Association for Public Policy Analysis & Management

In recent decades, the jobs available to less-educated workers became less stable and less likely to pay a living wage. Simultaneously, income support policies for low-income families grew increasingly tied to employment and earnings. One policy response to poor quality jobs at the low end of the skill distribution has been local and state minimum wage laws. On April 2015, Seattle’s minimum wage law took effect; it has since raised the city minimum wage 3 times to a current rate of $11 to $15 depending on the size of the employer and whether the employer provides health insurance. In an effort to understand how the law is affecting the lives of the people that it targets, researchers from the Minimum Wage Study at the University of Washington conducted annual in-depth interviews with workers who were working in low-wage jobs and raising children.

This study uses multiple waves of respondents’ monthly budgets and qualitative interview data to examine both the objective and subjective realities of financial well-being. We draw from theories of subjective well-being and personal agency to understand how these families view their financial situation and the choices they have to get by or get ahead. Specifically, we ask four questions: 1) How do monthly income and expenses balance? 2) What are the respondents’ subjective experience of financial well-being? 3) To what extent does subjective financial well-being reflect the objective balance of monthly income and expenses? 4) To what extent does subjective financial well-being relate to the use of work, public assistance, and other strategies to make ends meet?

Preliminary findings suggest that many families have monthly expenses that exceed income, but the number of these families decreased as the minimum wage increased. Respondents fell into four subjective financial wellbeing groupings: “things are good,” “we’re getting by,” “unsatisfied,” and “stressed.” Subjective financial well-being relates to objective budget realities, but not as strongly as one might expect. While those in the stressed category often had a lower or negative net balance in their monthly budget, there were people in the other categories that fared similarly on paper, but maintained a different subjective experience of their situation. Respondents in each of the categories utilized public assistance and community-based support, such as SNAP and housing subsidies, but stressed respondents tended to rely on these resources the most. Respondents who fell into the “things are good” category used public assistance the least. Cutting back or shifting around expenses, depending on what was most urgent, was a strategy used by respondents across groups to make ends meet on a monthly basis.