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Money How Liveable is the Minimum Wage?
The minimum wage is a law that tells employers the legal minimum they can pay their employees. But what kind of lifestyle can the minimum wage achieve in 2024 and how does this compare to previous generations? That’s what this analysis wanted to find out.
Historical data for the average minimum wage was reviewed against what kind of lifestyle this could afford you. This included things like paying rent or owning your own home, as well as everyday spending like your grocery shop and utilities. Here’s what the data showed.
Key findings
- The federal minimum wage has increased by 116% since 1984 from $3.35 per hour to $7.25 per hour in 2024.
- Full-time earnings on the federal minimum wage have not been enough to cover average household expenses at any time in the last 40 years.
- In 2024, an average house in the U.S. costs 23.4x annual full-time minimum wage earnings, compared to 13.8x in 1984.
- For those with a mortgage, the monthly payment for a low-priced home is 133.1% of minimum wage earnings.
- Average rent prices ($1,148) are 90% of the monthly income for someone living on minimum wage ($1,276), while in 1984, average monthly rent costs were 41% of monthly earnings on the minimum wage.
- Even the rent for low-priced apartments is 80% of a single person’s monthly minimum wage earnings.
- Utilities account for 32.8% of minimum wage earnings in 2024, compared to 23.2% in 1984.
- Monthly food costs are 67.4% of minimum wage earnings, a significant increase compared to 46.5% 40 years ago.
How the minimum wage has changed over time
In 2024, the federal minimum wage in the U.S. is $7.25 per hour, and this has not changed since 2009. This analysis compares the change in the minimum wage and common living expenses since 1984, the earliest year that comparable data was available. Since 1984 when the minimum wage was $3.35, the U.S. Government has increased the federal minimum wage seven times, with a percentage increase of 116% during this period.
However, the wage increase lags behind inflation with $3.35 in 1984 being worth $10.14 in 2024 dollars (that’s a 202% increase). [1] Bureau of Labor Statistics, CPI Inflation Calculator https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3.35&year1=198401&year2=202401
The average house price has also increased by 268% since 1984, demonstrating another of the economic pressures that are making the cost of living such a challenge. [2] St Louis Fed, “Average Sales Prices for Houses Sold for the United States” https://fred.stlouisfed.org/series/ASPUS
The table below shows how stark the difference is between the change in the minimum wage and the change in average expenses between 1984 and 2024. Average monthly rent prices have increased by 374% during this time period, while monthly utilities have increased by 205%.
| 1984 | 2024 | % change | |
|---|---|---|---|
| Minimum wage | $3.35 | $7.25 | 116% |
| Average monthly rent | $242 | $1,148 | 374% |
| Average house price | $97,550 | $358,849 | 268% |
| Average monthly utilities | $137 | $418 | 205% |
| Average monthly food cost | $274 | $860 | 214% |
| Healthcare | $87 | $539 | 519% |
| Year | Federal Minimum Wage ($) |
|---|---|
| 1984 | $3.35 |
| 1985 | $3.35 |
| 1986 | $3.35 |
| 1987 | $3.35 |
| 1988 | $3.35 |
| 1989 | $3.35 |
| 1990 | $3.80 |
| 1991 | $4.25 |
| 1992 | $4.25 |
| 1993 | $4.25 |
| 1994 | $4.25 |
| 1995 | $4.25 |
| 1996 | $4.75 |
| 1997 | $5.15 |
| 1998 | $5.15 |
| 1999 | $5.15 |
| 2000 | $5.15 |
| 2001 | $5.15 |
| 2002 | $5.15 |
| 2003 | $5.15 |
| 2004 | $5.15 |
| 2005 | $5.15 |
| 2006 | $5.15 |
| 2007 | $5.85 |
| 2008 | $6.55 |
| 2009 | $7.25 |
| 2010 | $7.25 |
| 2011 | $7.25 |
| 2012 | $7.25 |
| 2013 | $7.25 |
| 2014 | $7.25 |
| 2015 | $7.25 |
| 2016 | $7.25 |
| 2017 | $7.25 |
| 2018 | $7.25 |
| 2019 | $7.25 |
| 2020 | $7.25 |
| 2021 | $7.25 |
| 2022 | $7.25 |
| 2023 | $7.25 |
| 2024 | $7.25 |
Sources [3] Minimum-wage.org, “Federal Minimum Wage” https://www.minimum-wage.org/federal [4] Department of Labor http://dol.gov/
The minimum wage and the cost of living
Most people living on the minimum wage will be looking for affordable housing rather than average-priced homes or apartments. Let’s look at how minimum wage earnings stack up against houses and apartments in lower price brackets.
Minimum wage and low-priced homes
An analysis of homes valued in the 5th to 35th percentile range shows that in the year 2000, a home in this range would cost an average of $61,081 to purchase. This means mortgage payments would amount to 88.8% of an annual minimum wage salary after tax.
In 2024, house prices in the 5th to 35th percentile range cost $190,390 on average, meaning annual mortgage payments are 133.1% of a minimum wage worker’s yearly income. This demonstrates just how unaffordable even low-cost houses are for someone on the minimum wage, a problem that has persisted over the last two decades.
For two people living together, both on minimum wage, the mortgage on a low-priced home takes up 66.6% of household income, compared to 44.4% in 2000. A good debt-to-income ratio is below 43%, and many lenders prefer 36% or below, meaning your monthly obligations should be around one-third of your gross income. Therefore the cost of low-priced homes compared to the minimum wage today and in 2000 are both above the recommended amount. [5] Investopedia, “What is a Good Debt-To-Income (DTI) Ratio?” https://www.investopedia.com/ask/answers/081214/whats-considered-be-good-debttoincome-dti-ratio.asp
| Year | Percentage of Salary Spent on Mortgage (Low Cost) |
|---|---|
| 2000 | 88.8% |
| 2001 | 93.1% |
| 2002 | 88.9% |
| 2003 | 77.8% |
| 2004 | 97.8% |
| 2005 | 105.8% |
| 2006 | 111.9% |
| 2007 | 101.1% |
| 2008 | 88.7% |
| 2009 | 75.3% |
| 2010 | 73.3% |
| 2011 | 71.5% |
| 2012 | 71.9% |
| 2013 | 75.0% |
| 2014 | 79.5% |
| 2015 | 83.4% |
| 2016 | 87.4% |
| 2017 | 92.4% |
| 2018 | 94.2% |
| 2019 | 99.4% |
| 2020 | 103.5% |
| 2021 | 117.1% |
| 2022 | 124.0% |
| 2023 | 130.0% |
| 2024 | 133.1% |
Data note: Low-priced homes are houses priced between the 5th and 35th percentile range in Zillow’s Home Value Index. The oldest data available was from 2000.
The minimum wage and low-priced rent
This analysis also looked at rent prices in the 40th percentile to compare lower-cost rental apartments to minimum wage earnings. Adjustments are made to exclude public housing units, newly built units, and substandard units. It should be noted that many individuals earning minimum wage may reside in public housing units which were not included in this analysis.
In 1984, the average monthly cost of renting a 40th percentile 0-2 bedroom apartment was $297, amounting to 50% of monthly minimum wage earnings ($589.60). In 2024, monthly rent for an apartment in this range averages $1,026 per month compared to monthly earnings of $1,276. This means that even low-priced rents cost 80.4% of minimum wage earnings.
| Year | Monthly Pay ($) | Rent Monthly (low-priced) ($) |
|---|---|---|
| 1984 | $589.60 | $297.00 |
| 1985 | $589.60 | $303.00 |
| 1986 | $589.60 | $321.00 |
| 1987 | $589.60 | $338.00 |
| 1988 | $589.60 | $350.00 |
| 1989 | $589.60 | $363.00 |
| 1990 | $668.80 | $375.00 |
| 1991 | $748.00 | $391.00 |
| 1992 | $748.00 | $407.00 |
| 1993 | $748.00 | $412.00 |
| 1994 | $748.00 | $378.00 |
| 1995 | $748.00 | $374.00 |
| 1996 | $836.00 | $398.00 |
| 1997 | $906.40 | $406.00 |
| 1998 | $906.40 | $415.00 |
| 1999 | $906.40 | $423.00 |
| 2000 | $906.40 | $428.00 |
| 2001 | $906.40 | $438.00 |
| 2002 | $906.40 | $462.00 |
| 2003 | $906.40 | $480.00 |
| 2004 | $906.40 | $487.00 |
| 2005 | $906.40 | $519.00 |
| 2006 | $906.40 | $545.00 |
| 2007 | $1,029.60 | $568.00 |
| 2008 | $1,152.80 | $604.00 |
| 2009 | $1,276.00 | $621.00 |
| 2010 | $1,276.00 | $640.00 |
| 2011 | $1,276.00 | $649.00 |
| 2012 | $1,276.00 | $632.00 |
| 2013 | $1,276.00 | $657.00 |
| 2014 | $1,276.00 | $655.00 |
| 2015 | $1,276.00 | $672.00 |
| 2016 | $1,276.00 | $690.00 |
| 2017 | $1,276.00 | $718.00 |
| 2018 | $1,276.00 | $742.00 |
| 2019 | $1,276.00 | $761.00 |
| 2020 | $1,276.00 | $779.00 |
| 2021 | $1,276.00 | $809.00 |
| 2022 | $1,276.00 | $842.00 |
| 2023 | $1,276.00 | $928.00 |
| 2024 | $1,276.00 | $1,026.00 |
Sources [3] Minimum-wage.org, “Federal Minimum Wage” https://www.minimum-wage.org/federal [4] Department of Labor http://dol.gov/ [6] HUD User, “Fairmarket Rents (40th Percentile Rents” https://www.huduser.gov/portal/datasets/fmr.html#history
How does the minimum wage compare to average costs?
Someone working full-time on the minimum wage of $7.25 per hour would earn $1,276 per month or $15,312 per year. Although a worker on this wage would likely be living in lower-cost accommodation and spending less than the average on utilities and food, this analysis seeks to understand how slowly the minimum wage has risen compared to average costs.
So, how exactly do minimum wage earnings stack up compared to the average expenses including housing and monthly bills?
An average house now costs 23.4x a minimum wage salary
Although the average person earning the minimum wage would likely not expect to afford an average-priced house, this analysis compares the minimum wage to average prices to demonstrate the difference.
The house price to minimum wage ratio has fluctuated over time due to changes in housing markets and the minimum wage itself. In 1984, an average-priced house ($97,550) would have cost 13.8x a single person’s minimum wage income of $7,075.20.
This figure dropped to a low of 11.4 in 2011 and 2012 when house prices were low due to a weak economy following the 2008-2009 economic crash, and the increase of the minimum wage to $7.25, also in 2009.
The ratio of average house prices to minimum wage income began to grow again in 2013 and reached a high in 2024, where the average house would cost 23.4x annual minimum wage earnings. For two people on minimum wage buying together, an average house would cost 11.7x their annual income. This is more than double the recommended 3-5x household income that is defined as affordable. [7] Fidelity, “How Much House Can I Afford?” https://www.fidelity.com/viewpoints/personal-finance/before-buying-house
| Year | Times Salary Needed to Purchase an Average House |
|---|---|
| 1984 | 13.8x |
| 1994 | 17.2x |
| 2004 | 15.9x |
| 2014 | 12.7x |
| 2024 | 23.4x |
Average rents amount to 90% of minimum wage earnings
The average monthly cost of renting has increased by 374% since 1984, going from $242 per month to $1,148 in 2024. Again, this far outpaces the 116% increase in the minimum wage during that time.
In 1984, the average monthly rent cost of $242 made up 41% of monthly earnings for someone on the minimum wage ($589.60). In 2024, average rents cost $1,148, which is 90% of monthly minimum wage earnings of $1,276, demonstrating that someone living alone on the minimum wage today could only barely cover their rent costs, before factoring in bills, food, or anything else. This analysis does not factor in the fact that many people on the minimum wage may live in public housing and use assistance like housing choice vouchers.
| Year | Rent as % of Pay |
|---|---|
| 1984 | 41.0% |
| 1985 | 44.9% |
| 1986 | 47.6% |
| 1987 | 50.6% |
| 1988 | 54.8% |
| 1989 | 55.5% |
| 1990 | 50.2% |
| 1991 | 46.5% |
| 1992 | 51.4% |
| 1993 | 50.2% |
| 1994 | 53.5% |
| 1995 | 52.8% |
| 1996 | 49.2% |
| 1997 | 48.1% |
| 1998 | 47.6% |
| 1999 | 48.6% |
| 2000 | 49.0% |
| 2001 | 50.6% |
| 2002 | 51.2% |
| 2003 | 51.5% |
| 2004 | 52.0% |
| 2005 | 55.4% |
| 2006 | 61.2% |
| 2007 | 53.9% |
| 2008 | 50.4% |
| 2009 | 48.0% |
| 2010 | 49.1% |
| 2011 | 51.0% |
| 2012 | 53.1% |
| 2013 | 55.1% |
| 2014 | 60.2% |
| 2015 | 63.1% |
| 2016 | 66.7% |
| 2017 | 69.1% |
| 2018 | 70.2% |
| 2019 | 72.9% |
| 2020 | 72.8% |
| 2021 | 76.8% |
| 2022 | 81.5% |
| 2023 | 89.0% |
| 2024 | 90.0% |
Utilities account for 32.8% of minimum wage earnings
The cost of utilities like water, electricity, and gas has also increased dramatically in the last four decades. According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, a household (with an average of 2.7 people) paid $137 per month for utilities in 1984, but this has risen to $418 per household (average 2.5 people) in 2024, an increase of 205%. Today, the average cost of utilities is 32.8% of a single person’s earnings on the minimum wage, compared to 23.2% in 1984.
If we factor in that the average household could have two wage earners, utilities would cost 16.4% of two people’s minimum wage earnings in 2024, compared to 11.6% in 1984.
| Year | Percentage |
|---|---|
| 1984 | 23.2% |
| 1985 | 23.2% |
| 1986 | 23.2% |
| 1987 | 23.6% |
| 1988 | 24.8% |
| 1989 | 25.9% |
| 1990 | 23.6% |
| 1991 | 22.2% |
| 1992 | 22.1% |
| 1993 | 23.5% |
| 1994 | 24.3% |
| 1995 | 24.5% |
| 1996 | 23.4% |
| 1997 | 22.2% |
| 1998 | 22.1% |
| 1999 | 21.8% |
| 2000 | 22.8% |
| 2001 | 25.5% |
| 2002 | 24.7% |
| 2003 | 25.8% |
| 2004 | 26.9% |
| 2005 | 29.2% |
| 2006 | 31.2% |
| 2007 | 28.2% |
| 2008 | 26.4% |
| 2009 | 23.8% |
| 2010 | 23.9% |
| 2011 | 24.4% |
| 2012 | 23.8% |
| 2013 | 24.4% |
| 2014 | 25.6% |
| 2015 | 25.4% |
| 2016 | 25.4% |
| 2017 | 25.1% |
| 2018 | 26.4% |
| 2019 | 26.5% |
| 2020 | 27.2% |
| 2021 | 27.6% |
| 2022 | 29.7% |
| 2023 | 32.4% |
| 2024 | 32.8% |
Food costs two-thirds of minimum wage earnings
The same data from the BLS also shows that the average household spend on food has increased by 214%, from $274 per month in 1984 to $860 per month in 2024. This includes groceries as well as food out of the home.
During this time, the cost of food as a percentage of a single person’s minimum wage earnings has increased from 46.5% to 67.4%. This means an average monthly food bill costs more than two-thirds of what one person earns on the minimum wage.
If we factor in two minimum wage earners in a household, food makes up 33.7% of earnings in 2024, compared to 23.3% in 1984.
| Year | Percentage of Salary |
|---|---|
| 1984 | 46.5% |
| 1985 | 49.2% |
| 1986 | 48.7% |
| 1987 | 51.7% |
| 1988 | 52.9% |
| 1989 | 58.7% |
| 1990 | 53.5% |
| 1991 | 47.6% |
| 1992 | 47.6% |
| 1993 | 49.1% |
| 1994 | 49.2% |
| 1995 | 50.1% |
| 1996 | 46.9% |
| 1997 | 44.1% |
| 1998 | 44.2% |
| 1999 | 46.2% |
| 2000 | 47.4% |
| 2001 | 48.9% |
| 2002 | 49.4% |
| 2003 | 49.1% |
| 2004 | 53.2% |
| 2005 | 54.5% |
| 2006 | 56.2% |
| 2007 | 49.6% |
| 2008 | 46.6% |
| 2009 | 41.6% |
| 2010 | 40.0% |
| 2011 | 42.2% |
| 2012 | 43.1% |
| 2013 | 43.1% |
| 2014 | 44.1% |
| 2015 | 45.8% |
| 2016 | 47.0% |
| 2017 | 50.5% |
| 2018 | 51.7% |
| 2019 | 53.4% |
| 2020 | 47.8% |
| 2021 | 54.2% |
| 2022 | 61.1% |
| 2023 | 66.7% |
| 2024 | 67.4% |
Has the minimum wage ever been enough for an average lifestyle?
Since the start of the data in this analysis, the federal minimum wage in the U.S. has not been enough to cover the costs of an average lifestyle.
In 1984, the cost of living including average mortgage payments, utility bills, food, transport, and healthcare was 214.5% of annual earnings for a single person on minimum wage. For someone renting, the cost of living was 241.4% of the annual earnings of a minimum-wage worker.
These figures have fluctuated during this 40-year period, but in 2024 average living expenses are 328.8% of a minimum wage salary for someone with a mortgage and 404.5% for a renter.
Of course, someone earning minimum wage would not necessarily expect to afford an average lifestyle, but this study simply demonstrates just how far behind the minimum wage is compared to everyday costs.
| Year | % of Salary with a Mortgage | % of Salary while Renting |
|---|---|---|
| 1984 | 214.5% | 241.4% |
| 1985 | 227.5% | 256.6% |
| 1986 | 231.7% | 263.2% |
| 1987 | 270.0% | 309.7% |
| 1988 | 303.6% | 348.9% |
| 1989 | 323.7% | 366.7% |
| 1990 | 290.8% | 329.1% |
| 1991 | 266.4% | 301.2% |
| 1992 | 269.2% | 310.2% |
| 1993 | 279.9% | 320.6% |
| 1994 | 290.0% | 334.6% |
| 1995 | 294.4% | 335.1% |
| 1996 | 279.8% | 318.9% |
| 1997 | 263.6% | 302.1% |
| 1998 | 267.0% | 301.9% |
| 1999 | 279.1% | 314.1% |
| 2000 | 291.5% | 325.8% |
| 2001 | 302.4% | 336.0% |
| 2002 | 282.9% | 313.1% |
| 2003 | 278.4% | 308.3% |
| 2004 | 289.9% | 320.6% |
| 2005 | 307.1% | 337.6% |
| 2006 | 318.5% | 351.1% |
| 2007 | 292.1% | 319.7% |
| 2008 | 268.3% | 296.4% |
| 2009 | 233.4% | 263.9% |
| 2010 | 228.5% | 262.3% |
| 2011 | 237.0% | 274.6% |
| 2012 | 245.3% | 286.3% |
| 2013 | 244.7% | 288.0% |
| 2014 | 255.1% | 305.7% |
| 2015 | 261.7% | 316.4% |
| 2016 | 262.6% | 321.6% |
| 2017 | 280.3% | 339.2% |
| 2018 | 270.3% | 332.2% |
| 2019 | 280.7% | 345.9% |
| 2020 | 265.1% | 328.5% |
| 2021 | 288.0% | 357.3% |
| 2022 | 298.0% | 366.4% |
| 2023 | 325.4% | 400.2% |
| 2024 | 328.8% | 404.5% |
Two people living together on the minimum wage have never been able to afford an average lifestyle
Even when factoring in two people living together, two minimum wage salaries are not enough to cover average expenses. In 1984, the typical living expenses with a mortgage were 107.3% of annual minimum wage earnings for two people, and 120.7% of earnings for renters.
In 2024, two people on the minimum wage need 164.4% of their earnings to cover expenses if they have a mortgage, and 202.2% if they are renting.
Methodology
The minimum wage by year was taken from The Department of Labor and Minimum-Wage.org, and the monthly pay on the minimum wage was calculated using an average of 22 working days per month and 8 working hours per day.
Bottom-tier house prices between the 5th and 35th percentile were collected from Zillow for 2000 to 2024.
Average house prices by year were taken from St. Louis Fed for 1986-1999, and from Zillow for 2000-2024.
Mortgage interest rates and rent costs were taken from the Bureau of Labor Statistics Consumer Expenditure Survey. The average number of people per household was predicted from the Consumer Expenditure Survey data using the TREND formula for 2023 and 2024.
Low-priced rent costs were taken from HUD’s historical Fair Market Rents data for homes in the 40th percentile. Adjustments are made to this data to exclude public housing units, newly built units and substandard units.
Prices for utilities, transport, food, healthcare, entertainment, and other monthly expenses were also taken from the BLS Consumer Expenditure Survey.
Sources
- [1] Bureau of Labor Statistics, CPI Inflation Calculator https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3.35&year1=198401&year2=202401
- [2] St Louis Fed, “Average Sales Prices for Houses Sold for the United States” https://fred.stlouisfed.org/series/ASPUS
- [3] Minimum-wage.org, “Federal Minimum Wage” https://www.minimum-wage.org/federal
- [4] Department of Labor http://dol.gov/
- [5] Investopedia, “What is a Good Debt-To-Income (DTI) Ratio?” https://www.investopedia.com/ask/answers/081214/whats-considered-be-good-debttoincome-dti-ratio.asp
- [6] HUD User, “Fairmarket Rents (40th Percentile Rents” https://www.huduser.gov/portal/datasets/fmr.html#history
- [7] Fidelity, “How Much House Can I Afford?” https://www.fidelity.com/viewpoints/personal-finance/before-buying-house
