In late 2017, retail chain Target announced an across-the-board increase in its minimum wage to $11 an hour. Following in their footsteps, retail giant Wal-Mart recently announced that they too would be making the same move.
While this may seem like a giant step in the right direction, the reality is that it may be a forced move that places both companies far behind where they genuinely need to be in order to provide a living wage to their employees. While the move was more or less voluntary, it was most likely also heavily influenced by a tightened labor market creating a shortage of employees. This forces employers to provide more attractive incentives to keep existing employees and attract new ones.
The $11 an hour minimum is certainly a significant increase over the current $7.25 an hour mandated by the federal minimum wage and is even a higher bump than the majority of state minimum wages. It meets the minimum wage criteria of California and Massachusetts, but still falls short of state requirements for Washington ($11.50) and Washington DC, where the minimum is set at $12.50.
But is being an improvement over both state and federal guidelines really enough? Is an $11 an hour wage really enough for an average American to live off of? The reality is that the cost of living varies greatly across the US, so while bumping the minimum to $11 an hour may represent a generous windfall for some, it may still put others below the poverty line for that specific market.
The problem with determining what a "fair living wage" is (the income required to adequately support an individual and their dependents) for a national conglomerate is that the cost of living varies so greatly across the US. According to GoBankingRates' cost-of-living survey, however, which ranked all 50 states and the District of Columbia based on the highest and lowest cost of living, Minnesota seems to come as close as possible to the mid-point between the two. Out of the five metropolitan areas located in Minnesota, St. Cloud also represents the closest midpoint in terms of a living wage.
This means that a look at the cost of living in St. Cloud, Minnesota offers the best opportunity to determine how far an $11 an hour salary will extend for the most typical American. Data provided by MIT is based on the assumption that a person works a full-time 40 hour a week schedule for a full 52 weeks per year. At $11 an hour, that calculates out to $22,880 a year.
For a single adult living in the St. Cloud area, the living wage is set at $10.64 an hour, or $22,136 annual income before taxes. So, both Target and Walmart are in fact offering a fair living wage for a single adult living in an area where the cost of living is about average.
When you add in just a single child, however, the cost of living jumps to $23.00 an hour or $47.841 a year. This means that both Target and Walmart wages fall woefully short of what a single parent with a single dependent would need to support themselves. Add in an additional dependent and that figure jumps to $29.16 an hour or a salary of $60,663. An $11 an hour salary only provides roughly a third of the income a single wage earner would need to make in order to support two dependents.
As difficult as it may be for a single parent to make ends meet, an $11 an hour salary becomes woefully inadequate for a household of 2 adults and a child where only one adult is employed full time. In that situation, the cost of living jumps to $21.95 an hour with a yearly income of $45,646.
Even if there are two working adults living in the household, however, the Target and Walmart salaries still fall short of what is needed to make ends meet. In that scenario, the cost of living is estimated to be $13.09 an hour per adult, with a total yearly income of $54,467. With two children, that jumps to $15.91 an hour or $66,172 per year.
As you can see, a single individual can provide the basic necessities for themselves such as housing, food, clothing and health care on a salary of $11 an hour. If you add so much as one child in the mix, however, an $11 an hour wage doesn't even cover half of the wages necessary to meet even the most basic expenses. Even if a household consists of two working adults and a single child, they still cannot cover their basic expenses on an $11 an hour salary.
While this is certainly a step in the right direction for the two retailers, they have still failed to meet a basic living income for the majority of their workers. Even more notably however, is that based on the figures from MIT, federal standards are even more woefully inadequate than those of the two retailers.
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