and excess spending for things like a daughter's future wedding or my children's college tuition costs -
I need at least $80k a year. Going lower than that (which is around the exact number my wife and I earn right now) seems like it would put us in a bind for our life necessities and goals.
A few examples:
Birmingham, AL:
1 adult needs $21k to meet the minimum standard of living for the area.
2 adults need $34k.
2 adults with kids need about $45k if one stays home and $57k if both work.
New Orleans, LA:
1 adult needs $23k.
2 adults need $37k.
2 adults with kids need about $50k if one stays home and $56k if both work.
I understand that these numbers reflect the minimum standard of living costs, but for me, they are incredibly low.
When working my budget and determining the minimum numbers I would need to survive without any excesses, I need about $4200/month without daycare costs and $4900/month with daycare costs.
That's ~$50k or ~$59k before taxes.
What gets me here is that I would never allow myself to define this as a livable wage. Sure, it's the minimum. Cheapest TV option, no smart phones, food budget, no vacation funds, very low retirement investments, and not much savings.
But when I really look at my budget and what I would accept as a middle class, educated (two master's degrees in the house) family who desires safe, reputable schools, healthy food options, a savings account that can be used for six months worth of emergencies, proper retirement investments, good health insurance and excess spending for things like a daughter's future wedding or my children's college tuition costs -
I need at least $80k a year. Going lower than that (which is around the exact number my wife and I earn right now) seems like it would put us in a bind for our life necessities and goals.
This post was edited on 6/1/15 at 7:53 am
18
Posted on 6/1/15 at 8:33 am to StringedInstruments
"livable" wage, to me, means food on the table, safe home, and a small savings
by my definition, I think those numbers from MIT are pretty accurate
by my definition, I think those numbers from MIT are pretty accurate
Posted on 6/1/15 at 9:11 am to StringedInstruments
Livable wage likely doesn't include any retirement or savings inputs. I would also assume it uses rent costs so that you don't need to account for home/residence expenses.
Posted on 6/1/15 at 9:18 am to StringedInstruments
quote:
StringedInstruments
quote:
But when I really look at my budget and what I would accept as a middle class, educated (two master's degrees in the house)
You can't define middle class as having two individuals with master's degrees. Sorry but that's just not reality. The income associated with multiple post-secondary degrees-unless they're teaching/education-related-is just not applicable for your definition.
Posted on 6/1/15 at 10:04 am to seawolf06
quote:
Livable wage likely doesn't include any retirement or savings inputs
I would agree. I think it's whatever wage is needed to meet basic living expenses - rent, basic utilities, food, basic transportation, and maybe healthcare. It's an impossible number to pinpoint because those expenses can be so varied from town to town and person to person.
Posted on 6/1/15 at 10:16 am to StringedInstruments
That's bare survival with no internet, TV, iPhones, etc.
Posted on 6/1/15 at 10:45 am to StringedInstruments
This is the problem with all these "living wage" proponents who said companies should pay a "living wage". A "living wage" is different for everyone.
The real issue is people trying to work at McDonalds in a non-manager role and raise a family. The solution is not to pay them $20/hr for 40 hours a week... the solution is to stop having single parents with multiple kids work at McDonalds. We have to increase their skill sets so they can get a better job.
I mean, I know a fair number of single moms that have jobs that pay 50K a year or more, and they are fine financially. But they don't take fast food orders.
The real issue is people trying to work at McDonalds in a non-manager role and raise a family. The solution is not to pay them $20/hr for 40 hours a week... the solution is to stop having single parents with multiple kids work at McDonalds. We have to increase their skill sets so they can get a better job.
I mean, I know a fair number of single moms that have jobs that pay 50K a year or more, and they are fine financially. But they don't take fast food orders.
Posted on 6/1/15 at 11:33 am to The Spleen
quote:
I would agree. I think it's whatever wage is needed to meet basic living expenses - rent, basic utilities, food, basic transportation, and maybe healthcare. It's an impossible number to pinpoint because those expenses can be so varied from town to town and person to person.
Well...exactly. That's what the OP is asking.
MIT defines what is basic living expenses and then shows how much money people need to meet those expenses in particular areas.
There's a thread on the MT right now where posters are surprised that people don't have as much as $400 in savings. Perhaps people like that are spending too much money on extraneous things, but according to MIT, a livable wage would not include a growing savings account. Therefore, the MT does not believe the MIT's livable wage definition is enough as a livable wage should include enough money to put money in savings.
As the expenses can vary from place to place and person to person, I'm asking what MT posters believe is their basic standard of living expenses.
Posted on 6/1/15 at 11:53 am to StringedInstruments
quote:
New Orleans, LA:
...
2 adults with kids need about $50k if one stays home
As recently as 2012 this was exactly my position. The idea that I was on the razor-edge of a "livable wage" seems crazy to me.
But there are a other lot of things that enter into it beyond straight salary. For instance, I had very good medical and dental benefits; if you're making $50K with no benefits it's a different story. You also have to take into account your assets - we had 2 cars owned free and clear (so no car notes).
Posted on 6/1/15 at 12:35 pm to Cold Cous Cous
To live a "decent" life with no extra in the margin at my company, in a "small city" fairly low COL here is the assumptions and wage needed for scenarios based on what my expenses are
Assumptions:
6% Retirement (12% total w company match)
Health Insurance (300$ /mo employee portion)
$700 house + property taxes (married)
$550 1BD apartment (single)
$200 car loan total payment
Married(no kids): $38,000 1 income
Single: $28,000
Assumptions:
6% Retirement (12% total w company match)
Health Insurance (300$ /mo employee portion)
$700 house + property taxes (married)
$550 1BD apartment (single)
$200 car loan total payment
Married(no kids): $38,000 1 income
Single: $28,000
This post was edited on 6/1/15 at 12:41 pm
Posted on 6/1/15 at 2:03 pm to StringedInstruments
One can get by with a family making around 50k I would think. I'd say you're taking home around 3k a month after retirement, insurance, etc. You can have a rent of 1k, some lower end car notes and still have about $1500+ for utilities and spending. You can totally get by on that. Would I want to? Hell no. But it could be done. No doubt about it.
Posted on 6/1/15 at 3:55 pm to StringedInstruments
quote:
I need at least $80k a year. Going lower than that (which is around the exact number my wife and I earn right now) seems like it would put us in a bind for our life necessities and goals.
Any amount a person currently makes, they will deem it a catastrophe if they make a dollar lower.
Posted on 6/1/15 at 4:09 pm to StringedInstruments
quote:
I need at least $80k a year. Going lower than that (which is around the exact number my wife and I earn right now) seems like it would put us in a bind for our life necessities and goals.
Key here is "livable" not meeting your goals in life.
For me to have 2-3 kids, be financially secure, set for retirement and live the "minimum" lifestyle I would like to have, I need 135k/year
All about frame of reference though. If I was married no kids and had to, I easily could live in $40k/year assuming my partner was on my understanding and save for retirement etc
Posted on 6/1/15 at 4:48 pm to StringedInstruments
I encourage everyone to check out the Mr. Money Mustache blog. To say that a family needs 50k a year to survive is crazy. After my house is paid off, I could live on 20k a year easily.
Those that say you can't, need to revisit what is a need vs. a want. We are so brainwashed as Americans in regards to what our "needs" are.
Those that say you can't, need to revisit what is a need vs. a want. We are so brainwashed as Americans in regards to what our "needs" are.
This post was edited on 6/1/15 at 5:00 pm
Posted on 6/1/15 at 4:56 pm to StringedInstruments
quote:
I need at least $80k a year. Going lower than that (which is around the exact number my wife and I earn right now) seems like it would put us in a bind for our life necessities and goals.
I'm not sure if you should feel blessed or naive to have that frame of mind.
Posted on 6/1/15 at 5:43 pm to I Love Bama
quote:
Those that say you can't, need to revisit what is a need vs. a want. We are so brainwashed as Americans in regards to what our "needs" are.
To live like Mr Money Mustache is just absurd. Even without that level of frugality with a house paid off , ~$24-25k should be "plenty" for a single person. For a married couple, $28-32k should be more than enough
Once you have kids, it really is a sliding scale based on what you plan on paying for them (should they have a job, are you paying for college, what type of health needs they have)
Posted on 6/1/15 at 6:05 pm to GenesChin
You've really lost a grip on reality if you think that is a hard standard of living.
He eats like a king, vacations and spends all day with his family. I would hardly say he is roughing it.
I promise if you sat down and separated your cost of actual needs you would probably be shocked.
I can absolutely live on $1,000 per month. I make 12 times that much so thank god I don't have to but it's not hard to do.
I am speaking as a single male. I'm sure you would need to double that for a family.
Edit : I'm not trying to preach. I would suggest you spend some time abroad and see how the rest of the world lives.
He eats like a king, vacations and spends all day with his family. I would hardly say he is roughing it.
I promise if you sat down and separated your cost of actual needs you would probably be shocked.
I can absolutely live on $1,000 per month. I make 12 times that much so thank god I don't have to but it's not hard to do.
I am speaking as a single male. I'm sure you would need to double that for a family.
Edit : I'm not trying to preach. I would suggest you spend some time abroad and see how the rest of the world lives.
This post was edited on 6/1/15 at 6:10 pm
Posted on 6/1/15 at 6:38 pm to StringedInstruments
quote:
two master's degrees in the house
quote:
$80k a year... (which is around the exact number my wife and I earn right now)
Did you both just finish school?
Anyway, the numbers from the MIT calculator look about right. I wouldn't want a household income of less than 80k (especially if I had a family), but I realize that I have goals that are higher than the "minimum" that is a livable wage.
When I first got out of undergrad I had a low paying entry level job making 28k, but still managed to pay my bills and save enough to pay for graduate school. I also had a little money to have fun with.
Posted on 6/1/15 at 7:06 pm to StringedInstruments
quote:Those numbers actually seem high.
Birmingham, AL:
1 adult needs $21k to meet the minimum standard of living for the area.
2 adults need $34k.
2 adults with kids need about $45k if one stays home and $57k if both work.
New Orleans, LA:
1 adult needs $23k.
2 adults need $37k.
2 adults with kids need about $50k if one stays home and $56k if both work.
For example, MEDIAN household income in Italy is lower than those numbers.
Posted on 6/1/15 at 8:24 pm to StringedInstruments
A bunch also depends on your prospects for better. If you're making minimum wage today but most people with the master's degree you're aiming for generally make $100K, you have something to look forward to. If you already have your master's but it is an MFA in Sculpture and you're scraping by at Starbucks hoping to catch on somewhere, you are in much more trouble.
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