The Reverberating Impact of Low Wages

Aug 12, 2013, 2:35 PM

A recent vote by the Washington D.C. City Council requires large retailers to pay a minimum hourly wage of $12.50 an hour—$5.25 more than the current minimum wage of $7.25 nationally and $8.25 in D.C.— and the decision received wide attention, especially when retailers planning to build new stores in the city said they’d pull the plug on the projects if required to pay the higher salaries. But at least two recent magazine articles explain why there’s been a fervent recent push to try to push up the wages of those in low-paying jobs. New York Magazine recently surveyed 100 fast food restaurant employees in that city and asked, among other things, “can you live off your paycheck?” The answer appears to be no. The average pretax monthly pay for the surveyed workers was $984 while average monthly expenses including rent, utilities, groceries and cell phone bills was $1,115—which adds up to $131 more in expenses than pay.

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And last weeks’ New Yorker Magazine added heft to the need to look at the current minimum wage rate, in light of just how critical that income is to many households. According to the article, while low-wage retail jobs were once squarely aimed at high school students looking for pocket money and those looking for supplemental income, in the last few years of stiff unemployment, studies find that current low-wage workers are responsible for 46 percent of household income. According to the New Yorker article, “Congress is currently considering a bill increasing the minimum wage to $10.10 over the next three years…still a long way from turning these jobs into the kind of employment that can support a middle-class family.”

A recent budget document, Practical Money Skills for Life, released by McDonald’s and Visa, underscores the difficulty of paying needed expenses on a minimum wage salary. The budget assumes two jobs per household (or individual) and, according to some reviews, even with a second minimum wage job, the household may still not have sufficient funds for vital expenses, including rent and heat. Clothing did not make it onto the budget list.

With so many breadwinners working in low-wage jobs, children can’t help but be impacted. The 2013 County Health Rankings, a collaboration between the Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute, found that child poverty rates have not improved since 2000, with more than one in five children currently living in poverty. Among other health impacts, those with incomes that place them under the federal poverty line are less likely to get preventive care that can keep them healthy.

This commentary originally appeared on the RWJF New Public Health blog.