The federal minimum wage hasn’t changed in nearly a decade and Texas has equally followed suit.
Texas is one of the 14 remaining states that pays its workforce, at a minimum, $7.25 an hour.
The cost of living throughout the state is increasing, especially in areas located in and around metropolitan cities. With the expansive growth that the city of Austin has endured in the past decade, the rising cost of living is beginning to seep into parts of Hays County.
At $7.25 an hour for 40 hours a week, an individual would make around $2,320 before taxes. Financial experts recommend spending no more than 30 percent of one’s monthly income on rent. So someone earning minimum wage would have about $696 for living accommodations.
Kyle and Buda have experienced a three to five percent increase in the average home rental amount in just the past year.
But simply raising the minimum wage could cause economic headaches for business owners. Raising wages would likely cause business owners to increase the price of their service to compensate for lost revenues, which could, in turn, prove to be counterproductive.
Julie Snyder, CEO for the Kyle Area Chamber of Commerce, said keeping the minimum wage steady would keep a level playing field for business owners as the government would not be mandating an increase in a business’s product.
“It’s hard to be competitive with a smaller budget, but if companies continue to pay above the minimum wage even if it stays at $7.25, it will keep a higher standard throughout the business community,” Snyder said. “I can be competitive by paying my workers $12 an hour, urging surrounding businesses to do the same.”
With cities like San Francisco fighting for $15 an hour minimum wage, small business owners coming from that environment can come to Texas and still pay well above the minimum wage of $7.25 and make a profit, Snyder said.
“As a Chamber and business representative, if the state looked to increase the minimum wage to $15 an hour, I would anticipate pushback from the business community,” Snyder said. “And with big companies moving to the Central Texas area with good wages and benefit packages, it keeps the environment here competitive.”
Despite the interest of the business community in mind, Snyder said the minimum wage should be a guideline for people to be able to live in their community. Snyder said the current minimum wage of $7.25 is, admittedly, low.
At $7.25 an hour for 40 hours a week, an individual would make around $2,320 before taxes. Financial experts recommend spending no more than 30 percent of one’s monthly income on rent.
According to the 30 percent rule, at $7.25 an hour, an individual in Texas should not pay more than $696 a month on housing which is about half of the average rent in Kyle and Buda.
For Rigo Garza, an engineering student at Texas State, working at H.E.B has provided financial stability through school which has enabled him to support himself while being a full-time student.
Garza has worked at the company for four years and currently receives $13 an hour. Like many other students, Garza is supporting himself completely, paying for his monthly living and school expenses without aid from his parents.
“If I was being paid $7.25 an hour I would have to work at least full-time and even then, I would probably just scrape by,” Garza said. “I wouldn’t have any extra spending money for going out with my friends or to buy new things.”
Living with roommates has also proved to be a great way for Garza to save money by splitting rent and utility costs, a common practice among college students.
When budgeting for the month, Garza said he likes to have at least a month’s rent in his checkings and savings account at any given time, which guarantees he’ll never be behind on monthly living expenses.
“I am very fortunate to work for a company that pays me this well,” Garza said. “That being said, I don’t know if raising the minimum wage would have positive or negative effects on the economy and businesses. I just couldn’t say for sure.”
The Central Texas area has seen a migration of residents from California, including new business owners looking to open their doors in the Lone Star State. According to a recent study by Wallethub, Texas is increasingly becoming a great place for young entrepreneurs, credited to Texas’ low wage costs.
“If I’m a retail business and need to hire a few part-time employees, for the same business in California, I would only afford to hire half the staff I could in Texas, or be forced to raise the price of my product,” Snyder said. “In states with higher minimum wage, the cost of gas, groceries and other everyday needs are more expensive.”
