09/26/2024
Over the years, consulting in People Operations, I have been part of many (many) compensation discussions and design projects.
Do you know what I have never, not once, seen from anyone else in those teams?
Putting pen to paper to determine what basic cost of living really is in their area (or nationwide for remote roles).
That always baffled me.
So...
Let's break this down for the current market (2023-2024) shall we?
(These are monthly numbers for an individual only, no dependents or partner.)
Rent - $2,000 ($1,987 is the median rent per Rent .com)
Groceries (no pets) - $450
Used Car Payment - $525 (the median per Experian)
Gas - $250
Car Insurance (full coverage)- $150 (average per Insurance .com)
Internet - $60
Streaming Subscriptions - $40
Phone - $120
Electric - $250
Individual Health Insurance - $700 ($706 is average per USNews .com)
Savings & Incidentals (doctor appointments, car repairs, meds, etc.) - $500
Spending - $400
Total: $5,445 (after tax)
Approximately $6,500 pretax, or $78,000 per year
That is to attain a livable... still a bit tight... but livable wage.
(The national average salary is about $64,000 per SoFi... so... not livable.)
So, if you pay below $78,000 (or so) in most areas of the country (not just big cities), you are not paying a livable wage.
That is $37.50 per hour.
By the way, that number is 2.5 times bigger than $15.00, which is that little number so many people are complaining about. (That is why people arguing over raising minimum wage make me NUTS.)
Now, are there areas where $50,000 or $60,000 would be a livable wage? Absolutely.
In those areas, feel free to pay that much for onsite work.
However, for remote roles or roles in areas priced closer to average or higher, and this will seem harsh, but we need this wake-up call, $75,000 is about as low as you can pay and still claim to be applying ethics to your pay rates.
If your people cannot live comfortably... not lavishly, comfortably... on the wage you are paying, there is a breach of integrity.
Instead of squabbling over minimum wage, lets push for LIVABLE wages.
Let's do better.