Social Issues

What it’s like to support a family on $12.50 an hour

Many assume low-wage workers are teenagers, but data show that most are adults in their prime working years.

A woman holding a young child in her arms.
Sandra Lopez holds one of her two children Jan. 23 at her home in St. Paul. Lopez says she would like to buy a house but, even with careful budgeting, she finds it hard to save money while she supports her two children on minimum wage.
Christine T. Nguyen | MPR News

In a tidy apartment near the state Capitol, Sandra Lopez ticks off her bills. Rent eats up an entire paycheck plus part of her next one. There’s $25 a day for a neighbor to watch her baby. Then the phone bill, electricity, school clothes for her 11-year-old son and diapers for her 7-month-old baby.

After she finally pays all her bills, she knows how much she has to spend at the grocery store after using her food assistance that week on the essentials: rice, beans, tortillas, chicken. She’ll get breaded fish for her son if she has some money left.

“I make sure I buy everything I need for one week, really basic things like rice, oil, to make sure that we have enough food for the week,” Lopez said through an interpreter. “If I see there is a little bit left, then maybe I’ll buy things that maybe can be used for the following week.”

As Democratic presidential candidates offer competing visions to rein in income inequality, Lopez, who works at a McDonald’s in St. Paul, is one of tens of millions of Americans who work low-wage jobs, trying to make ends meet on incomes that are well below the cost of living.

Many assume low-wage workers are teenagers, but data show that most are adults in their prime working years, and many support families on those wages. In recent years, economists say it’s also become increasingly challenging for low-wage workers to change careers or move up the ladder.

Who are low-wage workers?

Lopez, 34, started at McDonald’s about a decade ago after coming to the United States from Mexico. She worked her way up from the federal minimum wage to $12.50 an hour, or about $26,000 a year. But she’s spending more than 60 percent of her take-home pay on rent and has to stretch every month to pay her bills and meet her kids’ needs.

Her situation became even more difficult after she separated from her longtime partner. In Ramsey County, where Lopez lives, the Minnesota Department of Employment and Economic Development estimates that the cost of living for a single parent with two children requires an income of almost $45 an hour, or $93,600 a year.

“I was thinking, ‘OK, now I’m on my own, now I need to figure out how to pay the rent, to pay the bills, to pay all the needs that my child has,’” Lopez said. “Definitely I was worried about how I was going to do that.”

There’s no exact definition of a low-wage worker. A report late last year from the Brookings Institution identified more than 50 million Americans low-wage workers who made less than their threshold of $16.03 an hour. They found that more than half the workers are white, 25 percent are Latino and 15 percent are black. Women account for a majority of low-wage workers. Nearly two-thirds of low-wage workers are in the prime working years of 25 to 54.

Although some industries like fast-food restaurants are associated with more low-wage work, the jobs are really spread through most industries, said Abigail Wozniak, an economist at the Federal Reserve Bank of Minneapolis.

“There have been tremendous changes in the last 30 to 40 years, and one of them has been a real rise in inequality, even within these industry bins,” Wozniak said.

How are wages affected by minimum wage increases?

Most of these low-wage workers make more than minimum wage. But there are misconceptions even around minimum wage earners, Wozniak said.

“If you thought the minimum wage predominantly applied to teenage workers, that might have been true in 1980. It’s no longer true today,” Wozniak said. “A large share of minimum-wage workers are earning adults.”

The federal minimum wage has not kept pace with inflation since the late 1960s. That’s spurred cities across the country, including Minneapolis and St. Paul, to institute municipal minimum wages. Both cities are slowly raising wages for most employers to $15 an hour. But Lopez and many other low-wage workers haven’t yet benefited from the increase because St. Paul is rolling out the increases gradually, reaching $15 an hour for larger employers in July 2022.

Lopez testified in favor of the minimum wage increase in St. Paul in 2018.

“A lot of people say, ‘Well, they’re just at McDonald’s making hamburgers, they don’t deserve more money,’” Lopez said. “They don’t see how hard we work, how much we are producing, how much profit we are making for the bosses and for the company. We deserve to live with a fair wage.”

The impact of minimum wage increases is one of the most closely studied topics in economics, said Ben Zipperer, an economist with the Economic Policy Institute. Not only do they increase wages for those making the least, but they can eventually lead to wage increases for workers making just above minimum wage.

“While it makes it more expensive to hire workers, it’s also easier to recruit and retain workers,” Zipperer said. “Those two forces balance out so that there’s not really not much of an effect on employment.”

While many economists have increasingly warmed up to the mandatory increases, some caution that they still could hurt small businesses or rural areas where the pay is lower.

In places like the McDonald’s where Lopez works, the minimum wage increase hasn’t yet affected veteran workers. But now they’re seeing new employees being hired at the same wage that they only climbed to after years on the job.

“The people who have been at the same place for a long time are saying, ‘When I entered, I didn’t make as much, now the new people are making almost what I make, and that’s not fair,’” Lopez said. “There’s been some tension between coworkers for that reason.”

Wozniak said increases in the minimum wage may also require employers to adjust the pay structures to better compensate veteran employees, something some businesses may be slow to do.

In recent years, very low-wage earners and very high earners have continued to see wage increases, Wozniak said. Most people in the middle have seen their incomes remain stagnant despite a strong economy.

Why not get a better job?

A visor and lanyard with McDonald's logo hang on a wall.
Sandra Lopez has worked at McDonald's for nine years.
Christine T. Nguyen | MPR News

Workers like Lopez hear all the time that they should find a new job that pays better. She thinks about it, but it’s difficult to find another job that is flexible with her child care needs.

It’s actually become less common in recent years for people to change careers, or to make a leap within their industry, Wozniak said.

“Any conception that folks had in their mind, ‘Oh, that you start at your low-wage job and then you easily move up a ladder,’” Wozniak said. “We’re finding for a variety of reasons that that process, it’s slowed down and less common than it was in the past.”

Another drawback for low-wage workers is that many of those jobs don’t include much training, Wozniak said, so the employees don’t develop new skills that would qualify them for other positions.

“The labor market knows what your skills are, you’ll get matched to jobs that use exactly those skills,” Wozniak said. “You can try to switch, but you’re going to get matched to another job that uses exactly your skills, and that’s somehow more fixed than in the past.”

Economists are still studying the reasons behind why it’s become less common for people to move around, Wozniak said, and it’s not exactly clear whether it’s a good thing for workers or employers.

In a statement, a McDonald’s company spokesperson said the average starting wage at corporate-owned restaurants is more than $10 an hour, which exceeds the federal minimum wage of $7.25 an hour.

“McDonald’s does not lobby against or participate in any activities opposing raising the minimum wage and believes elected leaders have a responsibility to set, debate and change mandated minimum wages,” the company said.

The minimum wage is only one way to help low-wage workers, Zipperer said. The Economic Policy Institute has published papers advocating for a host of other policies, including tax strategies to tighten the labor market and strengthened rules for labor union bargaining.

“We actually need a lot of arrows in our quiver to attack low wages and low incomes,” Zipperer said.

Constant worries about money

For now, Lopez is staying at McDonald’s. She tries to stash away extra money when possible, but all it would take is someone getting sick or another emergency to fall behind. She can get emotional talking about how stressful it is.

“That’s happened before, that my checks aren’t enough when I have an appointment or my children get sick,” Lopez said. “Yes, I’ve been a little worried.”

These sort of constant struggles with money often have a long-term effect on the workers and their families, Wozniak said.

“It will affect how your kids do, it will affect your own health, it will affect your kids’ health, it will affect the educational attainment they’re able to achieve, both K-12 and post-secondary,” Wozniak said. “There really almost isn’t a sphere of life that we would look at that would not be affected by a household’s earning power.”

Lopez has been involved with the labor group Centro de Trabajadores Unidos en la Lucha, or CTUL, which advocates for low-wage workers. She said it’s important that workers understand their rights so they can speak out if they’re being denied benefits like paid sick time, which is now required by both Minneapolis and St. Paul.

Right now, Lopez is focused on keeping afloat in the short term so that her son can get a good education.

Sometimes, the family has been able to take a trip somewhere like the zoo or mall, but a real vacation isn’t plausible.

“I try to explain to him that right now we’re on a tight budget, we have to be sure there’s enough for what the baby needs,” Lopez said. “Maybe down the road there will be some extra money, but right now we’re tight.”

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