Minimum Wage vs. Living Expenses: Texas
A hot topic among today’s political economic discussion is the minimum wage and whether or not it sufficiently provides Americans with the amount of money needed in order to comfortably live in their state. This edition looks at the Lone Star State to see whether their minimum wage is enough for its residents, and whether or not it can improve.
Texas’ minimum wage
The minimum wage in Texas is the bare minimum for the United States of America – $7.25 – with no current plans of increasing. While the state also has a lower average cost of living than the U.S. average, many question whether it’s fair that things like taxes and rent are going up year by year, but minimum wage never does. All citizens see is higher costs and a paycheck that seems smaller every day.
What is the cost of living in Texas?
When compared to the nation’s average, Texas is about 94% of that cost, making it a rather inexpensive place to live overall. However, this isn’t applicable to all residents, especially the types of people who would be living off of minimum wage. Let’s focus on an individual working a full time job at minimum wage to see how it stacks up against the true cost of living.
Monthly budget for someone working full time at minimum wage
Working for $7.25, 40 hours a week, their earnings before taxes are about $1,100 a month. While Texas doesn’t have a state income tax, they’re still paying federal taxes, social security, and Medicare, which comes out to be about 15.5% of their paycheck. They take home about $980 a month.
The average rent for a one bedroom apartment in Texas is about $844 a month. Looks like that isn’t possible. So our individual has a roommate, meaning they probably pay about $600 a month in rent. That leaves them with $380.
The average electric bill is about $120, so that’s $60 for their half of electricity, and we’ll include all other utilities with that.
The cheapest internet plan is going to be at least $60 a month for most major providers, so $30 more for internet.
It’s probably safe to say that you spend about ten percent of your budget on groceries and eating out, but let’s say that our individual is living on a tight budget and not dining out, so they spend six percent. That still is around $60 a month.
Most individuals require a car to get to work, and it’s likely they haven’t paid their car off. If this individual has a car note on the cheap side, they’re looking at at least $250 a month, and that’s not including any repairs or maintenance requirements.
This puts their monthly total expenses at $1,000. For just the literal bare necessities (a home, food, and a way to get to work), they’re in the negative for $20, and this doesn’t include any other costs that are likely to arise, such as:
- Medical costs
- Car repairs
- Need for new clothes (or anything really)
- Having a child
- Any “luxury” expenses
- Toilet paper
Many of these are likely to be considered necessities by the average, civilized human, and yet there’s not room for them in a budget on Texas’ minimum wage.
What is a real living wage then?
If the bare necessities cost $1,000 a month, it’s reasonable to assume that $2,000 is the bare minimum that someone can live off of while still buying basic necessities. Let’s say that a comfortable living wage with room to save, invest, and maintain a good physical and mental health is $2,500.
Working 40 hours a week, this is an hourly rate of about $20.50 before taxes. It’s pretty obvious that the current standard of minimum wage is not one that is something that can support even a single person. Yet the Bureau of Labor Statistics reports that about three percent of Texans live on the amount of minimum wage or even below.
There is also the argument that minimum wage jobs are not intended to be jobs that require a living wage. This makes it difficult to determine how much one should be paid for working a job that is considered more menial to some, but others point out that anyone working full time should be able to earn a basic living. It seems to be the general consensus among those calling for a higher minimum wage that $15 would be a much more reasonable payment for someone putting in 40 hours of their week. They also argue that, while employers will have to pay their workers more, there may be a greater influx of cash coming into their store when more people are able to afford to spend more money.
Overall, it seems as if Texas is still behind in terms of providing a basic living wage compared to the rest of the nation, and even the world. Heading toward $15 an hour would definitely be a start in terms of helping its citizens live more comfortably and afford basic necessities.
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