$15-an-Hour Minimum Wage Is All the Rage, But Is It Livable?

A recent proposal to raise the federal minimum wage to $15 an hour failed in the U.S. Senate, keeping the federal rate at the same $7.25 it has been at since 2009. At the current federal rate, a full-time worker in 2021 will barely break the single-household poverty guideline of $12,880 annually and would still be well below the threshold for a two-person household of $17,420. While living on federal minimum wage in 2009 may have been possible, due to inflation and skyrocketing cost of living, many minimum wage workers now are forced to hold several jobs just to make ends meet. But would more than doubling the federal minimum wage afford these workers a 2021-adjusted livable wage?

A new report by MoveBuddha, a moving cost aggregator, analyzed which of the nation’s 99 largest cities would be the best and worst to live in while earning a minimum wage of $15 an hour. It found that Albuquerque, N.M., was the best city to live while earning $15 an hour and Irvine, Calif., was the worst.
To determine how each city ranked, the report considered income tax, utilities, housing and transportation estimates collected from the U.S. Census Bureau, U.S. Department of Agriculture, Walk Score, Rent Café and The Economist’s Big Mac Index to determine how much a single person working full time at $15 an hour would expect to have after paying the bills. The cities were then ranked based upon the amount of disposable income the resident would have remaining of their $2,400 monthly salary.

The report determined that someone working full time on a $15 minimum wage in Albuquerque, N.M., would still have as much as 36 percent, $861.96, of their salary remaining after paying their expenses. But Albuquerque was not the only city in which $15-an-hour workers had significant portions of their salary left over; the top nine cities all allotted their residents $800 or more after paying bills, the top 26 had more than $700. Overall, in 68 of the cities, a single, childless person would have at least $480 of discretionary spending.

Ohio was the state that was represented the best in the report. Cleveland, Toledo and Cincinnati not only ranked well overall, but they also had the lowest rent of all the cities on the list, $719, $725 and $738 respectively. The low cost of living in Ohio would allow a $15-an-hour minimum wage worker to maintain a recommended budget breakdown.

Finance experts advise that a person should only spend 50 percent of their monthly budget on needs, 30 percent on wants and 20 percent on savings and debt repayment. Ohio’s top three cities would adhere to this budget, spending approximately 30 percent of the paycheck on rent, but for many cities on the list, this ratio would be impossible.
Irvine’s high rent prices would subsume 98 percent of the worker’s monthly paycheck and result in a monthly deficit of $678. Only four cities left $15-minimum-wage residents owing money each month, all of which are in California: San Diego (-$20.18), San Francisco (-$158.43), San Jose (-$413.76) and Irvine. In fact, due to the state’s high cost of living, 11 of the 25 worst cities on the list were in California and the state’s highest-ranking city, Fresno, was still only 30th best.

California has one of the highest minimum wages in the nation; the rate increased in 2021 to $14 an hour and will increase again in 2022 to $15. Yet the report found that many of the 25 worst cities on the list were places in which the state or local minimum wage was already much higher than the current federal minimum wage: San Francisco (#97) has a local wage of $16.32 an hour, New York City (#86) is at $15 an hour and Seattle (#91) has a minimum wage of $16.69.

In fact, of the report’s 25 worst cities, only Plano, Texas, has a local minimum wage equivalent to the current federal minimum. This suggests that for many cities across America, increasing rent, utility and transportation costs have reduced the benefits from raising the minimum wage to $15 an hour. State and local government officials in those cities will need to proportionally increase their local minimum wage to provide their residents with some financial stability, or they will need to find ways to reduce utility and transportation costs and make housing more affordable.