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Executive Summary:

I am writing this Research Document to indicate my support and findings for increasing the Federal Minimum wage and suggest your consideration for use of the MIT calculated Cost of Living Wages at the State-County level as the basis for the Federal Minimum Wage.

To that end following is a policy paper on why we should increase wages to the Local Living Wage, data tables and graphs derived from MIT¹ Research. This data indicates the need for using a County Living Wage, and graphs displaying  the interplay between the existing minimum wage, the proposed nationwide $15/Hr. wage, and the MIT Living Wage and various government poverty levels.

The MIT¹ data is a researched geographic cost demand approach, i.e., What is “the minimum subsistence wage for persons living in [a county in] the United States.,” versus the theoretical supply-side application of a nationwide Federal Minimum Wage, which does not reflect actual local family cost of living.

Upon review of the various wage scenarios and the effects on various counties (poorest and richest county by various states), key highlights from the data and other comments are listed below.

Key Findings:

  • $15/Hr. a noble improvement, is not enough. Existing State Minimum wages, and the proposed $15/hr., although an improvement, are not adequate to cover the cost of living for most family compositions, necessitating the need for additional income and/or Government Benefits.
  • Two Working Adults Needed. Only if both adults are working full-time all year is their combined minimum wage salary of $30/Hr. approaching the family’s cost of living expenses in the average US county.
  • Maintain Local Synergies and Economic Dependencies. As the cost of living can vary widely by state and counties, and these local economies are well established, a locally targeted wage at the County level, would mitigate disruption to the locally historically linked employer, employee, and consumer relationships. A phased in approach over several years could mitigate disruptions in these geographies and provide time for business, consumers, and employees to adjust.
  • Adjustment of Government Benefit Levels. Implementation of the geographic Living Wage or a new Federal minimum Wage could necessitate the adjusting of poverty rates for certain family compositions, and other benefit guidelines ex. SNAP, EIC, to ensure families on the new wages will not unintentionally have benefits negatively affected, a fall thru the cracks issue.
  • Co-ordinate Government programs: If employees become unemployed while business management and consumers are adjusting to the new wages, provisions for training programs or higher education possibly combined with voluntary partially reimbursed relocation assistance could mitigate the layoff, strengthen the employee’s lifetime job position prospects, minimize their reliance on future government programs, and provide business with a more educated work force.
  • Alternative Geographic Wage Allocation: If the MIT Living Wage concept by County and Family Composition is not enacted by Congress or State Government and a national or State wage based on $15/Hr. is passed, may I suggest the $15/Hr. wage be allocated on an economic geographic basis to acknowledge the cost-of-living differences by location and to minimize disruptions to the local economies. Scenarios include:
    • Redistribute Wages by State County Index:

Assign the $15/Hr. to the County with the lowest Median Family Income County (Essex County in VT for example) and raise the Minimum Wage level proportionately to the States richest County (Chittenden in VT).  An example would be to calculate the ratio of LW numbers for Chittenden County to Essex County LW on an aggregate that ration is equal to 1.20. The calculated Minimum wage for Chittenden County would be the Essex Min Wage of $15/Hr.  times 1.20 or $18/Hr.

  • Redistribute Wages by US State Index:

Utilize the State Cost of Living Index. (See details on Cl Index page) Determine the ratio between the lowest Cost of Living Index State which is MS at 86.1 and say VT at an index of 116.8, the ratio is 1.36. With MS at $15/Hr., the calculated Minimum wage for VT would be $15/Hr. times 1.36 or $20.4/Hr.

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“It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

President Franklin D. Roosevelt, 1933

President Franklin D. Roosevelt, 1933