Just How Much Is a ‘Livable Wage’ for Indiana?
With the rising cost of goods and services including groceries, rent, and utilities, there has been a lot of talk about "living wages," but how much exactly is a livable wage here in Indiana?
We Can All Agree That Minimum Wage Is Not Enough
The federal minimum wage in the United States has been frozen at $7.25 per hour since we saw the last increase in 2009, when it rose from $6.55 the previous year. In 2007 Americans saw the federal minimum wage jump for the first time since 1997 from $5.15 to $5.85 an hour, according to the Department of Labor.
Indiana Does Not Have Its Own Minimum Wage
While some states have a higher minimum wage for its residents, and some like Illinois will be seeing an increase in 2025, on a national level, we have not seen an increase in the federal minimum wage in almost 15 years. Indiana does not have its own minimum wage but rather adheres to the federal minimum wage of $7.25 per hour. The minimum wage is literally one penny above what the Massachusetts Institute of Technology (MIT) calls a poverty wage - $7.24.
Minimum Wage and Inflation
When we look at the Consumer Price Index (CPI) Inflation Calculator made available through the U.S. Bureau of Labor and Statistics, it is easy to see why the federal minimum wage is not enough. Thanks to inflation, Americans would now need to earn $10.38 per hour just to have the same buying power that we had at the time of the last increase in 2009.
What IS a Livable Wage in Indiana?
While diving into what is considered a livable wage in the Hoosier State, we discovered conflicting information between sources. In August of 2023, CNBC said that $49,855 (roughly $24/hour) was the livable wage for a single person living in Indiana. For their study, they used what's called the "50/30/20 budget." Essentially, an individual would use 50% of their income for needs, 30% for wants, and 20% for savings.
<p>Although the study uses the 50/30/20 budget as a guideline for determining living wage, it isn’t always a realistic measure of what people can afford, primarily because of ever-rising housing costs.</p><p>That usually means some sort of compromise is needed to make ends meet, whether that’s cutting back on retirement contributions or eliminating other costs, like owning a car. In the case of large, expensive cities, getting a roommate is sometimes the only way a single person can cover their expenses. CNBC</p>
What Others Consider a Livable Wage in Indiana
Revisiting the data from MIT that we mentioned earlier, they say that $20.44 per hour is a livable wage for a single person with no children. This equates to a salary of $42,515 per year. Meanwhile, Zip Recruiter says that number is higher at $26 per hour, or $53,817 annually and Go Banking Rates says $67,728 is what it would take annually ($32.56 per hour) for a livable wage in Indiana.
There is quite a difference between a minimum wage and a livable wage in Indiana. It's no wonder so many Hoosiers are struggling with the continuing rise of inflation.
Source: [Amy K. Glasmeier, “Living Wage Calculator,” Massachusetts Institute of Technology, 2024. Accessed on February 19, 2024 from https://livingwage.mit.edu/states/18.; CNBC; ZipRecruiter; GoBankingRates]
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Gallery Credit: Bethany Adams