Monday, October 8, 2007

Living Wages

In an encounter with one of the office malcontents today, I wound up in a discussion that made me think about what I consider to be a reasonable life in this day and age, and what it costs to fund that life. Personally, I'm doing ok, but not so great that I can let loose on the budget with impunity on a saturday afternoon at the mall. I get by just fine, but by my way of thinking, I should be able to support more than just me on this salary. And while I'm sure I could swing it, it would involve a lot more compromise and nitpicking on my spending.

Sort of on the fly here, based on a whole afternoon of pondering this, I've made a list of what I think a decent living wage salary should buy. It's a bit above where I and most of my friends' experience, I think. Some of my friends are close to this, but most do it with two salaries. It's what I would expect a family of 4 to have, buy, and do when the parent(s) is/are in their 30s and 40s and at least one has a college degree.

  • Own a home in at least the 2nd quartile of the local market. (This means it's not a motor home and probably a townhome instead of a condo, if not a single family home.) This home is insured.
  • This home has a kitchen with refrigerator, freezer, sink, microwave, oven, range, dishwasher, toaster, blender, and coffee/tea maker.
  • This home also has a washer/dryer, vacuum cleaner, and small selection of power tools.
  • Finding money to pay for water, electricity, landline phone and heat is not a concern.
  • Household has 2 reliable cars, ages new through 8 years and can afford insurance on both.
  • Can afford daycare for 2 kids (although the cars might be in the 5-8 year age for this period.)
  • Able to put aside 10% pre-tax for retirement, and 5-15% post-tax for mid and long term savings like college funds, a new deck, updating furniture every 10 years, renovating outdated rooms, etc... (Although perhaps not while funding daycare for two.)
  • Has health insurance such that routine out of pocket medical expenses are unlikely to run more than $3K a year and are generally tax free due to the medical spending account.
  • Can afford 5 new outfits per person every new school year, and another 3 or so at the midwinter holiday, and a new swimsuit in the summer.
  • Eats decently from groceries without always buying expired produce, cheese ends and 40 pounds of frozen meat at a time, and can afford to eat out once a week, even if it's just pizza.
  • Can afford one big outing a month - renting a boat at the lake, heading to Disneyland, tickets to the local ball game, heading out of town for a ren-fair or to visit relatives, or inviting the extended family over for a BBQ. This might be by way of a yearly membership to a theater or science museum or zoo.
  • Can afford to take two weeks off a year to travel - to visit relatives or ski or go to the beach, or stay home and work on a hobby - but doesn't need to use all the vacation from the primary job to work at the second job.
  • Can afford time and money to have a hobby or two- reading, puttering on cars, building furniture, singing, dancing, soft/base/volley-ball, soccer, glassblowing, painting, scuba diving, scrapbooking, room-mother, coach assistant, band booster, etc...
  • Can afford a TV, a stereo, a computer and an internet connection. Has at least one cell phone, might have a family plan. Probably gets basic cable.
  • Can afford a med-lg toy every year (new TV, bicycles, X-box with games)
  • Everyone can get in enough exercise to stay healthy.
  • Everyone can get at least 7 hours of sleep every night, on average.
  • All of this can be afforded without going into debt.
I'll leave it as an exercise for the reader to add up those costs. I've purposely left it flexible in some areas - upper middle class would have a home in the 3rd quartile (above average cost), and newer cars and maybe private schools. Their new outfits would be name brand, not from necessarily from Target or sale racks. They might own a boat and a lake house rather than go in on one with a dozen relatives and friends. The weekend outings might be to Disney rather than the state park. The hobby would be one with a different investment level. The family may or may not be able to afford someone to come in and clean once in a while, although it's something I'd really, really like.

What I'm interested in is if I've forgotten something that others would consider essential for a comfortable life that won't get the kids embarrassed in school when compared to the neighbors. Everyone has different ideas of what is and isn't negotiable. Since I don't have kids, I probably missed some huge kid related expense. But I'm thinking that in order to live this "ordinary" life, I'm going to have to budget hard for a while and figure out how to make more money. Especially if I want someone else to clean the place. Let me know what you think of my list. Fantasy? Or achievable goal?


Anonymous said...

Oi! I am too scared to add this up. Having zero kids so far we've been lucky enough never to have budgeted. Mind you, we aren't washing our Wheaties down with champagne but we've never put pen to paper and said you get X for groceries, X for lunches.

It is amazing how many more *luxuries* like cell phones and cable have become *necessities* to people. Like those Oprah debt shows where people on the brink of foreclosure think they are stripped down to the basics but are still spending 100 bucks a month at Starbucks and have 2 luxury SUVs.

farmwifetwo said...

Lets see... you probably make double what we do and there's 4 of us :)

All depends on your priorities. We aren't movie or CD people. So, that's a huge expense we don't have. I have 3 or 4 pairs of shoes compared to those with 10 times that many.

Little things.. add up.

We don't have a formal budget, and I admit I'm the banker. Money's never been something we fought over and we're making not losing. Although prior to my dh's 3 per dieums and my funding... we were breaking even... barely.


CrankyOtter said...

On the phone front, I went all cell and gave up landline. It has become necessary for me to have an internet connection if I want to participate in various groups, not to mention keep my sanity and keep some things off my work computer. And that is NOT cheap. I don't do starbucks, I rarely buy movies or CDs, and yet I hemmorhage twenties every time I step out the door. I really need to find more free activities.

But is my list what y'all would consider "what a middle class income buys fa family"? Or is it overshooting or understating the mark?

farmwifetwo said...

We can do most of what you've mentioned but what you didn't mention was incidentals.

You go out for lunch most days. I would bring mine.

You go out most weekends to a fair, travel to N. Cal etc. I'm lucky to afford that quarterly. OK, the travel part is about every 18mths. We dropped $100 at the fair on Sunday. We cannot do that regularly.

You think nothing of buying a pair of shoes on sale. A book. A neat pair of earrings. A CD. Your Firefly dvd's. A pretty top.

Going for a drive "just b/c".

I don't. All those "incidentals" cost a lot of $$$$ and add up quickly. I had a large shopping day today - b-days and I and the boys needed new shoes. I even bought a purse which I've put off forever. But it was planned.

I don't go to town daily. I try not to go more than once or twice/week tops. So that on the weekend I can take the boys.... somewhere.

I have a garden. I haven't bought potatoes and onions since the first of August.

That trip to the fair cost us $100. We can't do that weekly.

But we do pizza or the local family restaurant about every 2 weeks or so.

We don't have the movie channel b/c we don't watch movies. We're not CD or games people so we just have a few for the boys.

I use the library for about 95% of my kid movie rentals and my book habit.

But the cupboard has a decent selection of booze, we had shrimp and scallops for supper on Sun and turkey on Mon.

We're not "things" people. It's the "things" that cost the $$$$.

And we do save monthly.


Up My Mind said...
This comment has been removed by the author.
Up My Mind said...

For the "average" middle class American family, your list would probably be what they would want a living wage to cover.

I don't think that's possible on one income. It certainly isn't here, and listening to my sister talk, it isn't in the Bay Area.

For me, a "living" wage is all about being able to furnish the basic necessities without struggling. My list is:

- pay the mortgage
- pay heat/energy bill (especially in winter)
- have a running/working car & gas money
- groceries (including fruits, veggies, meats)
- money to fund my hobby. Something affordable, I'm not talking flying lessons or anything like that. In a family of 4, you'd have to take turns on whose hobby got "supplied" monthly
- one monthly outing (dinner, movies, etc.)
- one big yearly outing (Disney, visiting family, etc.)
- ability to set money aside for retirement and for an emergency fund.
- Cable
- house and/or cell phone
- internet
- computer & printer (probably older model, 3-5 yrs?)
- New clothes: a couple of new outfits a year. School kids - 4 outfits a school year? A lot would come from Goodwill, etc.

Up My Mind said...

Almost forgot to put on my list...

- Daycare (for those that have kids)

janet w said...

I'm with QL: not even going to touch this with a 7-foot pole! Our biggest expense, bar none, is educationsl expenses ... all those school fees really start adding up. But it's our free choice: no complaints!

Well except maybe a few from our resident pension expert :)

Lemon Stand said...

I think that your list is pretty consistent with an upper class income. With 4 kids, one adult working (and at a military job at that), we never come close to most of those things.

We don't have cable but use that money at the book store since our kids are all voracious readers. (between 3 and 4 books every week)

Two vehicles, one paid for.

Mortgage and insurance... check

Don't need the babysitting any more (thank you God!)

I continually make clothes for the kids and the older ones now make a lot of their own clothes. We also shop at Goodwill and Salvation Army.

We eat out about twice a month. We do not take trips to Disney World and such but we do travel quite a bit to see family and friends.

The kids get music and swim lessons if they want. We pay the fees for any school sports they want to participate in.

Our food and incidental budget is pretty tight. Our kids and the husband mostly take their own meals to school and work.

We all get new sneakers and boots when we need them.

With the exception of not paying for Drivers Education, Driving Test, Teen Car Insurance, our kids still do pretty well, I think. The older three have cell phones and share a plan. They are very responsible with it. They all have basic laptops for school work. They are nothing fancy but we figured it was an investment in their education and future.

I guess you could say that we are at the very bottom of the middle class scale.

I don't know if this helps or is what you had in mind.

VERY good post, BTW! So glad I didn't miss it.

CrankyOtter said...

Thanks for playing, everyone! I had a lot of fun with this post, it turns out.

I also had another friend write in offline that she figured this described "upper middle class" rather than "middle class" and that might be more correct, although I did try to make it flexible. She pointed out that a different housing choice might be a lowest quartile single family home in the best school district rather than a 2nd or 3rd quartile house in any old place.

Part of the reason for this, as I said, was listening to the frustration of a colleage wondering why the life of an engineer wasn't a little easier. But I also wonder about how to define success. Some days it's making it out of bed and staying out of it for at least 4 hours. Some days it's running a 5K. Most days it's making sure the bills are paid and no one is bleeding copiously. Other days, it's winning that big contract or pulling off something cool.

And big days every so often are nice, but they're an exhausting way to live every day. So on the normal days, how does one measure success? When does one have "enough"? And so I made this list. I figure that someone who is very desperately struggling might not get weekends off very often, so that is something I would strive for in assessing whether or not my job paid enough to live "comfortably". Not living high on the hog necessarily, but living well enough that one could afford to spend regular leisure time with family and friends without financial catastrophe looming, or living off the grid with no backup (like insurance).

I think the monthly trip I talk about could be equally spent having a BBQ at the local state park with a swimming beach ($6/car plus food you would have bought anyway) or at Disneyland ($55/day plus $15 in food per person and $11 for parking per car), although what is one family's weekend getaway would be another family's annual vacation. No judgement as to which one is better is expressed or implied.

Growing up, we went to grandma's house, out of state, for at least 2 weeks every year. We drove 12 hours down, the 'rents dropped us off, then they drove 12 hours home. And turned around and did it again 2 weeks later, but by god, they had 2 kid free weeks. Outside of that, we managed to take 4 big family vacations. But I grew up around kids whose parents worked for the airlines and always had to get their homework early at winter break so they could go skiing in Colorado for 2 weeks or sunning in Hawaii for 2 weeks, so I knew that other families vacationed more often.