What is a Living Wage, and Are People Getting It?

A fast-food restaurant in SE Portland at night. Many fast food restaurants require long hours with little pay for employees. Photo by Luke Ramsey

Ronan, a 21-year-old, works at the Old Spaghetti Factory in Portland. He’s been working there since July 2020. In his previous job at FedEx, he was making $23 per hour, but at the Old Spaghetti Factory, he’s making just $14, Oregon’s minimum wage, working 35 hours per week. His studio apartment in downtown Portland costs just $775 per month, which he expressed as getting “really lucky,” but even then he’s spending roughly half of his income on housing, leaving $200 per month for savings. For others in Portland, a city where housing prices continue to rise, living within the metro area on the minimum wage is a virtually impossible task.

Recent debates throughout the country have focused on the concept of raising the minimum wage to $15 per hour, which would force many employers to pay considerably more than they have been in much of the country. The current federal minimum wage is $7.25 per hour, but at the state level, the minimum wage varies much more. It is $5.15 per hour for some employees in Georgia and Wyoming and $15 per hour in Washington, DC, according to the US Department of Labor. However, federal, state, and local laws do not always reflect a “living wage”: the actual income needed to get by in the United States, which depends greatly on the specific location. 

With rising costs of living in Portland and throughout North America, many believe that even $15 per hour may not be enough. Estimates for the Canadian province of Ontario place the living wage at around $16 per hour for a family of four with two working parents.

The living wage depends not only on the location, but also on a given person’s definition: Maxim Baru, Communications Officer of the Industrial Workers of the World, says that many consider it to be “an income sufficient to thrive, afford hobbies, [and have] savings.” Others would define it by the bare minimum needed to afford necessities.

Cities in general have higher costs of living than rural areas do. The costs of food, transportation, housing, and more rise within the city limits, leading to an elevated cost of living. As a result, many states vary their minimum wage depending on where people live, making Portland’s minimum wage $1.25 per hour higher than the statewide standard.

High school students like those at Franklin regularly work for minimum wage. However, the vast majority are not financially self-reliant, and don’t need to spend their money on housing, utilities, or even retirement. Matthew Hansen is a Franklin student working at Portland’s Old Spaghetti Factory. He earns $14 per hour not including tips. Hansen spends his money by “[saving] it and [buying] drinks every now and then, or food,” not the housing and utilities that adults must take into their budget, the money that makes a living wage so high.

According to Zillow, the “typical” Portland home, based on “the middle price tier of homes,” is valued at more than $550,000, compared to a middle price of around $300,000 nationwide. Due to the COVID-19 pandemic, prices have continued to shoot up, with many homes selling for far more than the asking price. As a result, Portlanders have lost their homes and have been forced to live on the streets at a higher rate. According to the City of Portland, there are roughly 3,800 houseless people in the city, saddled by the rise in prices.

Portland and its surrounding suburbs have attempted to expand programs for affordable housing, where tenants pay rent according to gross income rather than a set price, usually around 30 percent, but the programs have not been as successful as the city hoped. According to OPB, the city of Tigard has been at risk of losing as many as one in five affordable homes. With the prices of other houses so high, affordable housing has not been enough for many people.

The finance company Chase recommends that people spend 30 percent of their income on housing, leaving the other 70 percent for food, savings, and other amenities. The median rent in Portland is $1,337 per month, according to the Oregonian, so if someone were to spend 30 percent at $1,337 per month, they would have an income of $53,480 per year, or more than $25 per hour on a 40-hour workweek. That vastly exceeds Portland’s minimum wage of $14. If they were to spend 50 percent of their income on housing, $15.43 would be sufficient, though 50 percent would leave far less to spend on anything else, including retirement spending, which CNN says should make up 10 to 15 percent of one’s income.

In the rest of the Metro area, things get even worse. Hillsboro’s median rent of $2,100 would require an astonishing $40 per hour at 30 percent, far more than any minimum wage employee can afford. Saddled by high costs, many renters are forced to sacrifice spending in other areas, sometimes critical ones: Zillow states that just 51 percent of renters nationwide could afford a sudden $1,000 expense, and that the average renter earns less than $40,000 per year.

In spite of opposition from conservative and moderate lawmakers, minimum wage increases are popular among the American public: According to a poll from Pew Research Center, more than 60 percent of Americans support raising the minimum to $15 an hour, including 28 percent of Republicans, and almost 90 percent want some sort of raise.

Oregon’s wage raises, which benefit the roughly 6 percent of Oregonian workers who receive the minimum wage or less, have been met by enthusiasm by many workers’ rights advocates. Graham Trainor, president of Oregon’s division of the collection of unions AFL-CIO, said that the 2021 increase to $14 per hour would help the state as a whole, as “when the lowest paid workers receive a pay raise, they in turn put money directly into Oregon’s local economies.” Unions themselves have historically worked to help workers earn greater compensation.

Even if today’s employees earn less than a living wage, raising the legal minimum isn’t so simple. Due to heavy opposition from Republicans, especially those in Congress, the federal minimum remains stuck at $7.25, reflecting the last raise from 2009, in the record American streak without a minimum wage increase. In those last twelve years, adjusting for inflation, it has fallen 21 percent in value, according to the Economic Policy Institute. President Joe Biden’s attempt to raise wages within the $1.9 trillion U.S. stimulus package in the winter failed, and many states maintain low minimums. Additionally, even if such a bill were to get passed, the influx of money going to a large segment of the U.S population could lead to inflation, raising prices for the goods that those people would now be able to afford. This can be resolved through gradual increases that have been enacted in states like Oregon, which will adjust for inflation each year starting in 2023, but this method has not traditionally been employed by the federal government.

Laws are not the only way to give employees greater compensation. Unions and strikes can also help, and in many places, they have managed to force companies into pay raises on their own. In Europe, according to Baru, this happens rather often.

The national minimum wage of $7.25, which hasn’t been raised for twelve years, may not reflect the cost of living in much of the country. Portland’s minimum wage is higher than that of other parts of the country, but so is the cost of living, and that cost of living has harmed the city’s residents. It’s hard to define a living wage, since the location, the definition of an acceptable budget, and much more help decide, and complicate, the definition of a living wage. However, with much of the country working on the minimum wage, it is imperative that the country determine what a living wage is, and soon.

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