The Cost of Everything, the (under)Value of Workers
I spend an inordinate amount of time reading economic news. And I spend an inordinate amount of time listening to people who can’t make ends meet. And who are angry about it.
What I’m not seeing is an understanding between the two groups. I feel like what journalists are reporting is divorced from what people are experiencing.
For instance, there was this triumphant piece from the Economic Policy Institute - which is considered “liberal” - about a 22-state minimum wage increase. As of January 1, 9.9 million minimum wage workers got almost $7 billion in raises. These big numbers are quite impressive.
Until you go back to your fourth-grade math skills and do some long division.
Then you see that these workers are averaging a raise of $700 a year.
That seems less impressive. Even more so when you consider the actual salaries. Hawaii’s minimum wage, writes EPI’s Sebastian Martinez Hickey, is going up “$2 to $14 an hour, which translates to a $1,380 boost in annual wages for the average full-time, year-round affected worker.”
Workers in Michigan are getting a big 23-cent raise - from $10.10 to $10.33 an hour. Which translates to a couple of hundred bucks.
This is the important part: $10.33 an hour is about $21,000 a year in salary.
Now let’s consider how much it costs to live in Michigan.
According to the MIT Living Wage Calculator for Michigan, $21,000 won’t even sustain one adult living alone, who would need $16.33 just to get by. Two adults living together, with no children, would need to make $12.78 an hour. So even having a roommate doesn’t leave you able to make ends meet at $10.33.
Add kids into this, and the costs skyrocket. One adult raising one child will need to make $38.69 to make ends meet. One adult raising two children (single parents comprise roughly a quarter of U.S. families) would need to make $54.36 an hour to be able to support her children. That’s $113,000 a year.
For families where both parents work, each parent only has to make $29.05 an hour in order to get by. That’s a little over $60,000 for each parent.
For all of these scenarios, the minimum wage is still $10.33 an hour, or $21,000 a year.
A quick search of rental prices for a house in Wayne County (Detroit), shows prices varying from $1,300 a month to $2,300 a month.
That’s $15,600 a year for the lowest rental. Apartments with at least two bedrooms are maybe $200 a month less. In a state where the minimum wage is $21,000.
Hawaii’s cost of living is even higher. A single adult would need to make roughly $46,000 to just get by. An adult with two children would need to make $116,000. Hawaii’s recent $2 boost brings the state’s minimum wage up to $29,000 a year.
Me Oh My-O
EPI has a household budget calculator, and just for funsies, I looked up a budget for Las Vegas for one parent with two children. In other words, my family. I then cross-referenced it to the MIT calculator, and found both calculators roughly matched.
The rental costs on this are a bit low. A 2-bedroom apartment is going for about $1,700 a month on average. A 2-bedroom home is about $2,000 a month.
That means your kids HAVE to share a bedroom.
Childcare costs are a bit low, too, from my experience. But it evens out when your kids are a bit older, and you’re paying less than the $1,981 number for a car and insurance (or part of the insurance).
Let me just tell you, I hosted a radio show at Las Vegas’ main public radio station. You would think it was a prestigious, well-paying job. I did not make anything close to $96,000 per year. In 2017 I calculated my nut (what I needed to make ends meet) at $66,000 - which put my KNPR salary $9,000 short. All the calculators had a living wage in Nevada at $72,000 in 2017, but I knew I could just make it with two kids on $66,000. Now, housing prices in Vegas have skyrocketed to that $96,000 number.
The scary thing for me was when I found out I was one of the better-paid people at KNPR. I had colleagues who were making $40,000 per year. And, except for the hosting part, doing the same work behind the scenes as I did.
The minimum wage in Nevada is $10.25. But hey, we’re going up to $12 in July! But we’re stopping there, after a gradual rise over the last four years.
That’s still almost five dollars short of the living wage for one adult with no children in Nevada.
Minimum Schminimum
Wait, you might say, most people aren’t earning minimum wage. Which is true. But most people aren’t earning a living wage, either.
Let’s go back to Michigan. According to Statistical Atlas, 18.6 percent of households in Michigan earn less than $20,000 a year. It does not say how many people are in the household.
According to this graph on the page linked above, 20 percent of households earn more than $100,000 a year.
Remember, a living wage for a single parent with two children in Michigan is $113,000. A living wage for two parents with two children is $120,000 ($60,000 each).
Almost all Michiganders fall short.
In Nevada, remember, one adult with two children needs to make $96,000. Two adults with two children need to make $105,000 between the two of them.
But this graph from Statistical Atlas shows roughly 25 percent of Nevada households make enough to support a family of two children. Which leaves about 75 percent of the population that can’t make ends meet. And roughly 21 percent of the population makes under $25,000 a year.
The Larger View
I pulled data from the Bureau of Labor Statistics to see how workers in the U.S. were breaking even.
That didn’t work. The Bureau of Labor Statistics gave me ALL employment, which includes people who work two or more jobs. I need to make more specific queries with them next time.
But the Census is an excellent source of accessible data!
And according to this quick fact, the median (average) household income from 2018 to 2022 was $75,149. “Household” isn’t defined. The median income per person in that time period was $41,261.
Almost all the wage calculators I’ve looked at say that in order to get by, two-parent households need each adult to make at least $50,000 a year ($100,000 combined), and single-parent households need to have that adult bring in over $90,000 a year.
The average in the U.S. is far below those numbers.
Even Mississippi - the poorest state in the union - requires a single parent with two children to make $80,000 to get by, and a two-parent family to make $89,000 combined.
More than 75 percent of Mississippians make less than the national median of $75,000.
Honestly, the scariest part of this graph is that bigger percentages are on the bottom. This is what poverty looks like in data form.
The Price of Eggs, Er, Economic Middlemen
The point is, most of the country cannot make ends meet. That includes journalists. Who are not trained to look at the broader macroeconomic trends to find out why. But we are all trained - brainwashed - into thinking somehow it’s our fault individually that we don’t make enough, not the fault of economic policy designed to keep workers quiet and journalists confused.
So, really, our only contact with economics is when we see that the price of something that we like has gone up at the grocery store. And we blame the government.
Remember the egg scare from last year? The price of eggs almost tripled in some markets, supposedly because chickens got a bad case of chicken pox, or some pox, and the laws of supply and demand hit our wallets hard.
Except, there was no pox on our chickens. There were middlemen, who bought eggs from farmers and sold them to the increasingly consolidated grocery store market at a huge markup by blaming a bird illness that hit very few birds.
And it worked!
People blamed Biden for the soaring price of eggs. Journalists did stories on the soaring price of eggs. But they didn’t look behind the sticker shock to read industry trade publications that were very clear that the price hike was due to the greed of, mostly, an egg middleman called Cal-Maine.
Details, schmeetails.
What continually amazes me is how many people blame the government for the price of eggs, but they don’t talk endlessly about hedge funds like Alden Global Capital, which is systematically taking over newspapers and selling them for scrap. Or Sinclair Broadcast Group, which gives their network of local TV journalists talking points.
Those two issues are a direct result of government policy choices, as former Labor Secretary Robert Reich notes. Government policy choices that most journalists didn’t bother to cover in-depth when they were made in the 1980s and 1990s, and now can’t cover because so many of our newsrooms have been decimated.
The story now, though, is quite different. And most journalists who are still around are missing it. In the last two years, the guy who I thought was gonna be more of the same has actually gotten legislation through Congress that will not only create jobs, but well-paying jobs. Legislation that spurs investment in areas that have been decimated by closed factories and the 2008 recession.
Unions have made big gains in the last year. UAW workers will now make at least $40 an hour - which puts them at roughly $83,000 a year. Not enough for a single-earner household, but more than enough for a one-and-a-half-earner household.
That’s a step in the right direction. And yet, almost every story I saw about the UAW contract gave the percentage of the raise, not what people would actually be making. That’s one way to obscure from people that we’re not quite making enough.
So, this is my exhortation to journalists and consumers of journalism. Look behind the numbers. Focus less on the cost of things and more on the buying power of workers. Make the stories personal. Do some basic research, and understand that we are all struggling not because prices have gone up, but because the corporations who have engaged in price gouging aren’t paying us enough. And the people we elect are passing laws that allow them to do so with impunity.