63% of metropolitan Americans, 39% of farm workers, live on paycheck to paycheck

It’s no secret that the pandemic hit us well in the bank account. But the sad truth is that tens of millions of American households were struggling long before the coronavirus called.

It has recently become increasingly clear that the problem is systemic – especially in cities. In fact, a recent study found that 63% of US workers who live in metropolitan areas have trouble breaking out of the paycheck-to-paycheck financial cycle.

While the situation is better for farm workers, this is not an encouraging difference; more than a third of farm workers – 39% to be precise – also depend on the next paycheck to keep them off the road.

Wages are falling

One of the main problems millions of US workers face is the way wages have stagnated over the past few decades. Not only did general wages fail to keep pace with the cost of living, but minimum wage workers – arguably the weakest of all – were also not getting the protection they need.

While we have seen modest increases in the state minimum wage over the past thirty years, these changes have often been barely adjusted for inflation, let alone the cost of living. And there has been no increase in the state minimum wage in over a decade.

yearFederal minimum wage

1991

$ 4.25

1996

$ 4.75

1997

$ 5.15

2007

$ 5.85

2008

$ 6.55

2009

$ 7.25

Data source: US Department of Labor

Looking at inflation alone, the federal minimum wage would need to be at least $ 9.37 today to give minimum wage workers the same purchasing power they had when the minimum wage was last updated in 2009. That’s more than $ 2 below the current rate, which is more than $ 4,000 for a full-time employee over the course of a year.

Some states have their own minimum wage laws that provide workers better than the state minimum wage limit. Unfortunately, only 23 states have minimum wages above the $ 9.37 required to beat inflation.

The cost of living is skyrocketing

Inflation has not only affected the value of your bank account. The increase in the cost of living has far exceeded wages in even the best of states.

For one, housing costs are reaching record highs and praising many people from the cities in which they work. This is especially true in metropolitan areas, where the average rent can hit $ 1,500 even for modest homes. And forget about taking out a mortgage on your own house in town; Median home prices are well over $ 300,000 in all but the smallest cities.

All in all, looking at the bigger picture, most estimates suggest a minimum wage of between $ 15 and $ 25 to provide workers with a real living, with the higher end practically required in metropolitan areas.

While some states have kept pace with inflation (and in some cases some), no single state has a minimum wage of $ 15 or more. This means that workers at or near the minimum wage – you know, those who were “material” last year – are subject to the whim of companies that are not required to consider the real cost of living.

How to break the cycle

All the signs suggest that updating the federal minimum wage hike is a tough sell at best. So if you are one of millions of Americans struggling on the paycheck to paycheck cycle, you will likely have to rely on yourself for relief.

It is always good advice to cut your budget even though you may already have cut everything you could. If so, it may be time to consider ways to increase your income.

To start with, you should make sure that you are getting what you are worth. This may mean asking for a raise or finding a new job. If you are already making a decent income for your role, you can also consider taking on a side job to fund your bank account.

Whatever you do, you know that you are definitely not alone. Dozens of millions of your U.S. work colleagues are stuck in the same cycle that you may face. This indicates a systemic problem, not a personal one. If we come together and fight for better wages for all, every American could see a better future.

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