$7.25 Won't Keep Them Alive

Going into 2023, twenty states will have a minimum wage of $7.25. Some of the twenty states do not have a set minimum wage and simply follow the Federal requirement (of $7.25 an hour). Many of the states are in the South (like Alabama) but some are in the North (Pennsylvania and New Hampshire) and others are out west like Idaho. Texas, which would be the 10th largest economy if it were a nation (again), also sticks to the $7.25 minimum. My exploring this topic is my way of wrapping my head around this—how is it acceptable that the Federal minimum has not changed since 2009? Well, maybe in the states where it’s $7.25 the cost of living is a whole lot lower. Maybe it’s a lot cheaper to rent a place or buy a ten year old car or a Big Mac. Perhaps a gallon of gas is a lot less expensive. Let’s see:

The first thing I want to look at is something a lot of people enjoy: A Big Mac from McDonalds. It fits because a lot of fast food employees make minimum wage. I got these prices from a website called “fastfoodmenuprices.”

In Alabama, the average price for a Big Mac is $3.99. At $7.25 per hour you would need to work .55 hours or a bit more than half an hour.

In California, that Big Mac will run you an average of $5.11. Wow, that’s quite a bit more but, at the California minimum of $15 per hour, you have to work .34 hours or a bit more than twenty minutes.

Let’s swing east to New Hampshire where the Big Mac averages $4.83 an hour. At the minimum wage of $7.25 you have to work .66 hours or a bit more than 45 minutes.

Lastly, in Salem Oregon the minimum is $13.50. The average cost of a Big Mac is $4.47 so our minimum wage worker has to work .33 hours or roughly twenty minutes.

What we saw with that example is the range is working twenty minutes for that Big Mac to working about forty-five. Okay, we covered food now let’s check out shelter. Once again I only used one site for research (Apartmentsdotcom) but this is a very informal sampling. Informal, but it gives us an idea.

In Montgomery, Alabama the range for a one bedroom apartment is roughtly $750 per month. At $7.25 per hour you would need to work 103.44 hours or 2.6 full time (forty hour) weeks. Yeah, yeah, I remember you rarely get forty hours in the service industry but let’s move on.

In my hometown of Sacramento, CA the average for a one bedroom is around $1500. At the minimum of $15 you have to work 100 hours for your apartment or (very roughly) two and a half weeks.

In Concord, New Hampshire that one bedroom will run $1100 on average. At $7.25 you will be working 151.72 hours or 3.8 forty hour weeks.

In Salem, Oregon the average is the same as Concord ($1100). At $13.50 you will be mopping floors or flipping burgers for 81.5 hours or a bit more than two forty hour weeks.

Okay, well that is just food and rent maybe cars are half the price in Alabama or New Hampshire. I picked a ten year old Nissan Altima as my baseline and used the Edmunds website.

In Montgomery, that Altima will run you on average $13,500. At $7.25 you are working 1862 hours or 47 full time weeks.

In Sacramento the same car is roughly $11000. At $15 per hour you’re working 733 hours or 18 full time weeks.

In Concord that sensible sedan will be roughly $13000 requiring 1793 hours or 45 full time weeks.

In Salem the Altima is cheaper (and no sales tax!) at $10000 or 741 hours at the $13.50 minimum (19 forty hour weeks).

We looked at the cost of a car so let’s look at what makes that Nissan go: Gasoline. For this I checked out the Gas Buddy website. Since most of us fill up, let’s see how much it cost to fill the Altima’s eighteen gallon tank.

In Montgomery, a gallon of gas costs $2.60 (I’m jealous!).or $46.80 to fill the car up. At the $7.25 minimum you are working 6.5 hours to fill your car up.

In Sacramento you are doing good if you find gas for $3.80 which means $68.40 to fill up or more than twenty dollars more than in Alabama. At the $15 minimum, however, you are only working 4.6 hours.

In Concord a careful shopper can find gas for $3.50 or $63 for a fill up. At the minimum of $7.25 that’s 8.7 hours to keep on the road.

In Salem a gallon of gas averages $3.45 which totals $62.10 to fill up meaning our minimum wage worker has to clean hotel rooms or pump gas for 4.6 hours.

I feel strongly about this but I am going to let the data speak for itself. Maybe groceries are cheaper in Alabama or Georgia or Idaho or Pennsylvania, but are they half?

There is the argument that these minimum wage gigs are entry level jobs meant for teenagers who want to buy their first car or put gas in that car—how is it fair to the teeanger in a $7.25 state to have to work twice as hard for that car or gas for that car as another teen does in California or Oregon?

Something to consider.