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PolitiFact.com | Tampa Bay Times
Sorting out the truth in politics

PolitiFact: Minimum wage more than half poverty level for nearly all households

The statement

"On (the federal minimum wage of) $7.75, you can't even make half the poverty level."

U.S. Rep. Jim McDermott, D-Wash., Nov. 12 on MSNBC's Politics Nation

The ruling

A recent Gallup poll showed that an overwhelming 76 percent of Americans want the minimum wage increased to $9. There hasn't been a minimum wage increase in four years, and the prospect of an increase — particularly in the Republican-controlled House — looks dim.

But that hasn't stopped advocates of a higher minimum wage from making their case.

We wondered: Is it true, as Rep. McDermott said, that if you are paid $7.75 an hour, "you can't even make half the poverty level?"

First off, we need to correct one aspect of McDermott's claim. While he's right that the federal minimum wage has been static for the past four years, it's $7.25 an hour, not $7.75. But because he was specific about the dollar amount, we'll use that to make our calculations.

If you earned $7.75 an hour for 40 hours a week and 52 weeks a year, you would earn $16,120. For this to be less than half the poverty level, the poverty level would have to be at least $32,240.

Is the poverty level that high? For most households, no.

The federal poverty level is actually a matrix of different dollar amounts. It depends on the size of the family, with larger families having a higher threshold.

The poverty level exceeds $32,240 only for families with at least seven people — say, two parents and five children, or one parent and six children. (For a seven-person household, an income of $35,610 is right at the poverty level.) If we were to use the actual minimum wage of $7.25, the yearly income would be less than half of poverty for a six-person family, rather than seven.

According to the Census Bureau, only 9 percent of households have even three children, and the number with five (or six, if it's a single-parent household) is even smaller. Extrapolating from 2006 data, we estimate that about 2 percent of households have at least five children.

So, McDermott's claim would be wrong for 98 percent of households. And this may even understate how wrong he is.

Under the federal Earned Income Tax Credit — which provides a refundable tax credit to working people with low incomes — a poverty-level household with two adults and two children would be eligible for $5,372 in tax credits, noted Michael Wiseman, a professor of public policy and economics at George Washington University. That would make McDermott's scenario even more far-fetched.

A spokeswoman for McDermott acknowledged that he "misspoke," both about the amount of the federal minimum wage and about how far that wage would go.

"The point he was trying to make was that the current minimum wage is nowhere close to a livable wage," said spokeswoman Amber Macdonald.

We rate this statement False.

Edited for print. Read the full version at PolitiFact.com.

PolitiFact: Minimum wage more than half poverty level for nearly all households 11/29/13 [Last modified: Friday, November 29, 2013 6:13pm]
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