Minimum Wage should be indexed to 2% of a city’s median rent.
And here’s why:
Housing costs are the single biggest financial burden facing Americans today.
The Department of Housing and Urban Development define being cost-burdened as spending more than a third of your income on rent. By that definition, over half of the households in this country are cost-burdened. Source
If we want people to be able to afford to live in cities and not get priced out, we have to make a two pronged approach. One is to build houses towards all incomes and price ranges, not just luxury condos. And the other is a robust wage floor so people can actually afford to live.
Fight for 15 is doing an amazing job and I love them, but we have to realize that is quite a few places, $15/hr still isn’t enough to live on.
Which is where the 2% comes in. It allows a minimum wage that is flexible with regards to the costs of living.
And it wasn’t plucked out of thin air either:
Rent should be a third of a persons income, or to restate the equation: income should be three times a person’s rent.
And since a full time job is 8 hrs a day / 40 hrs a week / 160 hrs a month.
So when you do the math, the ideal hourly minimum wage as a percentage of rent works out to around 1.875%, which for ease of calculation is 2%.
Example minimum wages under a 2% rent rule:
- San Francisco: $67.40/hr
- New York City: $56/hr
- Boston: $55.94/hr
- Los Angeles: $27/hr
- Houston: $21.38/hr
- St. Louis: $18.22/hr
- Billings, MT: $17.16/hr
I. That puts San Fran’s cost-of-living issue into perspective.
So… Minimum wage in NYC is $116,000 annually