Okay, I’ll try and work this one out.
Details
Englewood, NJ apparently has an average home value of $512,307 and a median value of $405,000. Englewood Cliffs apparently has an average home value of $1,323,864 and a median home value of $1,050,000.
I don’t really know how to be accurate about this, so I’m just assuming the cost of living is 2% of home value per month (1% for mortgage/rent and 1% for everything else) and that there’s an average of 1.6 people working per household. The cost of living in a $405,000 home would be $8,100/mo, or $97,200/yr. There are 52 40-hour workweeks in the year, for a total of 2,080 work-hours per year. 1.6 people per household working 2,080 hours per year is 3,328 hours worked per year per household. $97,200/yr divided by 3,328 hours gives a minimum living wage of $29.21.
In formula form, we can calculate the living wage from home value as y=x*.02*12/52/40/1.6 or y=x*.24/3328. In table form,
| Locality | Mean home value | Living wage | Mean wage |
|---|---|---|---|
| Englewood, NJ | $512,307 | $36.95/hr | $44.28/hr |
| Englewood Cliffs, NJ | $1,323,864 | $95.47/hr | $65.55/hr |
| Locality | Median home value | Living wage | Median wage |
|---|---|---|---|
| Englewood, NJ | $405,000 | $29.21/hr | $28.51/hr |
| Englewood Cliffs, NJ | $1,050,000 | $75.72/hr | $45.96/hr |
The average wage columns are based on census data from the 2019 American Community Survey (‘median/mean earnings (dollars) for full-time, year-round workers with earnings’, table S2001). Englewood’s mean individual income was $92,093 per annum (avg. $44.28/hr) and its median individual income was $59,302 per annum (avg. $28.51/hr). Englewood Cliffs’s mean individual income was $136,339 per annum (avg. $65.55/hr) and its median individual income was $95,602 per annum (avg. $45.96/hr).
As you can see in the above table the residents of Englewood, NJ seem to be getting by without a minimum wage ordinance, but there is a disparity between the average wage and living wage in Englewood Cliffs, NJ. Therefore I expect that disparity would translate into political pressure to either raise the minimum wage or zone for more affordable housing, or both.
I’m saying that momentum for a higher minimum wage might be better spent in city hall than D.C.
My numbers for a living wage are significantly higher at $75.72 to $29.21, but I assumed 1.6 working people per home and median home values from the realtor’s website. It wouldn’t factor in things like apartment housing, which could possibly bring the numbers way down. Either way both of us have roughly 2:1.
Assume Englewood Cliffs sets their minimum wage to double the wages in Englewood. Businesses that don’t want to or can’t afford to operate with such high wages would move away. On the whole I think this is a good thing, essentially I see it as market forces correcting the unreasonably high cost of living.
I guess subsidies are an option but funding them creates a vicious inflationary cycle.
The resistance of businesses would make it more difficult to increase the wage floor to begin with, though.
~Max