The Universal Living Wage calculator is based on the US Department of Housing and Urban Development (HUD) standard: no more than 30% of a person’s gross income should be spent on housing.
The Universal Living Wage is dynamic in the purest sense of the word. It is designed to show what salary a full time, minimum wage worker would need to be paid in order to afford a certain bedroom size. So far the consensus of living wage initiatives across the country is to use the Fair Market Rent for a one-bedroom apartment. (We start our ULW calculator with an efficiency apartment.)
With our formula the community would be able to slide along the bedroom/size wage continuum, anywhere from an efficiency apartment all the way up to a multiple bedroom apartment. (Many cities have laws specifying one child/one bedroom, which is a young woman with two small children. Note- We have also devised a second formula that ensures that a single woman with a child is paid an appropriate wage.)
To calculate by hand, find your FMR (Fair Market Rent) for the size of your housing found on the HUD website and use the figures to calculate your Universal Living Wage or simply use our calculator.
Premise: Anyone working 40 hours per week should be able to get housing and get off of the streets.*
Work hours: 40 hours/week @ 4.33 weeks/month = 173.33 work hours/month, 173.33 work hours X 12 months = 2080 hours/year.
HUD Fair Market Rent: $(A) FMR for an efficiency, one, two, three or four bedroom apartment in your city.
Total Monthly Income
$(A) FMR divided by .3 = $(B) _______ monthly gross income necessary to afford basic housing. Total Gross Monthly Income of $(B)_________ X 12 months = $(C) ___________ . $(C)___________. $(C)___________ divided by 2080 hours per year $______ per hour. New hourly wage is _____________ per hour.
Total Monthly Expenditures
$(B) ____ total gross monthly income
– $(D) ____ Federal taxes, Social Security, Medicare supplement **
– $(A) ____ housing costs
$ ____ remaining for medical, clothing, food, transportation and telephone
* Whether a person works 4 hours per week or 40 hours per week, they should be paid at the full 40 hour rate. A full hours work deserves a full hours wage.
** Minus $(d1) _______ for Federal Income Tax, $(d2)_______for Social Security, and $(d3) _______ for Medicare. The Federal Income Tax rate (15%) is based on the monthly deductions outline in the Internal Revenue Circular E, Employers’ Tax Guide (Rev. Jan, 2000), Social Security is 6.2% of gross monthly income, and Medicare is 1.45% of gross monthly income (Total equals $(D) _______ ).
We have devised a national formula that is based on each local economy throughout the entire United States. The formula is designed in such a manner that no matter whether you live in Austin, Chicago, Los Angeles, etc., if you are willing and able to work a 40-hour week, you should be able to afford an efficiency apartment on no more than 30 Percent of your gross monthly income.