In most of the United States, even a $15 minimum wage isn't enough to make ends meet—and the gap becomes a chasm if you factor in ballooning student debt.
So says a new report from the People's Action Institute, released Tuesday, which finds that in most states, the minimum wage provides less than half of the true living wage—an amount that takes into account what families need to cover basic necessities while also saving for emergencies or planning ahead.
What's more, adding in the median monthly student debt payment to the cost of living increases the single adult living wage to more than $16 per hour in every state, and to more than $17 per hour in most states.
According to the first-of-its-kind analysis, Waiting for the Payoff: How Low Wages and Student Debt Keep Prosperity Out of Reach (pdf):
In 42 states and in Washington, D.C., the living wage for a single adult is greater than $15 per hour. No state has a living wage for a single adult that is less than $14.50 an hour. Nationally, the living wage for a single adult is closer to $17.28 an hour. When adding in repayment of student debt, the national living wage for a single adult rises to $18.67 per hour. For working families with children, the cost to make ends meet is even higher.[...] When workers are paid a wage that falls short of their cost of living, including savings and student debt payments, something has to give. Working families make tough choices on what to cut. Yet, when it comes to buying food versus making a student debt payment, the choice for most people is clear.
The latest numbers from the Institute of College Access and Success, published last week, show that college graduates left school with more debt in 2015 than they ever have before. The average undergraduate borrower now faces $30,100 in loans, up four percent from 2014.
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Furthermore, People's Action Institute notes that the impact of the student debt crisis is unequally distributed, because students of color and their families are more likely to take out student loans; academic majors with more women and people of color see starting wages below the cost of living; and women and people of color are over-represented in low-wage work "due to underlying structural issues and discrimination."
"In the past, the promise of a college degree was a more prosperous life—certainly you could expect to be able to make ends meet. But that promise has been broken," said LeeAnn Hall, co-executive director of People's Action Institute. "College graduates, especially women and people of color, are struggling with low wages and high student loan debt that doesn't allow them to support themselves, much less their families."
To rectify this uneven ratio, the report's recommendations include:
- increasing the federal minimum wage to a living wage;
- eliminating the tipped subminimum wage;
- expanding tax-free student debt forgiveness;
- establishing work supports like paid sick days and paid family leave; and
- investing in living wage jobs.
As Hall put it: "We need better wages and affordable higher education for everyone if we are all going to prosper and move our country forward together."