MIT: Can't live on minimum wage

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The front-page story about a local push to raise the local minimum wage mirrors efforts in other low-wage states. According to 2015 data from the National Conference of State Legislatures, with the exception of the stark hourly minimum of $5.15 in Wyoming and Georgia, Idaho's (and 15 other states') $7.25 per hour is the lowest, and compares poorly with the $9 in states such as California and Massachusetts.

However, reminiscent of complaints regarding Idaho's lower compensation packages for public employees, it's really not about the dollar amount; it's about the purchasing power. The cost of living in California is far higher than in Idaho; compare auto insurance, daycare, and average rent and that's abundantly clear. So Idaho's wages are somewhat better compared with states such Washington ($9.75) and Oregon ($9.25).

How do we know? The living wage calculator, courtesy of Massachusetts Institute of Technology. Maintained by MIT economics researchers, it uses county-specific, local data to calculate cost of living - a low-wage standard of living, not middle class - and geographically specific "living wage" figures. This figure is higher than federal poverty guidelines, which don't take into account local expense variations.

Their conclusion? The minimum wage does not cover the cost of living for most American families. The typical family of four, concludes the MIT team, needs more than three, full-time minimum wage jobs to do that.

Using average local prices for food, housing, medical care, transportation, taxes, day care, and other typical survival needs, the minimal necessary wage (no "extras" such as cable or cell phones) was calculated by family size. In North Idaho, the results include:

Living wage for 1 adult: Kootenai County $8.58, or $17,840 annually (Shoshone $8; Bonner County similar to Kootenai in most categories)

1 adult and 1 child: Kootenai $17.67, or $36,756 annually (Shoshone $16.59)

1 adult and 2 children: Kootenai $22.59, or $46,978 annually (Shoshone $21.50)

2 adults: Kootenai County $13.38, or $27,824 annually (Shoshone $12.47)

2 adults and 2 children: Kootenai $18.07, or $37,590 annually (Shoshone $17.00)

(Note: Figures use 2013 data, currently in an update process, and presume one adult per family working full-time; in two-adult families, day care is not included as an expense.)

The shortfall is obvious, and typical of the nation. In neighboring Spokane County, where the state minimum wage is higher, the living wage (i.e., cost of living) is surprisingly lower than in Idaho, giving more credence to arguments that our comparative salaries don't cut it. Beyond having less time and resources for more job training and other means to improving circumstances, as well as less purchasing power to stimulate struggling economies, working families who can't meet minimum expenses are more likely dependent on public assistance, which costs every taxpayer.

Now there is another side to this picture: Small businesses. No small number of families depend on their small businesses to make a living, and minimum wage increases impact them far more than large businesses. One state has an interesting approach to this problem; Minnesota's minimum wage for small employers is $1.50 less than for large employers (at least $500,000 annual sales volume). And wage increase effects on businesses have upsides, as well as costs.

For more information about the business impacts of minimum wage increases, look for the May issue of North Idaho Business Journal.

Sholeh Patrick is a columnist for the Hagadone News Network. Contact her at Sholeh@cdapress.com

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