The American unemployment rate stood at 3.5% in November 2019, the lowest in 55 years. However, the truth is that a lot of available jobs are low-paying part-time jobs. Almost 8.3% of American workers, or about 13 million people, work at least two or three jobs. Additionally, almost 29% of job applicants move to a large, metropolitan city for a new job. So, while unemployment is at historic lows, you should know the living wage of any city where you are planning a move.
I am remote writer living internationally at the moment. Actually, I am travelling through Asia working on several business opportunities.
I am a native New Yorker and the cost of living is astronomically insane. As a college student, I knew people who lived with significant others and multiple roommates and they could barely make ends meet.
That is because when it comes to minimum wages, living wages, and overall cost of living standards, there could be serious and underestimated statistical nuances.
For example, the minimum wage in New York City is $13.50 for any business with less than 10 employees. It increases to $15 for all New York City-based businesses with over 10 employees.
Sound good? Well, only if you live in New York City. The minimum wage within New York state and outside of New York City, is officially $11.10-per-hour.
However, the outside of New York City minimum wage increases to $11.80 on December 31, 2019. It will increase again to $12.50 on December 31, 2021.
Why does all of this matter to someone moving to a new city for work? Understanding this information can be the difference between prospering and becoming a poverty line statistic.
So, I will list the living wages of 10 large metropolitan cities. This is good information to know if you are planning a move to big city for a new job.
However, before getting to all of that, we should differentiate between a minimum wage, a living wage, and the cost of living.
It will also be beneficial to understand why people are working two or three jobs and moving to large cities for work with historically low unemployment rates.
The Minimum Wage, Living Wage, and the Cost of Living
A minimum wage is the government mandated minimum salary threshold for a job. However, the minimum wage is just a statistic.
Due to the rising cost of living, inflation, and the economics of living, a living wage is the amount of money you make per hour to have a realistic chance of living comfortably in a city.
The cost of living is all the expenses you must pay as a renter or a homeowner. Like rent, a monthly mortgage payment, food costs, transportation costs, insurance, medical costs, and so on.
Let’s use New York City to thoroughly explain all three. Here is a great Living Wage Calculator to help you calculate living wage standards in cities in all 50 states and the District of Columbia.
The minimum wage within the boundaries of New York City is $15. However, the average rent for a two-bedroom apartment in New York City, Manhattan specifically, is $2,500.
That comes to $30,000 annually just for rent, or, one of many costs of living standards.
If working 40 hours weekly, then a pretax $15-per-hour salary comes out to $600, or, $2,400 monthly.
Or, $28,800 annually. That salary can’t cope with a $30,000 annual rent. But this is the minimum wage standard.
After taxes are deducted, the living wage standard for a person with no children or dependents is $26,300. That is fine if you have roommate and don’t live in Manhattan.
However, if you are single and have three children, you must make at least $100,000 in net income for a livable wage.
Two working adults with three children must make at least $50,000 each for a livable wage.
If you don’t understand the living wage, then you may never truly understand why you aren’t succeeding in life.
Wage Stagnation
Even with historically low unemployment numbers, most Americans feel like they aren’t getting anywhere in terms of financial prosperity.
Over 40% of Americans couldn’t pay for a $400 financial emergency if one presented itself.
One of the reasons for this economic quagmire is wage stagnation. This is term you must understand to appreciate why living wages standards are so important.
The average national salary is currently $23-per-hour. In 1964, 55 years ago, the average minimum wage was $2.50-per-hour
That sounds good right? After all, the average American hourly salary increased by over $20 since 1964. (Well, after reading the previous sentence, it doesn’t really sound like a lot over a 55-year period.)
Anyway, nothing in life is that simple.
One must also consider inflation when it comes to finance. This is the incremental rate in which the buying power of money diminishes, and the prices related to consumerism and the cost of living increases.
Inflation
When we adjust for inflation, $2.50 in 1964 is the equivalent of $20.74 in today’s money.
That means that the buying power of the American salary only increased by $2.26 over a 55-year period.
The American worker of 1964 and 2019 basically have the same amount of buying power with their dollars when they pay bills and buy things.
For example, a brand new 1964 Ford Galaxie 500 cost $3,500 in 1964. Adjusting for inflation, that the equivalent of $29,000 today.
(Image by A.W.O.L. Thanks for 2,800,000 views via CC BY 2.0)
Then again, the average price of a brand new car in 2019 was $36,700.
While wages have remained stagnant, the cost of living has only just increased.
This is one of many examples why the American worker may feel like they aren’t financially prospering as much they want.
That is why you should know about a living wage as much as the minimum wage, especially if you move for a job.
According to a recent study conducted by the Bureau of Labor Statistics, the average American changes occupation 12 to 15 times throughout their working lifetimes.
The average person usually holds a job for about 5 years before switching up careers.
This is sobering data to consider if you’re moving to a new city for the sake of making more money.
Living Wages of 10 Major Cities
Over 28.5% of job applicants move to large metropolitan cities in search of new work according to a comprehensive study by Glassdoor.
This data was compiled by surveying over 668,000 online job applications sent to over 40 cities.
Here are the living wages of the 10 cities Glassdoor found that most job applicants are willing to move to for the sake of work.
These estimates are for a single adult with no children.
Austin, Texas
The minimum wage in Austin is $15. However, the living annual wage is about $21,000.
San Francisco, California
The minimum wage is $15.59. You need to make a living wage of at least $37,000.
New York City
Even though the minimum wage is $15 you need to make at least $17.46-per-hour, or $30,600 for a living wage.
Los Angeles, California
The minimum wage is $13.25-per-hour for businesses with less than 25 employees. It increases to $14.25 over that amount, which is near the living wage. You need to make $26,700 for a living wage here.
San Jose, California
Currently, the minimum wage is $15. However, the living wage salary is $18.54. You’d need to make at least $33,300 for a living wage salary.
Washington, D.C.
It’s $14. Still, the living wage salary is $17.64. You must make at least $30,750 for a living wage salary.
Boston, Massachusetts
Right now, its $12, but it will increase to $15 in 2023. The living wage salary is $14.70. A living wage here is about $27,000.
Seattle, Washington
Seattle has a multi-tier minimum wage system. Its $16 if you work at large fast-food, franchise chain, and restaurant businesses with more than 500 employees on a global scale.
Its $15 if you don’t get tips or healthcare benefits. If your employer has less than 500 employees on a global scale, then its $12.
The living wage here is $15.92, or, about $29,000 annually.
Chicago, Illinois
The minimum wage here is $13, which almost matches the $13.54 living wage. Your living wage here is $23,700.
Dallas, Texas
The minimum wage here is $13, or $15 for city government employees. Here, the living wage is $11.71, and the corresponding living wage salary is about $21,400.
Look Multiple Times Before Leaping
Never move to a new city without doing exhaustive research. Your, and your family’s, future well being could depend on it.
In many ways, understanding the living wage can be more important to know than the minimum wage.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.