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Minimum-Wage Workers Collect $31.50 per Hour

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Thu, 2010-02-04 14:53 — The Conductor
Topic: 
Economics
Places: 
U.S.A.

The State of New York is considering relaxing requirements and increasing benefits available to welfare recipients. But maybe the poor in New York are already overpaid:

When tax credits and medical and housing benefits are included, an average single mother of two with an $8.25-an-hour job in New York City receives a $63,000 annual income. On welfare alone, that same mother would pull in $43,000 a year—a whopping amount for non-work, to be sure, but still less than work provides.

Assume a 2000-hour work year. Then, a little math reveals (43,000 ÷ 2000) that NYC welfare pays $21.50 per hour. That’s just the handout, not compensation for adding any value to anything in the form of meaningful work.

The minimum wage job would pay $16,500 per year. Adding that to the benefit figure results in an annual income of $59,500. My calculations may be off because of different assumptions about the work year (there are really 2,080 hours in 52 forty-hour work weeks), and there may be earned-income credits or other incentives.

But my figures are sufficiently close to dispel any notion that, under the current regime, minimum wage workers live in poverty. Unless poverty is full-time work at $31.50 per hour ($63K ÷ 2000 hours).