Thursday, September 17, 2015

The Minimum Wage and Poverty Level Income. How much do I need to make? Numbers here...

Here is a table of the official income levels the US Federal government uses to determine whether or not someone is classified as "poor" (copied from HERE but I saw it at The Conversabel Economist)

This is useful but it does not help me fully understand what these numbers mean.

Below, I calculated the hourly wage I would need to earn in order meet these levels of  income based on household size.

I am going to use 2,000 hours worked per year as my measuring stick (40 hours per week, 50 weeks per year).  To make it simple, I am only going to use the numbers in the first colum "Weight Average Thresholds".  If I divide these income numbers by 2,000 I will get the hourly wage needed to make that amount of income (numbers in RED). I am assuming ONLY 1 wage earner in the household for this calculation.

This is the same graphic as above but enlarged:

The number I am most interested in is the "Three people".  This could be a single parent with two children.  That parent would have to earn at least $9.43 (not including taxes/other deductions NOR othe public transfer payments) per hour in order to meet or exceed the Federal definition of poverty for a family of 3.

You can compare this to the minimum wage of $7.25 per hour.

I think looking at it like this allows us to have a more effective discussion of how we get the "working poor" AT LEAST to a poverty level income.  Raise the minimum wage? Increase Transfer Payments (EITC for low income workers, Food/Housing Assistance, etc).

How do we intelligently cover that deficit between the actual minium wage and a near poverty wage I calculated?

Let me know in the comments.  I hope this perspective gives some body to your thoughts on the subject.  I do realize there are many ways of looking at these numbers too.  What about a family of 4 (two working parents with two kids). Combined they need to make "only" $12.12 an hour, less than their combined minium wage incomes.  Does this mean they are living above the poverty line and all is well?


View My Stats