- No county in the US is affordable for a worker making just the federal minimum wage, the EPI finds.
- And that's just for single people — it gets even less affordable if you have kids.
- Rent is spiking in places where minimum wage hasn't changed.
If you make federal minimum wage in the US, you probably can't afford to live in any of its towns.
According to the Economic Policy Institute's updated Family Budget Calculator, a full-time worker with no children would need to make roughly $14.50 an hour to sustain themselves in the US county with the lowest cost of living: Orangeburg County, South Carolina.
That's twice the current federal minimum wage of $7.25.
The EPI's calculator looks at the cost of housing, food, child care, transportation, healthcare, and taxes in every county. Its estimates for the annual income needed for a family of four — two adults and two children — ranges from nearly $60,000 in Orangeburg County, South Carolina, to more than $170,000 in San Mateo County, California.
The federal minimum wage has been stuck at $7.25 per hour since 2009, the longest the US has gone without an increase. Many companies have increased wages beyond that, but most haven't kept pace with inflating living costs. The "Great Resignation," in which 48 million people quit over the last year highlighted that many Americans are growing frustrated with pay that is often far below the cost of living. Employers have been increasing wages to compete, and inflation has been automatically raising the minimum wage in many states. But as the EPI calculator underscores, the rising cost of rent and mortgage rates are diminishing those gains.
"Boosting the federal minimum wage would lift millions out of poverty and serve as a huge additional pandemic stimulus boost for the entire economy," Chuck Collins, the Director of the Program on Inequality and the Common Good at the Institute for Policy Studies, told Insider's Juliana Kaplan last year. "We have seen how many frontline essential workers are poorly paid and most vulnerable. Boosting their pay is both morally right and economically smart."
The cost of living is going up, but wages aren't
During the pandemic many housing markets got white-hot, even if average wages in the region couldn't compete.
In February, for instance, the Austin, Texas, metro area saw the second highest year-over-year rent increase nationally, trailing just behind Portland, Oregon. Between January 2021 and January 2022, average rent prices in the Austin metro increased 35%, according to Redfin data. The cost of rent is going up everywhere else, too.
Workers in the Austin area have higher mean hourly wages than most of the country overall, $27.80 in May 2020, which is 3% higher than the nationwide average of $27.07, according to the Bureau of Labor Statistics. But in lower-wage fields like repair work, food prep, and building maintenance, Austin wages are actually behind the national average, increasing the burden of the cost of living for lower-income people, if not outright pricing them out of their homes.
In Central Pennsylvania, rental prices have been soaring over the past year alone, 27% between the beginning of 2021 and 2022, according to Rent.com. The EPI calculator shows that to afford living in York County, which is located in Central Pennsylvania, an adult with no children working full-time would need to make $36,144 a year to afford living there. Pennsylvania is one of 20 states that still only adhere to the federal wage floor of $7.25, although state workers will see an increase to $12 per hour this year. Assuming someone working 40 hours per week earns minimum wage, they make less than half of what they need to afford living in York County.
The EPI's Ben Zipperer wrote last July that the federal minimum wage has lost 21% of its value since the last time Congress raised it in 2009.
"If Congress had continued to increase the minimum wage in line with productivity growth since then, the minimum wage today would be over $22 per hour," he said.