Fake Jobs and Real Jobs*
I earn $9 an hour. I was recently asked by an acquaintance in the UK, "Is that a lot?" This got me thinking.
Yes and no. For peon-style jobs, job-application jobs, jobs in the service industry, on-your-feet-all-day jobs, HS and college jobs, art major jobs, marginally employed jobs, etc -- yes, it is better than most salaries, which seem to hover around $6.50 an hour. Most in my position, in my social location, so to speak, would be very happy to get $9 an hour. Bear with me for a brief aside:
The standard formula for approximate conversion of full-time hourly pay to annual salary: double an hourly rate of pay, and that's how many thousands of dollars an employee earns a year, assuming full-time employment. This formula is almost right on the money, but is in fact a bit of an underestimate -- the approximate figure will be 96% of the actual figure. For instance, $9 an hour working 40 hours a week for 52 weeks a year comes to $18,720 a year. The formula yields $18,000. So, it's really not much of an underestimate.
Most people I know would not be able to live on $18,000 a year (before taxes): groceries, car expenses, utilities, clothing, rent (obviously there isn't any home ownership at $18,000 a year), holidays and birthdays, entertainment (including travel), student loan payments, medical co-payments (full-time employers are obligated to provide health insurance). Maybe this person dreams of budgeting more money into classes so they can perhaps better their salary a bit. I'm assuming that savings and investment are fantasies similar to home ownership, as is other insurance (property, life, etc). Let's not even consider charities. These expenses eat away $18,000 a year rapidly, and will most likely incur some credit card debt as well (add credit card payments to the list of expenses).
I'm not even considering the fact that most employers will keep employee hours hovering just under 40 hours a week to avoid paying health benefits. Without benefits, an employee needs to buy his or her own insurance at $150 a month or so, which is even more costly when co-payments and deductibles are factored in. Or, they don't buy insurance, and are saddled with medical bills.
It seems as though there are two classes here: those who would be happy to be earning $9 an hour, and those who would be outraged at earning $18,000 a year.
I think the people who earn $9 an hour and have to make it on their own might also have second jobs. Or, they might rent a room instead of an apartment (and share that room with three other people). Or, they might not own a car. Or, they might not see the doctor too often. Or, they might default on student loans. Or, they might eat a lot of ramen noodles. It's pretty much a given that they're not taking trips to Hawaii, saving $5 every week until they amass $3,000 after 12 years.
To service industry peons, $9 an hour might still not be very much. But it's more than what the vast majority of service industry jobs pay, and a service industry job is all someone who doesn't have a good work history or good set of experiences can get. Comparatively, $9 an hour is a lot, and I think even those who are forced to live on this meager salary consider it to be "a lot." "Wow! I scored a $9-an-hour job! Cheeseburgers once a week for me!"
The price of a burger at McDonalds doesn't slide up and down, depending on whether one makes a lot or a little. $800 in rent every month is still $800, regardless of whether one makes $1,500 in a month or $15,000. A meal at a restaurant is always going to cost the same, whether it's 50% of the week's earnings or 5%. The expenses of society aren't on a sliding scale. If they were, then being rich wouldn't have a lot of meaning. This is why everyone wants to be rich: it's that much easier to live when buying a car is like blowing some change at a vending machine. I guess this is truism, but I still find it striking.
To illustrate this further, here's a by-category guide on what percentage of income to spend, which I found on some website somewhere; it sounds reasonable to me.
Consider a corporate executive earning $1M dollars a year. According to this chart, he'd spend 15% of that on food, or $150,000 a year. That comes to a weekly food budget of about $2,885. He'd have to eat out, every meal of every day, spending an average of $137 per meal. Perhaps possible, but not very likely. More likely is that his food bill is closer to $200 or so a week. Let's be generous here -- after all, he's rich, and probably buys a lot of smoked salmon. That's almost exactly 1% of his income on food -- a far cry from 15%.
Similarly, consider a fast food fry cook earning $6 an hour, working full time. According to this chart, he spends 30% of his income on housing and utilities. This amounts to $312 a month for rent PLUS water, electricity, and possibly gas. I would say that's about $250 a month in rent, if he's lucky. Maybe somewhere this is possible, renting a trailer in Missouri with a roommate, etc.
What's a lot more likely is that the fry cook is going to spend a lot more than 30% of his income on rent, and consequently eat fewer healthy, expensive foods like meat and produce while opting for less expensive, less healthy foods like Little Debbies and mini-ravioli, save nothing whatsoever, buy no new clothes when old ones wear out, not have a car, never go to a movie, etc. Misery and deprivation, albeit on an American scale (he's probably not going to starve or die of hypothermia).
You just can't compare a rich person and a poor person -- it isn't simply a matter of working out percentages of income and learning to live on them, because products have a fixed cost.