Federal Minimum Wage

The Federal minimum wage adjusts starting 07/24/07, to increase to $7.25 over the next two years. Even if this wage were to go into effect today, this would not get people housing in any urban area in America. In fact, many local living wage campaigns are already paying more (but less than a true living wage for their area.) According to a recent Conference of Mayors Report, more than the minimum wage is required in every metropolitan area to afford a one or two bedroom apartment at 30% of earned income.

However, in the 1970s the Federal minimum wage was an average of $2.07 per hour and times were such that the Federal minimum wage was just that...the minimum amount required to afford housing. It allowed a person to pay for a room with a lock and key, get a good night's sleep and be refreshed enough to go to work the next day and to work his/her way up the economic ladder, if he so desired (the American Dream). Today, that is not possible as the Federal minimum wage will not allow a worker to get a toehold so he or she can maintain independence and work his or her way out of poverty.

As evidenced by the Fair Market Rents set each year by HUD, it can clearly be seen that the cost of housing in this country (1) makes up the lion's share of a person's expenses each month and (2) ranges widely in cost not just state to state but from city to city.

The Congressional approach of "One Size Fits All" is unfair not only to workers but also to industry. How can a worker be expected to find housing in Austin, Texas where the cost of an efficiency apartment requires $10.60 per hour while the Federal minimum wage is $5.15 or even $6.65 per hour? Conversely, how can a small business expect to survive in Beaumont, Texas if the employer is forced to pay $10.60 per hour. Why should the employer pay that if the worker only needs $6.48 per hour to be ready for work the next day? How do we reconcile the need to balance these two economic concerns?

The response is that obviously one size doe not fit all and because the greatest need is to house our minimum wage workers we look to housing (the greatest portion of that monthly budget) as the focus of the wage. By paying a wage that relates directly to the cost of housing in each local area we see the need to customize the Federal minimum wage. The Universal Living Wage allows us to do just that. The ULW formula allows us to index the wage to the local cost of housing. This allows us to de-federalize the minimum wage while maintaining established uniform guidelines which allow us to return control to local governments. This provides a new work force of ready and willing workers. According to a 1999 federal study 42% of all unhoused workers were working at some point during the week. Clearly the work ethic is in place and now the mechanism to utilize those workers will also be there.

Each year the Federal Government reexamines the cost of local housing as set forth in the Fair Market Rents. This means that if the cost of housing rises due to inflation or falls due to depression the cost of housing will automatically be adjusted either up or down. If the cost of housing increases, then the ability to meet those needs will be addressed. Conversely, if the cost of housing goes down, then the economic need and wage will likewise decrease accordingly.

Benefits to the Economy

Not only will this stabilize the minimum wage work base of our society, two additional events will occur. First, the economy will be energized as a new pool of funds will be injected into it. Second, an entire new rental market will come into existence which will attract construction dollars for a new pool of consumers looking to lay down money for affordable one-bedroom apartments.

Other Benefits

By utilizing the HUD fair market rents, we are basing our formula on existing government guidelines. These guidelines are reviewed and adjusted on an annual basis using HUD's fair market rent formula. The benefit here is that the US Congress will never again need to struggle with adjusting the minimum wage.

Most importantly, this formula will prevent homelessness for all minimum wage workers working a 40 hour week, and should enable fully one-third of our nation's homeless to work themselves off the streets of America.

This site last updated July 29, 2007. Thank you for visiting

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