Are U.S. Wages Enough to Live On?

MAKING SENSE -- May 15, 2012 at 1:13 PM EDT

Are U.S. Wages Enough to Live On?

A waitress carries a pizza to customers at Gino's East restaurant in Chicago. Wait staff in Illinois earn $2.13 an hour, before tips. Photo by Daniel Acker/Bloomberg via Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Tuesday's query:

Name: Ingrid

Question: Is it true that some workers in America get paid less than $10 per hour? Such as waiters, retail customer service, factory workers? Is it enough to survive on? Can they eat, travel, have a home and pay medical essentials etc. on $10 per hour? I watch the PBS NewsHour in Australia sometimes. You turn it on and can't turn it off. I liked the story about financial literacy on Sesame Street a lot in every way -- production, facts, laughs, in depth, experts, psychological references.

Watch: "'Sesame Street' Tells You How to Get to Sunnier Days Financially"

Paul Solman: Yes, Ingrid, some workers in America do get paid less than $10 an hour. In fact, the Federal minimum wage is $7.25 an hour, and more than 5 percent of all workers earn this amount or less -- about 4 million Americans. Eighteen states do have a higher minimum, but the highest is only $9.04 (Washington state). The federal minimum wage has reached the inflation-adjusted equivalent of today's $10 an hour once in U.S. history -- in 1968. See the first chart on this site for a graphic representation.

You ask: "Can they eat, travel, have a home and pay medical essentials etc. on $10 per hour?"

Well, I know of no deaths by starvation in America, but as to the rest, the answer is "No."

I've interviewed plenty of people in the past few years who couldn't afford their jobs because the commute was too expensive. And as to having a home, the last official government report, issued in June 2011, tallied 650,000 homeless Americans. If you meant "own a home, the number of foreclosures in the past few years has averaged close to 3 million.

Medical essentials? Depends on what one means by "essentials," I guess. But I can almost guarantee you I wouldn't be able to afford the medications my doctor considers essential to me on $10 an hour.

Put it this way: The minimum wage is now about more than 40 percent below the federal poverty line. See "Minimum Wage History" again to confirm. The numbers remind me of the old line in poker: Read 'em and weep. Very different meaning, however.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.

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