Answer:
In order to make the minimum wage earn enough to be at that poverty line in five years, the minimum wage in five years would have to be:
$9.38.
Explanation:
a) Data and Calculations:
Current minimum wage = $7.50
Inflation rate between now and five years from now = 25%
The minimum wage in five years should be $9.38 ($7.50 * 1.25)
b) When the minimum wage increases from $7.50 to $9.38 in five years, it will match the inflation rate between now and give years' time of 25% because the difference in minimum wage of $1.88 (9.38 - $7.50) is equal to 25% ($1.88/$7.50 * 100). If the minimum wage of $9.38 is earned the wage earner will be able to get a family of three to 70% of the poverty line, just as $7.50 is able to get the family of three to 70% of the poverty line in the current year.
