Week 2: How I Failed the Live the Wage Challenge
Autry Fellow Joshua Mbanusi started the Live the Wage Challenge this month, living off a weekly income of only $290 per week - $77 after housing costs and taxes are deducted. This is the second in a four-part series of his reflections on life at the minimum wage.
This week was difficult. After postponing some significant expenditures during my first week of the challenge, I started off week two spending over 70% of my budget in less than 24 hours. Consequently, I was forced to make deeper, more stringent sacrifices to ensure I stretched the remaining portion of my budget. I drove slower to conserve gas. I packed meals and declined most invitations to eat out. And with time, my appetite adapted to smaller portions and the hunger I felt most nights began to subside. With three days remaining in the week and $7 left in my pocket, I began to feel a bit self-assured, thinking that living on $77 a week, although difficult, would be doable – at least for another two weeks.
The next day, I entered the main lobby of a doctor’s office. I had scheduled the appointment weeks prior without paying much attention to how much it would cost, a privilege (described in my first blog) that many people working living-wage jobs take for granted. I walked up to the receptionist’s desk. We exchanged greetings and, before long, she began talking me through the paperwork I needed to fill out. I was directed to provide my signature on a few documents. After signing the final sheet and shifting my attention to the other forms, I was suddenly interrupted.
“Thank you Mr. Mbanusi. Now that you’ve finished signing those sheets, you can complete the rest of the papers at the seating area. You’re charge today will be $40.”
“I’m sorry, my charge today will be what?”
“Forty dollars, sir.”
“Forty dollars? Okay.”
I reached into my pocket and pulled out my wallet. There it was, beside the seven meager dollars that represented the rest of my weekly budget. It was much more than plastic. It was the lifesaver that helped me finance meals through college, survive my first unpaid internship, and relocate to take a new position in Durham. And now, it was my ticket into the doctor’s office: my credit card. I handed the receptionist this blue plastic guardian angel and watched as I overspent my budget by $33, failing the Live the Wage challenge in my second week.
Each year, millions of people earning the minimum wage suffer from illnesses, injuries, or simply aches and pains that require medical services. When these dreadful days arrive, those earning the minimum wage are left with few options:
1) Ignore it. As a result of the exorbitant cost of health care, all too often those earning the minimum wage allow their illnesses to go untreated. This lack of preventive care tends to worsen their health outcomes, sometimes leading to pains that cause them to miss valuable days of work, or worse, to chronic health problems that eventually remove them from the workforce. This is why employment, but more so income and wealth, are considered important social determinants of health.
2) Use credit cards. An increasing number of Americans have made the rational transition towards credit cards to buttress low-wages that inhibit them from making ends meet. In fact, Demos estimates that 40 percent of low- to middle-income households carry credit card debt “to pay for basic living expenses such as rent or mortgage payments, groceries, utilities or insurance.” Unfortunately, for people earning the minimum wage, the cost of borrowing on these credit cards is significantly higher than their wealthier counterparts. So while a $500 charge might cost a middle-income family $65 in interest, a family living on the minimum wage might pay $370.
3) High-interest lending. Many low-income families do not have access to credit cards. In fact, 54 million Americans do not have credit scores at all. This lack of credit access leads many families to seek other methods of high-cost borrowing, such as pawnshops, refund anticipation loans, rent-to-own shops, and payday loans. A recent USPS study found that low-income families on average spend $2,412 a year on fees for alternative financial solutions like payday lenders and check cashers. Extremely low-income families are paying 23.5 percent of their family income on debt payments alone. These services, outside mainstream financial markets, further squeeze the already-tight budgets of minimum wage earners.
As with last week, this experience leaves me wondering. I lost the Live the Wage challenge because I could not afford a doctor’s appointment that was subsidized by health insurance offered by my employer. But what about those who have neither access to low-interest credit or health insurance? What of minimum-wage workers with children? What options do they pursue? And what services do they forgo to remain financially viable?
I consider myself blessed that I grapple with these questions from a theoretical perspective; I am humbled that this experience has been simply a challenge I have chosen to take on, not a daily reality I am forced to live with.
Follow Joshua Mbanusi on Twitter: @JoshuaMbanusi