Wednesday, February 26, 2014

More About Money

This is further reflections on money from facebook:

I read economics blogs on a regular basis. I know what is happening in the US and the UK and Europe. But I am still amazed that ordinary people can't find enough money for food and are going hungry. My mind is stuck somewhere in the past -- the roaring wartime economy of the 1960s, maybe, when you could always find a job, and minimum wage was enough to live on. When Patrick and I moved to Minneapolis in 1974, our rent for single bedroom apartment was less than $200 a month. I was making $600 a month, and Patrick must have been making the same. So our rent was 17% of our gross income. We could buy two bags of groceries for $20, and that was enough to get us through a week. (We must have eaten out a lot, though I don't remember this.)

Minimum wage was $2.00. Take home would be around $300 a month. Assume two people at minimum wage, and we made more, the net income would be $600. Rent = $200. Food = $86. Health insurance was covered by the job. Utilities were a few bucks. Let's say $20. That left $294 -- about half of net income -- for clothing, transportation and eating out. The big issue for us was transportation. Car repair expenses terrified us.

The average cost of a one bedroom apartment in Minneapolis is $954 now. Federal minimum wage is 7.25 an hour. (Minnesota's minimum wage -- God help us -- is $6.15.) Assuming a 40 hour work week, which is a lot to assume, and no taxes except for FICA, take home will be $1151 at the federal rate. That leaves $197 a month for food, clothing, health care and transportation. And your rent is 76% of your gross income.

I figure I have been sliding through life, due to luck and beginning my work career in the Golden Years of Capitalism. I ended my work career after the crash 2008, so have not had to deal with the Great Recession, as Paul Krugman calls it. I think it's more like a depression, maybe like the Long Depression of the late 19th century.

The thing that's important to realize about my work career is -- I mostly worked clerical jobs, along with a few light warehousing jobs, and then "professional" jobs for nonprofits, which don't exactly pay professional wages. My work experience -- and my income -- was typical of many Americans. It is not typical any longer.

Note: Back when Patrick was working with homeless people, he used to say it always possible to find food. There were food shelves and free meals and dumpsters. The real problem was finding housing. Now, after the Crash of 2008 and the Great Recession and cuts to the federal food stamp program, food shelves in New York says they can't keep up. They have to turn people away without food. (This is per the New York Times.) I assume the same is true in the Twin Cities.


Post a Comment

<< Home