The Mathematics of Fair Wages: Why $25/Hour Should Be Today’s Minimum (And What Happens When We Ignore Basic Math)

1st of series, stick to the end of the series for solutions.

Let me ask you something that might make you uncomfortable: When was the last time you actually calculated whether what you’re paying, or being paid, makes mathematical sense?

Not what feels right. Not what the market supposedly bears. Not what your political tribe tells you is correct. Just pure mathematics.

What I’ve observed is that we’ve collectively agreed to ignore basic arithmetic when it comes to wages. And this isn’t a political statement!. It’s a systems failure that’s creating cascading dysfunction across our entire economy.

Here’s the reality that nobody wants to discuss: If we simply calculate cost-of-living increases since the last federal minimum wage raise, minimum wage should be approximately $24-25 per hour today. Not for skilled labor. For unskilled labor.

And before you close this tab in disagreement, I’m asking you to set aside whatever emotional response just surfaced and stay with me through the actual numbers. Because what’s happening right now is affecting you whether you’re an employer, an employee, or someone who depends on the quality of services others provide.

The Math Doesn’t Care About Your Politics

The federal minimum wage was last raised in 2009 to $7.25 per hour. That’s sixteen years ago as of 2025.

Here’s what most people miss: From a systems perspective, wages aren’t just numbers, they’re supposed to represent purchasing power. And purchasing power has a measurable relationship with cost of living.

When you run the actual calculations on cost-of-living increases from 2003 to 2025, you find a multiplier of approximately 4.25 to 4.5 times. This isn’t my opinion. This is what happens when you track housing costs, food prices, transportation, utilities, and basic necessities over two decades.

What does this mean in practice?

A job that paid me $12.75 per hour in 2003 should pay roughly $60 per hour today to maintain the same purchasing power and quality of life. A minimum wage job that paid $7.25 in 2009 should pay $24-25 per hour now.

Think about that for a moment. We’re not talking about giving people more. We’re talking about maintaining the same standard of living that minimum wage was designed to provide in the first place.

But here’s where it gets interesting, and disturbing.

The Skilled Labor Crisis Nobody’s Talking About

I’ve personally witnessed someone who was paid $60/hour for skilled trade work twelve years ago now being offered one-third of that rate for the same work. Not because his skills diminished. Not because the work became less valuable. Simply because employers have collectively decided that’s what they can get away with paying.

Let me give you a concrete example from our own experience.

We encountered a situation where a skilled tradesman, doing plumbing, electrical, and construction work, was told he was being paid “top dollar” at $20 per hour. This is for work that prevents your house from flooding, falling down, or electrocuting you. Work that requires years of experience, licensing, and the kind of judgment that only comes from having done thousands of installations.

Here’s what he should actually be making: If we apply the same cost-of-living multiplier to what he was paid twelve years ago, he should be earning $120 per hour today. That’s not accounting for increased skill level, or years of accumulated expertise. That’s simply maintaining the same purchasing power he had over a decade ago.

Instead, he’s was being paid $20 per hour and told it’s “top dollar.”

Let that sink in for a moment. We’re not talking about a 10% or 20% pay cut. We’re talking about someone making one-sixth of what they should be earning based purely on cost-of-living increases.

Who’s Really Living in the Margins

I know people, real people, not hypothetical cases, living in office buildings. Each office becomes a makeshift apartment. They get gym memberships not for fitness, but for access to showers. They share kitchenettes between multiple “units.”

And here’s what might surprise you: These aren’t people without skills or education. These are wellness and health practitioners. Legal workers. Skilled gardeners who understand permaculture, soil health, and ecosystem design. Clothing designers and retailers. Community builders who hold social infrastructure together.

These are people who have developed specialized knowledge over years, sometimes decades. They’re not teenagers learning their first job. They’re experienced professionals being systematically devalued to the point where they cannot afford basic housing.

This is happening in America in 2025. This isn’t a developing nation problem. This is what happens when we ignore mathematical reality long enough.

And here’s the part that should terrify everyone: When we push skilled professionals into survival mode, we don’t just harm them – we degrade the entire fabric of our communities and infrastructure.

The Real Cost of “Saving Money”: A Case Study

Let me share what I’ve witnessed firsthand, because it illustrates the hidden costs of underpayment better than any abstract argument could.

I know someone who hired tradesmen at the lowest possible wage to work on their house. They insisted this was “smart budgeting.” Here’s what actually happened:

• The electrical work was done poorly, leading to a near-electrocution incident
• The plumbing leaked, causing flooding and water damage
• Structural elements weren’t properly secured and began failing

The result? They had to pay to have the work done again. And then again. Each time hiring slightly more expensive contractors, each time discovering new problems created by the previous cheap work.

The total cost ended up being three to four times what it would have cost to hire properly compensated, skilled tradespeople the first time.

But it gets worse. This same person hired what they called “gardeners” – actually just unskilled workers with lawnmowers, weed wackers, and chemical sprayers – at the lowest wage in the area. The workers show up weekly, spend half the day on their phones, ignore instructions, and do whatever requires the least effort.

Over time the property degraded. The landscaping died. The soil became compacted and dead. And eventually, they will have to spend thousands remediating the damage and starting over with actual skilled gardeners who understood what they are doing.

From a systems perspective, this is the inevitable outcome of underpayment. You don’t save money. You just redistribute it into damage control, do-overs, and crisis management.

Reframing the Wage Scale: What Different Skill Levels Actually Deserve

Let me be clear about something, because this is where many discussions go off the rails:

$25-30 per hour is a fair baseline for low-skill or entry-level labor. This is your gas station attendants, basic food service, general laborers, simple maintenance work. These are essential jobs, and people doing them deserve to afford basic dignity: stable housing, food, transportation, and the ability to handle normal life expenses.

Skilled labor should start at $40 per hour minimum and scale up from there based on experience and specialization.

Think about what skilled labor actually means:

• Years of training and education
• Licensing and certifications
• Deep knowledge that prevents catastrophic failures
• Judgment developed through thousands of hours of practice
• Responsibility for outcomes that affect health, safety, and major financial investments

When you hire a skilled electrician, you’re not just paying for their time. You’re paying for the house fire that doesn’t happen. When you hire a skilled plumber, you’re paying for the flood that doesn’t occur. When you hire a real gardener who understands ecosystems, you’re paying for soil health that lasts decades instead of dependency on chemical inputs.

The tradesperson, who I mentioned earlier, making $60/hour equivalent twelve years ago, should be making $120/hour today just from cost-of-living increases. Add in skill development, additional experience, and increased responsibility, and $150-180/hour wouldn’t be unreasonable for master-level work.

Does that sound shocking? It shouldn’t. That’s what it costs to have someone ensure your $300,000-$500,000-$1,000,000+ house doesn’t burn down, flood, or collapse.

The Geographic Reality Check

Now, I understand the counterargument: “But cost of living varies by region!”

Yes, it does. And we need to be brutally honest about what that actually means in practice.

In San Francisco, $25/hour won’t even rent a studio apartment. Maybe, and this is a generous maybe, it might get you a room in someone else’s house. At that wage in a high-cost city, your options are:

1. Live with your parents (if you’re young and they’re local)
2. Share a house with multiple roommates
3. Live in an office building (which is actually happening)
4. Commute 2-3 hours each way from an affordable area

None of these options represent sustainable living for a working professional. None of them allow for the kind of stability that lets someone excel at their work, build a life, or contribute fully to their community.

Here’s a more honest framework for regional variations:

• $25/hour is the absolute federal baseline for unskilled labor in lower-cost regions
• In medium-cost areas, that baseline should be $30-35/hour
• In high-cost metros, the baseline should be $40-50/hour
• Skilled labor should always be calculated at 1.5x to 3x the regional unskilled baseline

What I’ve observed is that the “low cost of living” argument is often used to justify paying people wages that still don’t cover basic needs. Yes, housing might be cheaper in rural Tennessee than San Francisco, but food costs are often higher, healthcare access is more limited, transportation costs are similar, and the quality of life isn’t equivalent, it’s just differently constrained.

Why Employers Are Actually Harming Their Own Businesses

Let me challenge a deeply held assumption: That paying people less increases your profit margin.

What I’ve observed across multiple industries is that this is one of the most destructive myths in modern business. Here’s why:

Scenario A: You pay skilled labor $40-60/hour (fair wage for their skill level)

• Workers can afford stable housing and don’t live in survival mode
• Workers arrive well-rested, focused, and mentally present
• Workers take pride in their craft and reputation
• Work quality is consistently high with minimal callbacks
• Your reputation grows through word-of-mouth and quality referrals
• You can charge premium prices for premium work
• Customer lifetime value increases dramatically
• Recruiting becomes easier as your reputation spreads
• Your best people stay because they’re respected and compensated fairly

Scenario B: You pay skilled labor $15-20/hour (below sustainable)

• Workers live in constant financial stress and survival mode
• Workers may be working multiple jobs, leading to fatigue and errors
• Workers feel exploited and develop resentment toward you
• Work quality becomes inconsistent at best, dangerous at worst
• You face constant callbacks, warranty issues, and liability risks
• Your reputation suffers through negative reviews and word-of-mouth
• You’re forced to compete purely on price in a race to the bottom
• High turnover means constant recruiting and retraining costs
• Your best people leave the moment they find better opportunities
• You end up with only the workers who can’t find better jobs

Which business model is actually more profitable long-term?

From a systems perspective, you cannot extract value from a system indefinitely without replenishing it. When you underpay workers, you’re extracting value from the labor pool without providing enough compensation to sustain that pool. Eventually, the system collapses. The workers burn out, make costly mistakes, or leave. The quality degrades. The reputation suffers. The business fails.

And it’s collapsing right now.

The “I Can’t Afford It” Trap

I hear this constantly from employers: “I’d love to pay more, but I can’t afford it.”

Let me offer you a different framework for thinking about this.

If your business model only works when you pay people below what they need to survive, you don’t have a viable business model. You have a business that’s being subsidized by your workers’ suffering and the degradation of your community’s social fabric.

Here’s what you actually can’t afford:

• The reputation damage from poor quality work spreading through your community
• The turnover costs from constant employee churn and retraining
• The liability from mistakes made by exhausted, resentful, underpaid workers
• The loss of your best people to any competitor who does pay fairly
• The gradual degradation of your service or product quality that drives customers away
• The do-overs and warranty work from jobs done poorly the first time
• The compounding costs of short-term thinking that destroys long-term viability

What I’ve observed is that businesses resisting fair wages eventually face a harsh correction. They either fail entirely, or they’re forced to raise wages anyway after bleeding reputation, quality, and their best workers for years. By the time they correct course, they’ve often damaged their brand beyond repair.

The solution isn’t complicated:

1. Evaluate each position honestly: Does this person’s work directly impact your business success, reputation, and customer outcomes?
2. If yes, pay them well. If they’re not good at what they do, let them go and find someone who is. If they are good, compensate them fairly for their skill level.
3. Raise your prices to support fair wages. Build your pricing model around paying people what they’re worth, not around exploiting their desperation.
4. Focus on quality over volume. Do fewer jobs at higher quality and higher prices rather than racing through high-volume, low-quality work.
5. Communicate your value. Educate customers on why quality work costs what it costs, and why it’s worth every penny compared to the alternative.

“But customers won’t pay higher prices!”

Really? Or is that an assumption you haven’t tested?

People absolutely pay premium prices for premium quality. They pay for reliability. They pay for craftsmanship. They pay for peace of mind. They pay for not having to deal with floods, electrocutions, and structural failures.

What they won’t tolerate indefinitely – what they’ll eventually rebel against – is paying any amount of money for work that has to be done multiple times because you hired desperate people at exploitative wages who did it wrong the first time.

The Cascading Failure Pattern

From a systems perspective, underpaying workers creates a cascading failure pattern that most employers completely miss because they’re only looking one step ahead.

The cycle looks like this:

1. Worker is paid below livable wage for their skill level
2. Worker cannot afford basic necessities and lives in survival mode
3. Worker becomes resentful, disengaged, and mentally exhausted
4. Quality of work degrades due to resentment and inability to focus
5. Customer satisfaction drops as quality issues multiply
6. Business reputation suffers through reviews and word-of-mouth
7. Revenue declines as customers choose competitors or need do-overs
8. Employer, seeing revenue decline, doubles down on “cost-cutting” through lower wages
9. Best workers leave for any opportunity that pays better
10. Employer is left with only desperate workers who can’t find other jobs
11. Quality degrades further
12. Cycle intensifies until business failure

This isn’t theoretical. This is happening right now across industries.

And here’s what I’ve observed: The businesses that break this cycle and commit to fair compensation don’t just survive, they thrive. They become known as the premium option. They attract the best workers. They can charge prices that reflect true value. They build sustainable businesses that weather economic storms because they’re built on solid foundations rather than exploitation.

What Happens Next: Two Diverging Paths

We’re at a fork in the road, and the choice isn’t really a choice, it’s a mathematical inevitability presenting itself as an option.

Path 1: Continue Ignoring the Math

• More skilled professionals living in cars, office buildings, and precarious situations
• Continued degradation of service and product quality across all industries
• Growing resentment and social instability as people can’t afford basics despite working full-time
• Increasing difficulty finding skilled workers willing to work for unsustainable wages
• Business failures as reputation and quality collapse from underpaid, resentful workers
• Economic contraction as workers lack purchasing power to participate in the consumer economy
• Loss of institutional knowledge as experienced workers leave industries entirely
• Increasing safety hazards as critical infrastructure work is done by underpaid, overworked people

Path 2: Align Reality with Mathematics

• Businesses raise prices to support sustainable wages matched to skill levels
• Workers can afford stable housing and basic needs
• Quality of work increases across all sectors as workers are respected and compensated fairly
• Customer satisfaction improves as quality becomes consistent
• Businesses compete on quality and value rather than exploitation
• Economic growth as workers have purchasing power to participate fully in the economy
• Retention of skilled workers and institutional knowledge
• Safer communities as critical work is done by fairly compensated professionals who can focus

From a systems perspective, Path 1 leads to collapse. It’s not sustainable mathematically, socially, or economically. Path 2 leads to recalibration and growth.

The question isn’t whether we’ll end up on Path 2. Mathematics doesn’t care about our resistance. Reality doesn’t negotiate. The question is how much damage we’ll do to ourselves, our businesses, our communities, and our workers before we accept what the numbers have been telling us all along.

Your Next Move

So here’s what I’m asking you to do, regardless of whether you’re an employer or an employee:

If you’re paying people:

Set aside your political beliefs for exactly ten minutes. Calculate what you’re actually paying per hour for skilled and unskilled positions. Compare that to local cost of living. Ask yourself honestly: Can someone live with dignity on this wage?

If the answer is no, you have three choices:

1. Raise wages to sustainable levels and adjust prices accordingly
2. Improve efficiency and value delivery to support higher wages at current prices
3. Accept that your business model is unsustainable and will eventually fail

There is no fourth option. The math doesn’t care about your justifications.

If you’re being paid:

Calculate your hourly rate. Compare it to the appropriate baseline:

• $25-30/hour for low-skill work
• $40-60/hour for skilled work
• $60-120/hour+ for highly skilled, specialized, or master-level work

If you’re significantly below these numbers, understand that you’re not just accepting less money; you’re accepting a dramatically lower quality of life than what was standard two decades ago. You’re subsidizing someone else’s business model with your inability to afford stable housing, healthcare, and basic dignity.

Ask yourself: Why? And more importantly: For how much longer?

For everyone:

Stop letting political tribalism override mathematical reality. This isn’t about left or right. It’s about arithmetic. It’s about systems that either maintain equilibrium or collapse into dysfunction.

The cost-of-living increase is real. The wage stagnation is real. The mathematical gap is real. The consequences of ignoring these realities are manifesting all around us: in office buildings converted to makeshift housing, in poor quality work requiring multiple do-overs, in skilled professionals leaving industries entirely, in social instability and resentment.

Everything else is just noise designed to distract us from acknowledging what we can plainly see and calculate.

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I want to hear from you. Challenge these numbers. Share your experiences. Tell me where this analysis fails or where it resonates with what you’re witnessing in your own life and community.

What I’ve observed is that we’ve stopped having real conversations about wages because we’ve made it tribal and political. We’ve wrapped it in ideology and emotion to avoid dealing with the uncomfortable mathematical reality staring us in the face.

Let’s strip that away. Let’s talk math. Let’s talk systems. Let’s talk about what actually works versus what’s collapsing around us.

Because ready or not, reality is coming. And it doesn’t negotiate. It doesn’t care about your political affiliation, your business plan, or your justifications. It just is.

• What’s your number?
• What are you paying or being paid?
• Does it match the math?
• Does it provide for basic human dignity and stable living?

Drop a comment below. Let’s get a real conversation started about this. Let’s break through the noise and deal with reality as it actually is, not as we wish it were or as we’ve been told it should be.

The mathematics of fair wages aren’t complicated. We’ve just been collectively pretending we can’t do basic arithmetic.

It’s time to stop pretending.