(by MoneyMiser21)
What’s in a name? Or a number?
If that name and number is ‘minimum wage,’ that’s a real hot potato no matter which end of the political spectrum you fall on regarding the $15 an hour debate.
Bill Cosby made the economics of ‘regular people’ money into an unforgettable comedy skit back in the 80’s on his hit sitcom, “The Cosby Show.”
So, let’s update that interesting dynamic for 2024 (Because let’s face it, no one aspires to $300 a week Theo!).
Scenario #1 – The $15/hour minimum wage
Now the 2024 “Theo” in this case looks forward to graduating high school, and making $15 an hour.
Enter uncle Moneymiser (Because Theo is not my kid).
MM: So, Theo, you’re going to make $120 per day, $600 per week, and $31,200 per year at $15 an hour.
Theo: Great! 31k is a lot of paper!
MM: Yeah, you can make it rain at the club for a night or two with that. But you know you won’t actually get all of that money, correct?
Theo: Huh?
MM: Yes, if you work a job, you get to pay taxes to the federal government. And the government makes sure to take its cut before you get that paycheck, so you never keep all of what you earn.
Theo: What?!
MM: Joys of being an adult kid. And it gets even better!
Theo: That can’t be good.
MM: Yup. Depending on which state you live in, its government may take its own cut. Along with certain cities (hint, looking at you Big Apple).
Theo: Ugh.
MM: But we’ll keep things simple and only deal with Uncle Sam. Now guess how much you’ll have to pay as a single man/woman/no-gender-selection human being who makes $15 an hour?
Theo: Um… ChapGPT says $3,524.
MM: Well that stupid AI is wrong. For the 2024 tax brackets it’s actually $3,512. So, you saved twelve bucks.
Theo: $12! That’s a combo meal!
MM: Kid don’t get me started. I remember $2.99 combo meals…
Theo: Yeah right. When? In the dark ages before the internet?
MM: Never mind. That’s only the first part of the federal taxes you get to pay. But lucky for you, the government makes your employer pay half of the other two taxes.
Theo: Wait, the government can do that?
MM: Kid you don’t know half of what the government makes businesses do. Ask your precious ChatGPT about that.
Theo: Um, it says…
MM: Forget it. Now you get to lose even more money! Making $15 an hour, you get to pay another $1,934.40 into Social Security, and $452.40 to Medicare. You know, the things your grandma and grandpa depend on to pay bills.
Theo: No wonder they’re so angry all the time.
MM: Heh. Now you’re starting to wise up. So let’s do some basic math:
–Your $31,200 from working an entire year for $15 an hour
—Minus federal income tax of $3,512
—Minus Social Security tax of $1,934.40
—Minus Medicare tax of $452.40
That equals $25,301.20 assuming you live in a state with no income tax.
Theo: Well, $25k is still a lot of money. I can buy a new PlayStation 5 and iPhone 16 easily with that
MM: Oh you think so? Where are you going to use that game console?
Theo: In my room.
MM: And where is this room?
Theo: Um, we’re in it right now Uncle Money.
MM: You’re going have to leave the nest at some point Theo. You don’t want to bring a girl/guy/non-gender-choice person over for some ‘quality time’ here do you? How do you think they’ll react to that?
Theo: I never really thought about it…
MM: That’s right! You didn’t think! You’re lucky grandpa Dutch has passed, or else he’d sign you up for boot camp right now if you told him that.
So how much do you think it will cost to live on your own?
Theo: Umm… ChapGPT says it depends…
MM: (Smacks Theo Upside Head)
Theo: Ow!
MM: Don’t depend on that artificial so-called intelligence so much! Now, are you going to live by yourself or with friends?
Theo: Myself I guess.
MM: OK, since we don’t know where you’re going to live, we’re going to look-up what it costs on average for a one bedroom apartment in America. And according to Apartments.com, it $1,560 a month. So multiply by 12, and you lose another $18,720 just to put a roof over your head.
Theo: WHAT! Can’t I just live with mom and dad?
MM: Not up to me. So let’s keep going. Now you’re down to $6,590.20 for the year. You want to be able to play your games, use and charge up your iPhone correct?
Theo: Well duh…
MM: And do you think that requires? I’ll tell you: Electricity, a cell phone plan, a high-speed internet plan, and a television
Theo: Uh-huh.
MM: And if you want to drink, shower, and flush the toilet, you’ll need water service as well.
Since we’re not choosing where you’ll live, we’ll use the national average from Apartmentlist.com for utilities, and we’ll be generous and not include gas or fuel estimates.
For that 1-bedroom apartment you’ll rent, it will cost an estimated average of $89.76 a month for electricity, and $22.12 for water. That’s another $111.88 a month you get to pay, which equals $1,342.56 a year.
Theo: Ugh!
MM: Now for your internet and cell phone plan. Again the national average for high-speed internet is $71.06 a month. Say goodbye to another $852.72 a year just to surf at home.
And to use your iPhone for more than just Wi-Fi, $35 a month on a Straight Talk Wireless plan. Another $420 a year poof, gone.
Now you’re down to $3,974.92.
Theo: My money…
MM: That’s without Netflix, Amazon Prime, or any other subscription service you’ll need to sign-up and pay for.
But wait, there’s still more!
Theo: More?!
MM: Yes. How are you going to get to and from work? Assuming you’re actually leaving your apartment to work, you’ll need a ride, pay gas and upkeep costs for that car or motorcycle, and then there’s state and county registration fees for owning that vehicle…
Theo: Arrrrgh!
MM: And you still haven’t put any food in your belly, or paid health insurance. Do you think you’ll be able to do all of that on your left-over $331.25 a month?
Theo: No way!
MM: Regular people problems. Now do you understand why $15 an hour isn’t feasible to aim for nearly every American?
