There’s been much in the news recently about individuals and families being unable to participate in middle class lifestyles. There has also been much ado about minimum wages, with screams from the right about low-level workers, in such as McDonald’s, wanting to earn $15 per hour.
I hope those who scream would not deny anyone who is willing to work hard the right to a decent living. If there are such folk, clearly with Scrooge being a prominent figure at this time of year, they should be in their glory. However, I like to think there are very few among us with such dispositions and therefore let’s try to imagine a realistic look at what $15 per hour could provide in the way of the lowest rung on the middle class ladder.
First, $15 per hour, times 40 hours per week, times 50 weeks per year comes out to $30,000 per year. As my wife and I, whom I think of as middle class, have the unusual habit of writing down all our expenses, let’s see what expenses in similar categories might mean for a typical family of four living in Pittsfield, where the breadwinner makes $15 per hour. Of course my figures are all guesses, and lifestyle choices vary widely, but it’s possible to Google sites which will suggest average expenditures of many kinds and we can attempt to project from there.
Suppose our hypothetical worker needs a place for a family of four. In the case of home ownership, one site referenced gave the average recent sale price of a two bedroom home in Pittsfield as $131,900. Another site came up with 4.5 percent as the average rate for a 30-year mortgage being offered locally. Laying aside the enormous challenge of coming up with a down payment, 4.5 percent times $131,900 comes out to be $5,935.50 just to provide the yearly payments, or $494.63 per month.
Further, with Pittsfield’s property tax rate set at $16.70 per $1,000 of evaluation, 131.9 times $16.70 equals $2,202.73 for taxes. Thus we have a total of $5,935.50 plus $2,202.73 or $8,138.23 for living quarters alone, never mind repairs and upkeep.
Homeowner’s insurance works out to be about $3.50 per $1,000 of evaluation, or $461.65. That brings our total up to $8,599.88. Then there are water, sewer and sometimes trash expenses of perhaps several hundred dollars a year.
On the other hand, $860 a month is listed as an average rental rate for a two-bedroom apartment. This comes out to $10,320 per year, less than a third of the rent required for a similar rental in the Boston area. Such a Boston rental would, all by itself, use up more than the total $30,000 of income from a $15 per hour job.
Not wanting to live in the dark, the rate given as average for Massachusetts is 14.5 cents per kilowatt hour and average monthly consumption of electricity is listed as 908 hours, amounting to $131.66 per month or $1,579.92 per year.
The cost of staying warm is even harder to estimate. An average home is guesstimated at $2,544 for oil or $1,031 for gas heat. However the size of the house, its degree of insulation and varied desires for different temperature levels of comfort make this impossible to predict. As an example of the level of unpredictability, I found speculations that heating an apartment with gas could cost anywhere from $40 to $150 per month.
Once heat and light are taken care of, a family of four must eat to stay alive. The USDA suggests it takes a little over $1,000 per month to feed four people.
Then there is the issue of getting to work and back, etc. Our average transportation costs are about $2,500 per year, but our car is 18 years old with 180,000 miles on it, so it is only a matter of time before we have a major expense to contend with in that area. One must also add in car insurance to this mixture.
Then there is the matter of health care. Most middle class folks have health insurance of some sort and there are Medicare, Medicaid and Obamacare, plus all kinds of different rates from insurance companies. So, no matter what your circumstances, it’s important to realize that some money must be set aside for doctor’s and dentist’s visits, plus prescriptions, Band-Aids and what have you. I won’t attempt a guess at a good figure here except to say that our expenses in that area have increased as we age and a few thousand dollars seems plausible, even with good health care insurance.
Phone expenses can easily amount to about $40 per month and Internet connection a similar amount. Thus a middle class person may have to ante up $80 times 12 or $960 per year, without cable
Because we buy most of our clothes second hand, our customary annual rate of expenditure here is usually less than $200 for the two of us. This in no way compares to folks who buy new clothing and who have two growing children to keep attired.
We spend a few hundred dollars a year on recreation and a couple of hundred more on educational experiences. So not too much money needs to be allotted here unless desired or trying to gain a college education, which could be a massive expense.
The last item in our book of accounts is entitled Miscellaneous. This one is totally unpredictable. Things like seed for the birds, two new fire extinguishers, four new chairs and a table for outdoors, DVDs, batteries, plants, books, cards, gifts, stain, all appeared there over the last several years.
Now let’s tally up what we have as plausible expenses for our $15 per hour worker if he (or she) was to live at some level of the middle class.
Housing -- perhaps between $11,680 (guessing $1,500 for heat and $1,580 for electricity) for a home owner with absolutely no repairs and a totally mysterious way of finding a down payment or acquiring ownership, and $13,400 for a renter.
For other expenses, as enumerated above in a series of wild guesses as to health care and transportation in particular, let’s say: $12,000 for food, $4,000 for transportation, $2,000 for medical, $960 for communications, $400 for clothes, $400 for recreation and education, and $3,000 for Misc., which comes to $22,760.
Hence if one can get into a home free of charge and nothing goes wrong, perhaps $34,440 would be a barely possible figure to sustain a bottom rung middle class existence. In contrast, a renting family of four might require $36,160 to just make it.
Thus, if my guesses about what it would take to attempt to clamber into the very bottom of the middle class are in any way comparable to reality, it couldn’t quite be done on $15 per hour. And yet, right wing politicians feel $7.50 per hour is an adequate wage when it’s pretty obvious that even twice that amount, with two adults working full time, might not fill the bill. Plus, if the children were young, who would fund day care to allow two family members to work full-time?
While many families survive on a good deal less than $30,000 per year, it’s hard to see how they could move into the much-celebrated middle class. Further, I didn’t even add any income taxes, Social Security payments, etc. I don’t know what else I may have missed, but suffice it to say that $7.50 per hour is radically insufficient recompense for any hard worker.
One last observation. We must keep in mind that nobody knows exactly what "middle class" is. The Pew Charitable Trust puts it as having an income between $32,900 and $64,000. The Department of Commerce sees it as an income between $50,000 and $122,000. The IRS envisions it as between $20,600 and $102,000. Perhaps it’s better described as an attitude or perspective. Maybe it involves seeing life wherein failure is not an ongoing part of the whole and one can at least have a few genuine choices in spending and imagine, or actually live out, retirement without economic destitution.
Donald Lathrop is an occasional Eagle contributor.