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 insurance.
Calculate Minimum Wage
For example, if you earn $7.25/hr, it makes your income approximately $60/day. Which is equal to around $1400/month. On average, an individual needs $600/week to live a healthy life. According to this, an individual without a family should be making at least $2400/month to endure a healthy life. This is not possible for an individual with the earnings of $1000/month. They will lack the proper wages to help them lead a nice day-to-day life. Therefore, the minimum wage affects one’s ability to acquire life insurance.
Priorities With Earnings
Suppose an individual is short of $1000 to be able to afford basic necessities in life, do you think their priority is life insurance? I don’t think so! This is a person who is barely able to make it for themselves and their family to be able to get enough meals for the day and a livable place for shelter. Thus, life insurance is considered as an unnecessary expense by a lot of people. Life insurance is also a benefit provided by a lot of employers. However, if you are an employee working on minimum wage, employers are reluctant to pay for health 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.
More than half of the Americans receive their health care insurance from their employers. Losing these benefits to inflation or an increase in the minimum wage would not be fair.
Downsides of Wage on Life Insurance
However, there are various downsides to wages and the effect they can have on insurance, as well. 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 earning person 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.
Get with one of our life and financial experts today! They can help you choose a policy. Additionally, they can conduct a policy review to ensure that your current policy is still right for you!