The real costs of minimum wage

Here in personal finance blogland, we tend to be consumed with optimizing investment strategies, big goals -- "save a million dollars"; "retire early"; or even simply "buy a house" -- and batches of financial exotica. Want to know about CD APYs? There's a whole blog devoted to it.

This is a good thing. Fiscal responsibility is good; fiscal education and control are very, very good. Money should be demystified so that people have the tools and information they need to decide how best to spend their paychecks.

But first, they need to have paychecks with enough money in them to actually spend.

Congress is in the midst of a much-publicized push to increase the minimum wage to $7.25 an hour. A number of publications are looking at how this will affect people earning the minimum. One of the best I've seen is the Washington Post's "Life at $7.25 an Hour," which deftly examines the local economy in Atchison, Kansas, through the eyes of the town's residents. At $7.25 an hour, you're not thinking about 401ks, CDs, real estate investment or money-market savings accounts. You're thinking about how to feed three people for two weeks on $70.

In New York, the minimum wage isn't anything close to a living wage. New York magazine's annual money issue (typical story tagline: "Sometimes being a billionaire can just be so complicated.") included a great piece this year on a security guard making $10 an hour. He does all the things you're "supposed" to do -- works hard, is reliable, supports his kids -- but none of that changes the cold fact that to live in New York with a biweekly paycheck of $676, you're going to make a lot of miserable compromises.

A few years ago I read Barbara Ehrenreich's Nickel and Dimed, and wrote up some thoughts in my booklog. The biggest thing that struck me is that what low-wage workers sacrifice aren't "luxuries," but basics, like health and privacy.

I don't have answers for any of this. Income disparity, and setting an income floor, is among the most daunting public policy issues out there.

But I try to always remember how incredibly lucky I am to have a salary that affords me the choices I have. I don't think I could manage with any kind of grace the life an overwhelming number of low-earning Americans have too few opportunities to escape.