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Everybody is giving you theoretical answers, but I am literal minded. According to some website, Miami, FL is the most expensive real estate market in the coun

Everybody is giving you theoretical answers, but I am literal minded. According to some website, Miami, FL is the most expensive real estate market in the country, and Florida has a fairly low minimum wage currently. So, I'll work with that. I assume that a 1 hour drive without traffic puts you at most around 55 miles (freeways are faster, city streets are slower, but this is an estimate). That could put you in places like Belle Glade, Florida, where the 1 bedroom apartment listings are between $400 and $650 per month. But, it could also put you in the much nicer West Palm Beach, Florida, where (according to Zillow Fair Market Rent for ZIP Code 33401) the average rental for a 1 bedroom apartment is $1274 per month. Divided between two people, that's $637 per month. If we go with the rule that 1/3 of your wages should go to housing, that means you'd need to make $1911 per month to afford that apartment. If you worked 40 hours a week, and there are (on average) 4.3 weeks per month, that means you'd need to make $11.11 per hour to afford that apartment. According to this other random website, the average hourly wage in Miami is $21 per hour. The minimum wage in Florida is currently $8.65 per hour. In summary, if they took the least generous interpretation of your rule set (the Belle Glade case) they could safely lower the minimum wage. If they took the most generous (the West Palm Beach case) they would need to raise it by about $2.50 per hour. The average wage across the U.S. is about $27, and 2/3rds of people make "at least" above $15/hour, so it may not affect most people at all, ceteris paribus, and making the assumption that the example region is a useful example. This is all very hand-wavey and back of the envelop, of course.

dxbydt 5y ago
Hey stranger, thanks for doing the math! This is very helpful. I didn't know where to begin, but you've done all the work for me. Thank you again.
metaphor 5y ago
> Divided between two people, that's $637 per month. If we go with the rule that 1/3 of your wages should go to housing, that means you'd need to make $1911 per month to afford that apartment. If you worked 40 hours a week, and there are (on average) 4.3 weeks per month, that means you'd need to make $11.11 per hour to afford that apartment. Apologies for the approximation nit and acknowledged that it was all back of the envelope, but $11.11/hr struck me as low at face value. Upping the ante a bit, let's further assume single standard deduction earner with a $1911 net monthly income requirement (because you can't actually pay with money you don't have), which roughly implies 12% marginal tax bracket. Let's also account for fixed 6.2% social security withholding, and fixed 1.45% medicare withholding. Squaring against this standard 2022 IRS Publication 15-T withholding method[1], we come to the following arithmetic expression to determine gross monthly income requirement: (grossMonthly - fixed10pc - marginal12pc - ssWithholding - mcWithholding = netMonthly) x - 85.60 - 0.12(x - 1935) - 0.062x - 0.0145x = 1911 Crunching the numbers (~$2196 gross monthly income) while using your proposed 4.3 weeks per month scalar, it's more like $12.77/hr (or $11.11 being -13.0% in relative error). To be sure, this assumes complete omission of common tax-advantaged benefits such as deferred 401(k) retirement savings and medical/dental insurance coverage. > The minimum wage in Florida is currently $8.65 per hour. Florida's prevailing minimum wage is in fact $10/hr[2], with scheduled increases at $1 every year towards a $15/hr target by 2026[3]. [1] https://www.irs.gov/pub/irs-pdf/p15t.pdf https://www.irs.gov/pub/irs-pdf/p15t.pdf ref PDF p. 59 [2] https://www.dol.gov/agencies/whd/minimum-wage/state#fl https://www.dol.gov/agencies/whd/minimum-wage/state#fl [3] https://floridajobs.org/docs/default-source/business-growth-and-partnerships/for-employers/posters-and-required-notices/2021-minimum-wage/september-2021/florida-minimum-wage-september-2021-announcement.pdf https://floridajobs.org/docs/default-source/business-growth-... EDIT: Whoops, accidentally used table values for two-or-more jobs scaling; corrected.

dxbydt 5y ago

Hey stranger, thanks for doing the math! This is very helpful. I didn't know where to begin, but you've done all the work for me. Thank you again.

metaphor 5y ago

> Divided between two people, that's $637 per month. If we go with the rule that 1/3 of your wages should go to housing, that means you'd need to make $1911 per month to afford that apartment. If you worked 40 hours a week, and there are (on average) 4.3 weeks per month, that means you'd need to make $11.11 per hour to afford that apartment. Apologies for the approximation nit and acknowledged that it was all back of the envelope, but $11.11/hr struck me as low at face value. Upping the ante a bit, let's further assume single standard deduction earner with a $1911 net monthly income requirement (because you can't actually pay with money you don't have), which roughly implies 12% marginal tax bracket. Let's also account for fixed 6.2% social security withholding, and fixed 1.45% medicare withholding. Squaring against this standard 2022 IRS Publication 15-T withholding method[1], we come to the following arithmetic expression to determine gross monthly income requirement: (grossMonthly - fixed10pc - marginal12pc - ssWithholding - mcWithholding = netMonthly) x - 85.60 - 0.12(x - 1935) - 0.062x - 0.0145x = 1911 Crunching the numbers (~$2196 gross monthly income) while using your proposed 4.3 weeks per month scalar, it's more like $12.77/hr (or $11.11 being -13.0% in relative error). To be sure, this assumes complete omission of common tax-advantaged benefits such as deferred 401(k) retirement savings and medical/dental insurance coverage. > The minimum wage in Florida is currently $8.65 per hour. Florida's prevailing minimum wage is in fact $10/hr[2], with scheduled increases at $1 every year towards a $15/hr target by 2026[3]. [1] https://www.irs.gov/pub/irs-pdf/p15t.pdf https://www.irs.gov/pub/irs-pdf/p15t.pdf ref PDF p. 59 [2] https://www.dol.gov/agencies/whd/minimum-wage/state#fl https://www.dol.gov/agencies/whd/minimum-wage/state#fl [3] https://floridajobs.org/docs/default-source/business-growth-and-partnerships/for-employers/posters-and-required-notices/2021-minimum-wage/september-2021/florida-minimum-wage-september-2021-announcement.pdf https://floridajobs.org/docs/default-source/business-growth-... EDIT: Whoops, accidentally used table values for two-or-more jobs scaling; corrected.