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Basic Needs Budgets and the Minimum Wage
Prepared by the Joint Fiscal Office January 15, 2002
VT LEG 142324.1
This report has been prepared by the Vermont Joint Fiscal Office
Act 21 of the 1999 session of the General Assembly created the Livable Income Study Committee. In pursuing its work the Committee hired a consulting firm that prepared a report titled Act 21 Research and Analysis in Support of the Livable Income Study Committee.1 Part of the report addressed basic needs budgets and livable wages for a variety of household configurations (see consultant’s tables 1b through 1g). The Committee reported its recommendations to the General Assembly on December 17, 1999. Subsequently, the General Assembly passed House Bill 837, which became Act 119 with the Governor’s approval. Act 119 (a) increased the minimum wage from $5.75 per hour to $6.25 per hour effective January 1, 2001, (b) increased the state earned income credit from 25% to 32% of the federal benefit, and (c) required several reports be prepared by the Executive and Legislative branches of government.
Joint Fiscal Office Task
Act 119 of the 2000 session of the General Assembly requires the Joint Fiscal Office to perform the following tasks and report to the legislature each January 15 from 2001 through 2004: • Report changes in the federal minimum wage and in the minimum wage rates of surrounding and comparable states • Review current state wage distributions • Prepare basic needs budgets using the methodology of the report prepared for the livable income study committee issued on November 19, 1999. On January 15, 2001, the Joint Fiscal Office published the first of four annual reports.2 The balance of this document contains the findings of the second Joint Fiscal Office annual report.
The full text of the report may be viewed and printed from the Joint Fiscal Office web site: www.leg.state.vt.us/jfo. 2 The Joint Fiscal Office report may be viewed and printed from the JFO web site.
An eleven year history of the federal and Vermont minimum wage rates is given in Table 1.
Table 1: Comparison of Federal and Vermont Minimum Wage Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Federal Vermont $4.25 $3.95 4.25 3.95 4.25 3.95 4.25 3.95 4.25 4.50 4.75 4.75 5.15 5.00 5.15 5.25 5.15 5.75 5.15 6.25 5.15 6.25
A comparison of the Vermont minimum wage to the minimum wage of surrounding states is shown in Table 2.
Table 2: Minimum Wage in Effect as of January 1, 2001 State Minimum Wage Connecticut $ 6.40 Maine 5.15 Massachusetts 6.75 New Hampshire 5.15 New York 5.15 Rhode Island 6.15 Vermont 6.25 US 5.15
State Wage Distributions
The average annual wage distribution is shown in Table 3. Table 3: Average Annual Wage by Vermont County* County 1999 2000 Addison $ 26,032 $ 27,015 Bennington 24,628 25,457 Caledonia 22,631 23,617 Chittenden 32,896 34,301 Essex 24,815 24,694 Franklin 25,017 26,390 Grand Isle 19,317 20,624 Lamoille 20,833 21,829 Orange 22,606 23,240 Orleans 21,956 23,177 Rutland 25,202 26,570 Washington 26,825 28,306 Windham 26,782 27,888 Windsor 25,829 27,421
* Source: Vermont Department of Employment and Training
The process used by the Joint Fiscal Office in updating the Basic Needs Budgets was as follows: • Start with the budgets prepared by the 1999 consulting team and replicate all tax calculations • Gather the most recent data from the same sources used by the consulting team3 • Apply the methodology for data handling that was used by the consulting team It is important to note that Act 119 requires the Joint Fiscal Office to utilize the same methodology developed by the consultants for the Livable Income Study Committee Report of November 1999 The Joint Fiscal Office has used the most recent available information which involves a mix of different years. The first JFO update was based on tax year 1999. For this second report, tax calculations are based on tax year 2000. A total of six household configurations are represented in the Basic Needs Budgets. Each configuration contains a budget for urban vs. rural environments. Further, each sub-configuration contains budgets for (a) no employer assistance with health care and a moderate cost USDA food plan, (b) employer assistance with health care and a moderate cost food plan, and (c) employer assistance with health care and a low cost food plan. Thus a total of 36 budget scenarios are contained in this report. The findings of the Joint Fiscal Office are summarized and compared to the original consultant’s budgets in Table 4. Charts 1 through 6 graphically display the data in Table 4. Tables 5A through 5F contain the specific details of each budget scenario.
The consultant’s sources and methodology are contained in Appendix 1A of the 1999 report to the Livable Income Study Committee.
Table 4: Comparison of Hourly Wages: 1998 - 2000
Urban B With Employer Assisted Health Care Rural B With Employer Assisted Health Care
A No Employer Assisted Health Care
C With Employer Assisted Health Care Cost/Mo. Low Cost Plan 9.48 8.79 9.73 14.56 14.91 16.77 17.13 17.38 19.36 7.03 7.32 7.75 17.08 17.41 18.42 10.84 11.32 11.92
C With Employer Assisted Health Care Cost/Mo. Low Cost Plan 9.29 8.60 9.57 13.64 13.60 15.28 16.11 15.81 17.61 7.18 7.48 7.90 16.86 17.21 17.81 10.60 10.82 11.34
Cost/Mo. Cost/Mo. Moderate cost Food Plan Single + 0 1998 1999 2000 1998 1999 2000 1998 1999 2000 1998 1999 2000 1998 1999 2000 1998 1999 2000 11.65 11.68 12.68 19.06 20.49 23.15 23.81 25.61 29.23 9.32 9.81 10.61 23.81 24.46 27.25 14.34 15.08 16.90 10.62 9.90 10.93 16.37 16.75 18.75 19.61 19.89 22.03 8.10 8.38 8.85 20.08 20.46 21.60 12.47 13.00 13.66
Cost/Mo. Cost/Mo. Moderate cost Food Plan 11.39 11.42 12.38 18.09 19.11 21.48 22.61 23.53 26.87 9.48 9.97 10.77 23.58 24.25 26.60 14.09 14.47 16.12 10.37 9.70 10.70 15.40 15.37 17.17 18.54 18.24 20.19 8.26 8.55 9.02 19.85 20.25 20.96 12.23 12.47 13.05
Two + 0
Two + 2 (1 WKG)
Two + 2 (2 WKG)
Chart 1: Single-No Children
30.00 25.00 Hourly Wage 20.00 15.00 10.00 5.00 0.00 Urban-A Urban-B Urban-C Rural-A Rural-B Rural-C House hold Configuration
Chart 2: Single-One Child
20.00 15.00 10.00 5.00 0.00 Urban-A Urban-B Urban-C Rural-A Rural-B Rural-C
Chart 3: Single-Two Children
25.00 20.00 15.00 10.00 5.00 0.00 Urban-A Urban-B Urban-C Rural-A Rural-B Rural-C
Chart 4: Couple (2 Working) -No Children
Hourly Wage (Each Person)
30.00 25.00 20.00 15.00 10.00 5.00 0.00 Urban-A Urban-B Urban-C Rural-A Rural-B Rural-C
Chart 5: Couple (1 working) -One Child
Chart 6: Couple (2 working) -Two Children
Table 5A: Single Person
C With Employer Assisted Health Care
Category Food Rent Utilities Health Care Transportation Child Care Clothing / Household Telephone Personal Expenses Renter&#39;s Insurance Dental Care Life Insurance Savings (5%) Total Monthly Expenses Annual Expenses Federal &amp; State Taxes Annual Income Equivalent Hourly Wage $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 229 229 188 454 454 454 136 136 136 263 59 59 284 284 284 0 0 0 138 138 138 36 36 36 60 60 30 12 12 12 38 38 38 0 0 0 83 72 0 1,733 20,791 5,584 26,376 12.68 $ 1,518 18,221 4,506 22,727 10.93 $ 1,375 16,502 3,743 20,245 9.73 $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 229 229 188 373 373 373 104 104 104 263 59 59 360 360 360 0 0 0 138 138 138 36 36 36 60 60 30 12 12 12 38 38 38 0 0 0 81 70 0 1,694 20,327 5,419 25,746 12.38 $ 1,480 17,756 4,504 22,261 10.70 $ 1,338 16,059 3,841 19,901 9.57
Tax Calculations: Single Single Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 26,376 -4,400 -2,800 19,176 2,876 0 0 0 2,876 690 0 0 0 690 2,018 5,584 22,727 -4,400 -2,800 15,527 2,329 0 0 0 2,329 559 0 0 -121 438 1,739 4,506 20,245 -4,400 -2,800 13,045 1,957 0 0 0 1,957 470 0 0 -232 237 1,549 3,743 25,746 -4,400 -2,800 18,546 2,782 0 0 0 2,782 668 0 0 0 668 1,970 5,419 22,261 -4,400 -2,800 15,061 2,259 0 0 0 2,259 542 0 0 0 542 1,703 4,504 19,901 -4,400 -2,800 12,701 1,905 0 0 0 1,905 457 0 0 -43 414 1,522 3,841
Table 5B: Single Parent with One Child
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 350 350 285 620 620 620 168 168 168 605 109 109 284 284 284 496 496 496 302 302 302 36 36 36 120 120 60 12 12 12 66 38 38 12 12 12 154 127 0 3,225 38,696 9,457 48,153 23.15 $ 2,674 32,093 6,899 38,991 18.75 $ 2,422 29,067 5,822 34,889 16.77 $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 350 350 285 470 470 470 129 129 129 605 109 109 360 360 360 418 418 418 302 302 302 36 36 36 120 120 60 12 12 12 66 38 38 12 12 12 144 118 0 3,024 36,284 8,390 44,674 21.48 $ 2,473 29,681 6,040 35,721 17.17 $ 2,231 26,770 5,004 31,775 15.28
Tax Calculations: Single + 1 Child Head of Household Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 48,153 -6,450 -5,600 36,103 5,539 0 -500 -480 4,559 1,329 0 -115 0 1,214 3,684 9,457 38,991 -6,450 -5,600 26,941 4,041 0 -500 -480 3,061 970 0 -115 0 855 2,983 6,899 34,889 -6,450 -5,600 22,839 3,426 0 -500 -480 2,446 822 0 -115 0 707 2,669 5,822 44,674 -6,450 -5,600 32,624 4,894 0 -500 -480 3,914 1,174 0 -115 0 1,059 3,418 8,390 35,721 -6,450 -5,600 23,671 3,551 0 -500 -480 2,571 852 0 -115 0 737 2,733 6,040 31,775 -6,450 -5,600 19,725 2,959 0 -500 -480 1,979 710 0 -115 0 595 2,431 5,004
Table 5C: Single Parent with Two Children
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 512 512 415 620 620 620 168 168 168 825 159 159 284 284 284 686 686 686 378 378 378 36 36 36 180 180 90 12 12 12 111 38 38 14 14 14 191 154 0 4,016 48,198 12,602 60,799 29.23 $ 3,241 38,891 6,928 45,819 22.03 $ 2,900 34,798 5,472 40,270 19.36 $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 512 512 415 470 470 470 129 129 129 825 159 159 360 360 360 576 576 576 378 378 378 36 36 36 180 180 90 12 12 12 111 38 38 14 14 14 180 143 0 3,781 45,374 10,526 55,900 26.87 $ 3,006 36,067 5,924 41,991 20.19 $ 2,676 32,109 4,515 36,623 17.61
Tax Calculations: Single + 2 Children Head of Household Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 60,799 -6,450 -8,400 45,949 8,296 -111 -1000 -960 6,225 1,991 -36 -230 0 1,725 4,651 12,602 45,819 -6,450 -8,400 30,969 4,645 -111 -1000 -960 2,574 1,115 -36 -230 0 849 3,505 6,928 40,270 -6,450 -8,400 25,420 3,813 -111 -1000 -960 1,742 915 -36 -230 0 649 3,081 5,472 55,900 -6,450 -8,400 41,050 6,924 -111 -1000 -960 4,853 1,662 -36 -230 0 1,396 4,276 10,526 41,991 -6,450 -8,400 27,141 4,071 -111 -1000 -960 2,000 977 -36 -230 0 711 3,212 5,924 36,623 -6,450 -8,400 21,773 3,266 -111 -1000 -960 1,195 784 -36 -230 0 518 2,802 4,515
Table 5D: Two Adults with No Children
Category Food Rent Utilities Health Care Transportation Child Care Clothing / Household Telephone Personal Expenses Renter&#39;s Insurance Dental Care Life Insurance Savings (5%) Total Monthly Expenses Annual Expenses Federal &amp; State Taxes Annual Income Equivalent Hourly Wage Avg. per Wage Earner $ $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 456 456 369 454 454 454 136 136 136 605 178 178 568 568 568 0 0 0 302 302 302 36 36 36 120 120 60 12 12 12 66 66 66 19 19 0 139 117 0 2,913 34,955 9,176 44,131 21.22 $ 10.61 $ 2,465 29,575 7,261 36,835 17.71 $ 8.85 $ 2,182 26,180 6,052 32,233 15.50 7.75 $ $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 456 456 369 373 373 373 104 104 104 605 178 178 720 720 720 0 0 0 302 302 302 36 36 36 120 120 60 12 12 12 66 66 66 19 19 0 141 119 0 2,954 35,448 9,351 44,799 21.54 $ 10.77 $ 2,506 30,068 7,436 37,504 18.03 $ 9.02 $ 2,221 26,650 6,220 32,870 15.80 7.90
Tax Calculations: Two + 0 Children Married Filing Joint Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 44,131 -7,350 -5,600 31,181 4,677 0 0 0 4,677 1,123 0 0 0 1,123 3,376 9,176 36,835 -7,350 -5,600 23,885 3,583 0 0 0 3,583 860 0 0 0 860 2,818 7,261 32,233 -7,350 -5,600 19,283 2,892 0 0 0 2,892 694 0 0 0 694 2,466 6,052 44,799 -7,350 -5,600 31,849 4,777 0 0 0 4,777 1,147 0 0 0 1,147 3,427 9,351 37,504 -7,350 -5,600 24,554 3,683 0 0 0 3,683 884 0 0 0 884 2,869 7,436 32,870 -7,350 -5,600 19,920 2,988 0 0 0 2,988 717 0 0 0 717 2,515 6,220
Table 5E: Two Adults with Two Children (one wage earner)
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 710 710 574 620 620 620 168 168 168 921 278 278 471 471 471 0 0 0 378 378 378 36 36 36 240 240 120 12 12 12 111 66 66 15 15 15 184 150 0 3,866 46,392 10,280 56,672 27.25 $ 3,144 37,729 7,196 44,924 21.60 $ 2,738 32,853 5,460 38,313 18.42 $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 710 710 574 470 470 470 129 129 129 921 278 278 582 582 582 0 0 0 378 378 378 36 36 36 240 240 120 12 12 12 111 66 66 15 15 15 180 146 0 3,784 45,406 9,928 55,334 26.60 $ 3,062 36,742 6,845 43,586 20.96 $ 2,659 31,913 5,126 37,039 17.81
Tax Calculations: Two + 2 Children ( one wage earner ) Married Filing Joint Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 56,672 -7,350 -11,200 38,122 5,718 -111 -1000 0 4,607 1,372 -36 0 0 1,337 4,335 10,280 44,924 -7,350 -11,200 26,374 3,956 -111 -1000 0 2,845 949 -36 0 0 914 3,437 7,196 38,313 -7,350 -11,200 19,763 2,964 -111 -1000 0 1,853 711 -36 0 0 676 2,931 5,460 55,334 -7,350 -11,200 36,784 5,518 -111 -1000 0 4,407 1,324 -36 0 0 1,289 4,233 9,928 43,586 -7,350 -11,200 25,036 3,755 -111 -1000 0 2,644 901 -36 0 0 866 3,334 6,845 37,039 -7,350 -11,200 18,489 2,773 -111 -1000 0 1,662 666 -36 0 0 630 2,833 5,126
Table 5F: Two Adults with Two Children (two wage earners)
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 710 710 574 620 620 620 168 168 168 921 278 278 568 568 568 686 686 686 378 378 378 36 36 36 240 240 120 12 12 12 111 66 66 23 23 23 224 189 0 4,697 56,361 13,941 70,302 33.80 $ 16.90 $ 3,975 47,697 9,130 56,827 27.32 $ 13.66 $ 3,529 42,347 7,225 49,572 23.83 11.92 $ $
Cost/Mo. Cost/Mo. Cost/Mo. Moderate cost Food Plan Low Cost Plan 710 710 574 470 470 470 129 129 129 921 278 278 720 720 720 576 576 576 378 378 378 36 36 36 240 240 120 12 12 12 111 66 66 23 23 23 216 182 0 4,541 54,495 12,569 67,065 32.24 $ 16.12 $ 3,819 45,832 8,466 54,298 26.10 $ 13.05 $ 3,381 40,570 6,593 47,163 22.67 11.34
Tax Calculations: Two + 2 Children ( two wage earners ) Married Filing Joint Standard Deduction Personal Exemption(s) Taxable Income Federal Tax (before credits) EIC-Federal Child Credit (New 1998) Dependent Care Credit Net Federal Tax State Tax (before credits) EIC-State Dependent Care Credit Renter Rebate Net State Tax FICA/Medicare Total 70,302 -7,350 -11,200 51,752 8,790 -111 -1000 -960 6,719 2,110 -36 -230 0 1,844 5,378 13,941 56,827 -7,350 -11,200 38,277 5,742 -111 -1000 -960 3,671 1,378 -36 -230 0 1,112 4,347 9,130 49,572 -7,350 -11,200 31,022 4,653 -111 -1000 -960 2,582 1,117 -36 -230 0 851 3,792 7,225 67,065 -7,350 -11,200 48,515 7,884 -111 -1000 -960 5,813 1,892 -36 -230 0 1,626 5,130 12,569 54,298 -7,350 -11,200 35,748 5,362 -111 -1000 -960 3,291 1,287 -36 -230 0 1,021 4,154 8,466 47,163 -7,350 -11,200 28,613 4,292 -111 -1000 -960 2,221 1,030 -36 -230 0 764 3,608 6,593
Budget Categories Food Housing Transportation Data Source(s) Date &amp; Frequency (Original)
U.S. Dept. of Agriculture (USDA), Center for Nutrition Policy &amp; USDA - April 2001 Promotion, &quot;Low Cost Food Plan&quot; U.S. Dept. of Housing &amp; Urban Development (HUD), &quot;Fair Market Rents&quot; HUD - January 2001 U.S. Dept. of Transportation (DOT), National Personal Transportation DOT - 1995 Every 5 years; IRS Survey, Demographic Special Reports and Internal Revenue Service (IRS) 2000 Annually cost per mile for business travel Non-Group: Mutual of Ohaha, Group: MVP $500 Co-Pay + Prescription Drug Rider, Dr. Dynasaur Co-Pay = $50 Northeast Delta Dental, Preventer 1 (small business) (for single, two persons and families) Vt. Dept. of Soc. &amp; Rehab. Services (SRS), Office of Childcare Services (rural) and Child Care Resource (CCR - urban) U.S. Dept. of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey (CES) Derived from Consumer Expenditure Survey Verizon, Standard Use Measured Service Smith, Bell &amp; Thompson (SBT) Fixed percentage of before tax income National Life of Vermont BISHCA September 2001 NDD - July 2001 SRS - May 2000 Study CES - 1999 Annually CES - 1999 Annually July 2001 July 2001 NA July 2001
Health Care Dental Care Childcare Clothing and Household Expenses Personal Expenses Telephone Renter&#39;s Insurance Savings Life Insurance
minimum wage, basic needs, living wage, child care, health care, livable wage, federal minimum wage, ends meet, two children, family budgets, minimum wage workers, working families, low-wage workers, standard of living, cost of living
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