Wage & Salary Discrepancies

We often read of the inadequacies of the minimum wage. We hear stories how a family ekes out a living with both parents working more than one job at minimum wage. For example, Dad has two jobs at $7.50 an hour for a total of $30,000 gross income for a year. Mom works one full time job at $7.50 and earns $15,000 for the year. That is a total of $45,000 for the year. Is that enough to support a family?

No, not with kids added to the picture. A family of four needs roughly $50,000 annually to survive – rent or mortgage, utilities, food, some medical care, transportation and clothing. A lot of skimping is needed to run a balanced budget household with those parameters.

So why do we have some people at minimum wage and others earning $50/hour? Many earn well above the $50/hour. In fact, many two-earner homes with good jobs earn upwards of $100/hour. That’s $400,000 per year. Now that income is manageable: mortgage, two cars, property taxes, utilities, home maintenance and repairs, medical care, food, entertainment, travel, transportation and an ample list of other options. Don’t forget daycare ($25 to 30k annually), retirement investments ($20 to 35k annually), savings and income taxes. $400k doesn’t go as far today as it once did!

One obvious point to make is low-income earners do low level jobs that require little personal investment (education, tools of the trade, unique experience, technology skills). Not to demean those jobs, but higher paying jobs are worth more to employers because those employees actually make money for the employer far more than their salaries and benefits. That’s why bonuses are factored into such earners.

People who work hard but don’t advance their own skill levels will continue to earn lower wages. People who do not keep up with the financial health of their employer may find themselves out of a job when the business closes shop. People who work hard but are not aware of large changes going on in their industry are likely to become marooned in a dead-end job earning low wages.

Higher pay is available for most people. However, it requires employees to watch out for themselves and prepare for a changing future. Wise employers would also make this known to their employees and support training and development in-house. Some do; most do not.

A dynamic economy reinvents itself continually. This requires massive changes for labor pools. It behooves them to understand these changes and the future demand for enhanced work skills. Anticipating and planning for these in personal life will pay well for those who do. Part-time, menial jobs will always be at the lowest pay schedules. Competition for those jobs by workers is high, thus low wages. Make yourself unique and skilled, then watch wage and salary opportunities soar.

September 8, 2022

 

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