Living Paycheck to Paycheck in The World’s Wealthiest Country

Living Paycheck to Paycheck in The World’s Wealthiest Country

By Elijah Hoene

May 3, 2024

What it costs to survive, not thrive, in America.


“It’s called the American Dream because you have to be asleep to believe it.” – George Carlin 

Imagine you are the age you are right now, but the year is 2000. Aside from the Slim Shady-inspired shaved-heads and an inundation of NSYNC on the radio, life is pretty good. 

You’re working full time at the job you’ve had since high school, making a decent living of $30,000 a year—the median income in 2000. A new house costs about $160,000—just over five times your yearly income. A new car costs $20,000—about two-thirds of your yearly income. If you put some money away for a down payment, you could soon become one of the nearly 70 million Americans who own a home. 

Now let’s turn off the radio and get back to reality. The year is 2024. Let’s be generous and say you make $20 an hour, more than what the majority of American workers earn. At that wage, working 40 hours a week for 50 weeks out of the year will be about $40,000 a year before taxes—a little above the median yearly income in the United States. At $40,000, your salary is about 33 percent higher than our hypothetical Y2Ker’s salary. So the median price of a new house and a new car must have increased at the same rate, right? 

Wrong! 

In the 24 years since 2000, the median new home price has more than doubled to $422,000, and the median cost of a new car has followed a similar trajectory, now costing about $50,000. While the median yearly income in the US has increased by 33 percent, the median price of a new car has increased 125 percent, and the median cost of a new home has increased by over 160 percent—more than quadruple the growth rate of median salary. 

This disparity between wage decreases and increases in the costs of necessary purchases like cars and homes should be alarming, especially to young folks. What is most concerning is that so far, the example has been a person making $20/hr—but the federal minimum wage is only $7.25/hr. Let’s assume that after taxes, that $7.25 is really more like $6.50. The average price of a Big Mac in the U.S. is about $6 after tax. In 2024, the federal minimum wage is nearly equivalent to one Big Mac per hour. If you aren’t worried yet, you should be.

Let’s go back a little further this time, to 1960. America has just elected its youngest president ever, John F. Kennedy. The federal minimum wage is $1.25/hr, while a Big Mac costs about 21 cents. Looking at the United States as one big McDonald’s menu, an American worker earning minimum wage in 1960 could buy six Big Macs with what they made in an hour. Today, a minimum wage earner has to scrape together spare change to buy just one. 

While the Big Mac analogy is somewhat amusing, the bigger principle is deeply concerning: The federal government has determined that an annual income of less than $15,000 is a living wage. 

One more example: 

Let’s look at how a person earning the federal minimum wage of $7.25 could survive in the Great Lakes State. A quick search on Zillow showed some cheap rental properties in Lansing, the cheapest one being a 400 sq. ft. studio for $600 a month. That’s $7,200 a year, but assume property tax and utilities bring that total to $8,500. Deducting that $8,500 from the $15,000 yearly income leaves them with $6,500. 

Now for groceries. A recent survey found that the average single person in The Mitten spends about $3,400 per year on groceries. $3,400 from $6,500 leaves them with $3,100. But they are still missing some essentials. 

According to the Energy Information Administration, the average American spends about $2,000 a year on gas. That leaves this hypothetical federal minimum wage earner in Michigan with $1,100. They haven’t even paid taxes yet! 

Assuming a federal tax rate of 10 percent (the rate for the lowest earners in the U.S.) there’s still  $1,500 to pay in taxes, leaving a deficit of $400. 

You read that right. Simply paying for a roof over your head and the barest of necessities leaves you in debt to the federal government.

If anything goes wrong in your life—you need to get a new transmission, replace your washing machine, visit the emergency room — you will take on insurmountable debt. Forget about treating yourself, buying gifts for your loved ones around the holidays, and don’t even think about taking a vacation. At the dismal rate of $7.25 an hour, an American minimum wage earner’s entire existence is essentially to work, pay rent and hope they don’t get sick

Sleep tight, American Dream.


Elijah Hoene is a senior studying psychology at Michigan State University. His first job at 14 years old paid $5 an hour.