Applied Math - Finances - Rent and Minimum Wage

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Introduction

There is theoretically no maximum amount a person can earn at a job, but in each state, there is a minimum. Minimum wage is the lowest amount of money a person can be paid per hour for a job.

One way to keep track of housing costs is to compare it to minimum wage. How many hours does a person have to work per week at minimum wage in order to afford an apartment or a home?

Example:

1.

At the time of writing this sentence, minimum wage in Texas is the same as the federal minimum wage, $7.25 an hour. A person has an apartment that costs $1,000 a month. How many hours does this person have to work in order to pay for just the apartment per month?

We divide the total cost per month, $1,000, by the dollars per hour, $7.25, to calculate the number of hours needed to work for the cost of the apartment.

\[\$1,000 \div \frac{\$7.25}{1 \text{ hour}}\]

To divide by a fraction, flip and multiply the fraction.

\[\$1,000 \cdot \frac{1 \text{ hour}}{\$7.25}\]

\[\cancel{\$}1,000 \cdot \frac{1 \text{ hour}}{\cancel{\$}7.25}\]

\[\frac{1,000}{7.25} \text{ hours} \approx\]

\[138 \text{ hours}\]

A person would have to work 138 hours to pay just for the apartment, without taking taxes into consideration first.

Practice Problems

1. The current minimum wage in Maine is $14.15 an hour. The average two bedroom apartment in a certain Maine town is $1,200 per month. How many hours per month would a person have to work to afford only the rent?

Theory Questions

1. What are the potential numerical consequences to raising minimum wage? In other words, what are some changes to a local community’s finances if minimum wage increases?