GRAND RAPIDS, Mich. (WOOD) — The start of the new year marks more dollars in the paychecks of Michigan minimum wage workers. But what does that mean for workers’ budgets over the course of the year?
On Jan, 1, the minimum wage increased by 40 cents from $8.50 to $8.90.
Paul Isely, associate dean for undergraduate studies at Grand Valley State University’s Seidman College of Business, said the increase will put more dollars in pockets — but with inflation and increased taxes, it doesn’t amount to much.
He broke down the numbers, explaining that most people who earn minimum wage aren’t working full time. Estimating they were working 20 hours per week, he said they would earn $8 more per week and about $400 more per year under the wage increase.
“Half of it’s going to get eaten up by inflation and another 10 percent is going to get eaten up by the new gas tax,” Isely said.
Inflation is estimated at between 2 and 3 percent. The increased gas tax is 7 cents more per gallon — roughly $36 more in costs per year. Considering those factors, Isely said workers would wind up with only about $150 in additional spending money.
That’s not much. But Isely said the increase matters.
“Remember the alternative would be that the minimum wage is staying the same,” he said.
He said that would cost workers hundreds of dollars because they wouldn’t be keeping up with inflation.
But for those making at or near the minimum wage, like Karolina Carrillo, 40 cents is not enough. She makes a little more than $9 per hour — just above minimum wage — working at the counter and as a delivery driver for Maxi Automotive in Grand Rapids.
“I think it should be increased at least a dollar,” she said of the minimum wage. “At least something to show a little bit more in the check, because you’re not really going to see anything with 40 cents.”
But in four years, she’s only gotten a 50 cent raise. Luckily, her fiancé is a mechanic and brings in money to help support her and her two kids.
“We don’t complain, though. We just want to work and go home and whatever. We deal with what we got,” Carrillo said.
Isely said there aren’t many jobs that pay minimum wage anymore — most of them of are in food services or retail — and that the wage is not meant to be sustainable.
“Minimum wage as it is envisioned in the United States isn’t designed as a livable wage. That’s a different concept. Somebody who is earning minimum wage and that’s their only source of income is going to need some other support to continue to operate within society,” he said.