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Independent of who you ask, everything seems to be getting more expensive. Very dependent on who you ask, the reasons for the increase in expenses are varied: global supply chain disruptions; the war in Ukraine; government spending; and/or corporate profiteering, are common reasons. Regardless of the root cause (or the likely combination of multiple causes) of the inflation we’re currently experiencing, the Bureau of Labor Statistics’ Consumer Price Index indicates within the last year, prices have risen 7.7% on common consumer goods,[1] with some necessities increasing even more dramatically, a change observed in the recently updated Cuyahoga County fact sheet.
And to further exacerbate the situation, housing and rental costs continue to be at an all-time high.[2] In Greater Cleveland, rents have increased 16.2% from August 2021 to August 2022.[3] The increase in expenses without a matching increase in wages comes at a time when middle- and lower-income families are struggling financially with the effects of the pandemic.[4] a struggle acutely experienced by Black, Hispanic/Latinx and other communities of color.[5]
The Living Wage Calculator
The Department of Urban Studies and Planning at Massachusetts Institute of Technology (MIT) has developed The Living Wage Calculator. This tool, first developed in 2004 and updated annually, can be used to explore the wages that various family structures would need to earn in order to afford basic needs in any county in the United States. Drawing upon local expenditure data, the tool determines the lowest wage needed to cover necessities such as childcare, health insurance, housing, food, transportation, and other basic needs without accessing any public assistance.[6] The authors of the tool posit that these living wages are best defined as “subsistence wages,” as they are predicted to be too low to do things like contribute to savings, eat out at a restaurant, or pay for school.
Using this tool, we were able to explore the change in the living wage across Ohio’s 88 counties from 2018 to 2021 for both a single adult, as well as for a single adult raising two children.
Put simply, the changes are staggering.[7]
Living wage change from 2018 to 2022 for single adults
In 2018, the living wage for a single adult (converted to annual salary) across Ohio’s 88 counties ranged from $20,363 to $23,004. The minimum wage in Ohio was $8.30 in 2018, resulting in an annual wage of $17,264, or a deficit of approximately $3,099 to $5,740 in living wage.
In 2022 however, the living wage for a single adult was calculated to range between $30,742 to $34,923 annually. Minimum wage currently sits at $9.30, meaning an annual wage of $19,344. Therefore, a person earning minimum wage in Ohio in 2022 is earning anywhere from $11,398 to $15,579 less than the determined living wage.
This change in the living wage from 2018 to 2022 for a single adult has been dramatic, and while all counties experienced increases ranging from $8,777 to $12,729; mapping the data reveals pockets of the state that experienced more dramatic increases.
The largest increases in living wage were relatively concentrated in the center of the state.
The largest increases in living wage were relatively concentrated in the center of the state, and included counties such as Franklin, Delaware, Licking, Marion, and Madison, to name a few. Outside of the central Ohio cluster, Huron in the north and Athens in the southeast also experienced large increases in living wage. To a lightly lesser extent, concentrations of large increases were also observed in the northwest and southwest corners of the state.
Living wage change from 2018 to 2022 for a single adults with two children
Despite how troubling that information is for a single adult in Ohio, the story is even more difficult for a single adult raising two children. In 2018, the living wage (converted to annual salary) for a single adult with two children ranged between $52,915 to $55,723. With a minimum wage salary of $17,264 in 2018, the deficit between a livable wage and the minimum wage ranged from $35,615 to $38,459. A sizeable deficit to be sure.
But again, this deficit has only gotten worse as the livable wage numbers increased significantly in 2022, recalculated by MIT as ranging from $74,380 to $90,355 for an Ohioan raising two kids. The current minimum wage annual salary of $19,344 is but a fraction, roughly a quarter, of MIT’s calculated living wage.
Mapping this change in living wage again reveals trends in what regions of Ohio experienced the greatest increases.
Unlike the changes for single adults, the greatest increases in living wages for single adults with two children seemed to be primarily centered around urban centers including Cleveland, Akron, Columbus, Cincinnati, Toledo, and Youngstown as well as their adjacent counties.
The greatest increases in living wages for single adults with two children seemed to be primarily centered around urban centers.
Further analysis would be necessary to determine whether incomes have also increased in these urban centers that show the greatest calculated living wage increases. However, for individuals and families earning minimum wage in these counties, overall increases in median salary isn’t meaningful.
Addressing Inflation
Despite inflation concerns being top of mind for 87% of the American population,[8] and over a third of Americans indicating their finances have gotten worse in 2022,[9] one line of reasoning for why prices continue to climb is simple; many of us continue to pay. This is why the Federal Reserve has continued to raise the interest rate over the last year; up three percentage points in 2022.[10] Higher interest rates theoretically temper the demand for goods as credit card balances and borrowing money becomes more expensive, which is supposed to slow inflation as people and businesses spend less.[11] Less demand for goods/services equals less market ability to raise the prices of those goods/services. But it can also mean less demand for the workers who create those goods.
The tools that the Federal Reserve are employing to control inflation will also potentially hurt most the lower- and middle-income families already most affected by inflation.
However, the tools that the Federal Reserve are employing to control inflation will also potentially hurt most the lower- and middle-income families already most affected by inflation. In the words of the Federal Reserve chair Jerome Powell, “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”[12] And if all goes according to plan, that “pain” will most likely be felt by lower and middle income families losing their jobs and struggling to carry credit; in the words of Federal Reserve Board member Chris Waller, “There is a small section of the society that may bear the brunt of that by losing their jobs. There is no magic formula in a textbook that tells you how to do it. You kind of have to take your chances and see where it goes.”[13]
Now What?
I am particularly invested in the aforementioned “small section of society,” and the “pain” they will experience. For these Ohioans, many of whom are older, on fixed incomes, unable to work (or working multiple jobs), raising children, or taking care of older relatives, this drastic increase in the living wage represents an untenable prospect. The pressures the Federal Reserve may put on the economy to address inflation may only continue to exacerbate their situation. These lower income households in Ohio are more likely to be Black, Hispanic or Latinx of any race, living with a disability, and/or without a high school education.
In Cuyahoga County, roughly one third of residents are living in or near poverty (under 200 percent of the federal poverty limit), and in Cleveland, this number is just over 50 percent.[14] To be at or under 200 percent of the poverty level means to earn less than $27,180 annually, and with a living wage in Cuyahoga county of $32,531, this means that all of these people are living below the living wage. Therefore, in these times of economic hardships, programs that assist lower- and middle-income Ohioans are critical.
In these times of economic hardships, programs that assist lower- and middle-income Ohioans are critical.
The state of Ohio’s budgeting process for 2024-2025 is approaching, and initiatives such as Governor DeWine’s Bold Beginning Initiative, are strong examples of how to ease the burdens on families in Ohio by increasing Medicaid eligibility for expectant families, eliminating state and local taxes on baby supplies, and expanding a pilot program to ease the burden of enrolling into the Women, Infants and Children (WIC) program, as well as the Supplemental Nutrition Assistance Program (SNAP). Community Solutions continues to take an anti-poverty policy approach to the budgeting process in Ohio, as well as advocating for changes to SNAP, WIC1, WIC2, WIC3 and Temporary Assistance for Needy Families (TANF), as well as discussing the Earned Income Tax Credit, to make these programs better, more accessible, and further assist Ohioans who are earning less than a living wage.
[1] https://www.apa.org/news/press/releases/2022/03/inflation-war-stress
[2] https://maristpoll.marist.edu/polls/personal-family-finances-sep-2022/
[3] https://www.cbsnews.com/news/interest-rate-hike-federal-reserve-your-money-november-2022/
[4] https://www.nbcnews.com/business/economy/how-raising-interest-rates-helps-fight-inflation-high-prices-recession-rcna33754
[5] https://www.nytimes.com/2022/09/21/business/interest-rates-inflation.html
[7] An archiving tool was used to retrieve 2018 living wage data. MIT doesn’t provide historical living wage data. Their explanation for not doing so is it is challenging to analyze the living wage across time as key variables can change year to year, the same reason why they don’t offer projections for future living wages. Therefore, it is best to understand this analysis as the living wage numbers from 2018 were the best predictions of living wage MIT had at the time, as are the current 2022 predictions, despite potentially being calculated with different indicators.
[8] https://www.apa.org/news/press/releases/2022/03/inflation-war-stress
[9] https://maristpoll.marist.edu/polls/personal-family-finances-sep-2022/
[10] https://www.cbsnews.com/news/interest-rate-hike-federal-reserve-your-money-november-2022/
[11] https://www.nbcnews.com/business/economy/how-raising-interest-rates-helps-fight-inflation-high-prices-recession-rcna33754
[12] https://www.nytimes.com/2022/09/21/business/interest-rates-inflation.html
[14] American Communities Survey 2020 Five year estimates
