In 1931, writer James Truslow Adams coined the phrase “The American Dream” to describe a society where he hoped everyone might reach their “full potential.” That was contingent on having a solid job at a living income.
Unfortunately, for many millions of hard-working Americans, Adams’s vision of a “better, richer, and fuller” existence remains a pipe dream.
This year Biden administration will celebrate a better-than-expected jobs report that showed job growth and salary growth. However, employment does not ensure a living wage for millions of working Americans.
Jeffrey Kucik, Assistant Professor of Political Science, University of Arizona, and Don Leonard, Assistant Professor of Practice in City and Regional Planning, the Ohio State University, workers’ rights researchers claim the economy functions better when individuals are not forced to choose between paying rent, purchasing food, or getting medication. Far too many are driven to do so.
Calculating the number of workers who struggle to make ends meet is a tough assignment. A worker’s basic survival budget varies significantly depending on their location and family size.
Consider the city of Rochester, New York. According to the City Cost of Living Index developed by the research firm Advisor Smith, it has the cost of living closest to the national average across 509 U.S. metropolitan areas.
According to MIT’s living wage calculation, a single adult in Rochester needs at least $30,000 per year to cover the costs of housing, food, transportation, and other essentials.
However, in San Francisco, which AdvisorSmith data indicates has the highest cost of living in the United States, affording the bare necessities costs $47,587, primarily due to much higher taxes and rents.
Beckley, West Virginia, has the lowest cost of living. Even yet, a childless worker requires approximately $28,200 to make ends meet. Again, the average cost of living in an American metropolis is roughly $30,000 per year for a single individual.
Naturally, prices quickly build up in households with more than one person. In Rochester, two adults require more than $48,000 a year, while a single parent with one child requires more than $63,000. A single parent in San Francisco would need to earn $101,000 a year to make ends meet.
That is, after all, what it takes to exist in contemporary America. Around $30,000 per year for a single person without dependents in the average city — slightly less in other places and significantly more for families and anyone living in a major city such as San Francisco or New York.
Jeffrey Kucik, and Don Leonard estimate that at least 27 million US workers earn insufficient wages to meet that extremely low $30,000 level, based on the most recent profession salary data from the Bureau of Labor Statistics, a government body, as of May 2020. We believe that this is a conservative estimate, and that the number of individuals with jobs earning less than the minimum wage required to buy basic essentials is likely significantly greater.
Low-wage positions range widely, from bus drivers to cleaners to administrative assistants. However, the majority of those 27 million employees work in two industries: retail and leisure and hospitality. These two industries employ most Americans and pay the lowest average wages.
For instance, in early 2020, the median wage for cashiers was $28,850, with 2.5 million of the country’s 5 million cashiers earning less than that. Alternatively, consider retail sales. There, 75% of workers — almost 1.8 million – earned less than $27,080 per year.
It’s the same thing in leisure and hospitality, the sector hardest impacted by the COVID-19 pandemic, losing 6 million jobs in April 2020 as a large portion of the US economy shuts down. Nearly a million waiters and waitresses earned less than the median wage of $23,740 at the time.
Naturally, millions of those jobs have been restored, and wages have increased significantly this year – though only marginally faster than inflation. However, this does not change the fact that nearly one in every six workers earns less than the minimum wage required for an adult without children to survive.
That’s why it’s unsurprising that 40% of US households reported being unable to afford an unexpected $400 bill in 2018.
According to Kucik, and Leonard these data should prompt policymakers to rethink who constitutes the “working poor.” A 2021 Bureau of Labor Statistics study shows approximately 6.3 million people earned less than the poverty rate.
However, this condition grossly underestimates the extent of the working poor, as the federal poverty level is absurdly low – only $12,880 for an individual. The official poverty line was established to evaluate eligibility for Medicaid and other government assistance programs for low-income individuals, not to show how much a person requires to survive.