Minimum Wage Impact on Life Insurance
Does minimum wage affect Life Insurance? The minimum amount an employer pays their employees for any work provided is referred to as a minimum wage. As you move across the country or even the world, the minimum wage varies accordingly. Texas has a minimum wage of $7.25/hr and California has a minimum wage of $12/hr. Wage affects an individual’s ability to have life, health, and other types of insurance.
Calculate Minimum Wage
For example, if you earn $7.25/hr and work 8 hours a day, that makes your income approximately $60/day or $1400/month. On average, an individual needs to be making $600/week or $2400/month to live a healthy life. Obviously, this is not possible for an individual with the earnings of $1000/month. They will lack the proper wages to survive, struggling to afford rent, utilities, gas, groceries, medicine, and much more. Therefore, the minimum wage affects one’s ability to acquire life insurance.
Earning Priorities
Suppose an individual would need $1000 more a month in order to afford their basic necessities– food, water, shelter, transportation, clothing, and healthcare. Do you think their priority is life insurance? I don’t think so! Compared to keeping a roof overhead and food on the table, life insurance is considered an unnecessary expense. Life insurance is also a benefit provided by a lot of employers. However, if you are an employee working on minimum wage, most employers are reluctant to pay for your insurance. The general calculation of paying for an employee is to pay as much as they earn for you.
For example, if you have a company and your employee helps you earn $6/hour, you will ideally be planning to pay your employee $6/hour. However, you as an employer cannot pay less than the minimum wage, which is $7.25 in Texas, so they are actually $1.25 in a loss. You will mostly try to cover the gap of $1.25 reducing the non-wage benefits such as health insurance, life insurance, or vacation days. Furthermore, as the minimum wage increases by the changes in government policies or other circumstances, it reduces the health insurance benefits for the employees in a similar amount.
Downsides of Wage on Life Insurance
There are various downsides to wages and the effect they can have on insurance. Affording health care is extremely difficult for low-income families as they do not have any insurance. Unexpected circumstances such as the death of the breadwinner could be another event that would leave the families with no help or resources. This leaves them with various casualties. Not having life insurance is one of the major risks for low or minimum wage earners. Increasing the minimum wage decreases their health care benefits, moreover, it also increases inflation in the economy. Inflation causes an increase in expenses and leaves those with minimum wage vulnerable.
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