The Poverty in America Living Wage Calculator suggests that in New Castle County (the only DE county I can find on their site) that a family of four requires a Gross Annual Income of $47,674 to achieve an After-Tax income of $39,817, which they believe is sufficient to constitute a Living Wage.
Assuming that this family has a single bread-winner, this means that this individual must pull down $22.92/hour, working full-time (2080 hours/year). However, I suspect that they intend this example to be a two-income family, as they have budgeted $842 monthly for child-care, which would not seem to be necessary with a stay-at-home parent.
So let's go two ways with that. If you have only one working parent we should be able to deduct the child-care expenses from the necessary income ($842 x 12 = $10,104 pre-tax, which by my rough calculations would reduce the necessary Gross Annual Income for a family of four by $11,887--to $35,787. This means that a single individual supporting a family of four would have to have an annual income of not $22.92/hour, but $17.21.
On the other hand, with two working breadwinners and the child-care figured in, each would have to average $11.46/hour.
For the sake of argument, I'm going to accept these figures, even though I have some doubts, given that the 2006 Delaware Median Income was $52,438 (as compared to a US median of $48,201).
The question becomes, how do we best help the largest possible number of families reach a living wage?
Given the arguments currently circulating on Delwareliberal, the entire problem revolves around businesses and business owners being too greedy to pay their employees.
Quoth Liberalgeek in the main post:
So here is Joe’s statement in real English: Prices for everything are going up. The people that should suffer for that are the people that make the least amount of money in our economy. People working for minimum wage should just have to suffer along, because their food costs are rising, their fuel prices are rising, their energy costs are rising, their rent is rising, but their pay should stay the same, so that the business owner can still make his profit.
And his follow-up in the comments:
Look, for most small businesses, this is a level playing field. Their competitors are in the same boat. If it means that your pizza goes up a nickle a slice, that’s what happens. They raise the price of coffe when the cost of beans goes up, why not when it costs more to have your employees drive to work?
Yes, I see the inflationary implications of this, but the alternative is to grease the wheels of business with the blood and sweat of the low-wage employees.
The problem here is that they're arguing over a minimum wage hike of $.50/hour, not the multi-dollar hike that would be necessary to achieve the living wage.
Arguments that might have validity in raising a minimum wage from $6.15/hour to $6.65/hour have nothing in common with the arguments necessary to posit a living wage of $11.46/hour, to say nothing of $22.92.
Liberalgeek's slice of pizza is going up by considerably more than a nickel to get folks to the living wage.
Let's go back to that $47,674 Gross Annual Income for a family of four in NCC, and see what we can do without breaking the bank (or driving the employers out of business).
First step, realize that this Gross Annual Income includes $3,647 in payroll taxes (SSI, FICA, etc), $969 in state taxes, and $3,242 in Federal Income Tax. That's a total of $7,858, or a 16.5% tax bite on people just scraping by.
Instead of taking 16.5% of their income in direct taxes (we'll talk about indirect taxes in a moment), only to return a significant portion to them in food stamps, housing subsidies, or other benefits, here's a radical idea: Let's allow every family below 120% of the living wage to keep all the money that they actually earn.
That's right: let's credit them with SSI, FICA, and Medicaire taxes without taking them out of their checks, and let's exempt them from Federal and State income taxes. That act alone would reduce the necessary wage for a single breadwinner in a family of four from $17.21/hour to $13.43/hour.
In a family of four with two working parents (and therefore child-care expenses), this would mean that each earner has to average just $9.57/hour to make ends meet.
The expenses calculation for that family of four includes $570/month for food and $511/month for "other"--a grand total of $1,081/month or $12,972/year. Now let's exempt our family from the DE Gross Receipts Tax (each family could have an exemption card), calculated at roughly 1.5%, returning another $194.58 to them each year. Likewise we could allow these families to be exempted from (a) gasoline taxes; (b) vehicle registration fees; (c) telecommunication fees and taxes; (d) cigarette and alcohol taxes; and (e) any other fees or taxes charged by the locality, state, or Federal government. [This would include at least a phased exemption from property taxes to allow them to purchase homes.]
In other words: we could adopt the principle that taxes or fees should not be charged to anyone until after they have achieved a living wage.
And guess what? At that point the wage necessary for a two-worker, four-person family would drop somewhere into the neighborhood of $7-8.50/hour.
Of course, there is a price to be paid for this kind of plan. The government on all levels would have to learn to make do with a lot less tax revenue, and actually start making some hard decisions about what to spend and where to spend it.
[Yes, I'm well aware that my liberal and progressive brethren and cistern would see it differently: they'd want to raise taxes on everybody "above middle class" (which, conveniently, they never define) in order to assure that the government does not starve. Good luck with that. If they're willing to meet me half way and say, "No person should be taxed until after he or she has provided their family a living wage," I'm willing to take my chances with the political process.]
What's sad is that nobody will take me up on this. It's a hell of a lot easier to lampoon the problem as greedy corporate executives sucking the lifeblood out of convenience store clerks than to deal with the fact that 61% of all American firms that have any payroll at all employ fewer than five employees. And it's a lot easier to bemoan the fact that limited government is a pipe-dream of lunatic Libertarians than to admit that when the State is taking up to 20% of the income of people who aren't able to get by, then the State is part of the problem rather than part of the solution.