There has been a lot of discussion lately in the news on trying to eliminate high employment especially among the long-term unemployed. Many solutions have been proposed ranging from everything to getting the government regulation to creating more job training programs to get workers back on their feet. There has also been the argument of doing away with the whole minimum wage laws altogether as an incentive to get businesses to hire. Some have proposed setting a minimum wage as low as $4 an hour to solve the problem.
Could you live on $4 an hour in your life? It is a question that I was trying to answer myself based on my own life. My current basic expenditures for my boyfriend and myself are as follows for the month:
Cell Phone: $100
Car Insurance: $130
Health Insurance: $300
These are our very basic expenses for the month. We also put away money in savings, retirement accounts, and make debt payments (student loans, etc.). Assuming I was making $4 an hour, that would certainly put an end to all this. The plan would be to survive and not do much of anything else. Here is what my salary would be if I worked for $4 an hour:
40 hours a week=$160
Total for the month=$640 (Pre-tax)
As you can see, my salary would not be enough to pay for my expenses. I would have to get creative with my money, I guess. I could cut down on my food intake. I guess I could live with good ole mom and dad and then pay no rent or utilities. I would hate to do this, but I would have to get rid of the health insurance. Now that insurance is mandatory, I would have to have something in its place. If I made this salary, I would certainly be eligible for government assistance. I would probably get food stamps as well which would help with food costs. I would have enough to pay car insurance and gas but not much else.
Now these calculations do not account for my boyfriend’s income or any other expenses that we have. The truth is I would not be able to get very far on $4 an hour. Could I survive? Maybe but not without help from the government which is not the best-case scenario.
What is the solution to the long-term unemployed? I don’t know but paying people extreme poverty wages is not going to help. I think some people fail to realize also that a person only making $4 an hour has very little buying power in the economy. This means that he/she will not be able to have as much consumption power as someone being paid a decent wage. We all have seen the effects of this first hand with the crumbling economy and businesses going under for the simple reason that they did not have enough paying customers. This is an argument that is not pro-Republican or Democratic. It just makes sense on an economic level.