what constitutes a living wage can vary slightly depending on who s defining it some 60 plus definitions and descriptions of the term exist according to the global living wage coalition despite some deviations the organization found certain common themes when comparing how it s defined in human rights declarations by non governmental organizations ngos and others 2
the consensus is that a living wage provides individuals with enough income to support themselves without falling below the federal poverty line fpl it gives workers and their families the means to maintain a decent standard of living so they can afford the idea of a living wage isn t new but it became a hot topic following the great recession the economic crisis highlighted the fact that some individuals just can t afford to make ends meet some experts believe that people who don t earn a living wage face challenges such as having to work more than one job pulling their children out of school and succumbing to unexpected health issues that they can t afford to address 3the living wage in the united states was 25 02 per hour in 2022 or 104 077 70 per year before taxes according to research from mit this annual figure is based on a family of four with two working adults each adult would have to work 52 weeks a year earning 52 038 85 or 25 02 for a 40 hour workweek that s an increase from 24 16 or 100 498 60 per year in 2021 4these figures can vary by family size and the cost of living in a particular city or location history of the living wagethe movement for a reasonable living wage is hardly new boston ship carpenters came together in 1675 to demand higher pay the american federation of labor founded in 1886 proposed a general living wage that adequately supported a family and maintained a standard of living higher than the 19th century european urban working class 5congress passed the fair labor standards act flsa in 1938 which established the first national minimum wage of 0 25 hour 6 the passage of the law marked a turning point for the labor movement in the united states in 1968 the federal minimum wage was set at 1 60 an hour about 14 23 per hour in 2023 dollars but unfortunately it slowly declined after the late 1960s due to inflation 78the federal minimum wage rose to 7 25 in 2009 where it remains in 2024 79 many states cities and municipalities have minimum wages higher than the federal minimum wage 10 these minimum hourly rates increased in 22 states in 2024 for as many as 9 9 million workers 11 california and areas of new york city increased their minimum wages for nonexempt workers from 15 50 and 15 respectively to 16 per hour 1213the minimum wage movement is aimed at establishing a living wage living wage vs minimum wagea living wage can t be confused with a minimum wage which is the least amount of money a worker can earn as mandated by law many experts argue that the federal minimum wage should be increased to align with a living wage they point out that the minimum wage doesn t provide enough income to survive because it doesn t rise with inflation the minimum wage can only increase with congressional action the minimum wage dollar amount has risen since its introduction by president franklin delano roosevelt in 1938 but the constant dollar amount which accounts for the effects of inflation has decreased for american households since 1968 the federal minimum wage of 7 25 per hour has remained at that level since 2009 it hasn t kept up with the cost of living since the late 1960s the federal minimum wage was 1 60 per hour in 1968 but it had an inflation adjusted value of about 14 23 per hour 78 most states have their own minimum wage laws to try and align it more closely with a living wage but it s actually below the federal minimum wage in some states 10 the federal minimum applies when this occurs 9the u s house of representatives passed an amended version of the raise the wage act in 2019 that would have gradually increased the federal minimum wage to 15 by 2025 14 the bill died in the senate but the debate about whether to lift the minimum wage rages on several states and cities nonetheless raised the local minimum wage and several companies have done so voluntarily 10the table below indicates the rates for 2023 and 2024 for the 22 states that raised their rates in 2024 11living wage and poverty levelspoverty in the u s may have something to do with the lack of a living wage in all states at least to an extent the raise the wage act of 2021 an updated version from 2019 that was introduced in january 2021 could potentially help reduce or eliminate low wages that don t lift families and individuals out of poverty the bill aims to increase the federal minimum wage over five years for regular employees along with those who receive tips and new workers under the age of 20 15the federal minimum wage of 7 25 an hour isn t enough to raise a family of four above the federal poverty level 31 200 in 2024 16 working and earning the federal minimum wage isn t enough to get out of poverty for families and not enough money to be classified as a living wage advantages and disadvantages of the living wageliving wages are very controversial the ideas surrounding them and their effects on the economy are hotly debated supporters of a living wage argue that paying employees higher salaries benefits corporations as a whole they claim that employees who earn a living wage end up being more satisfied which helps to reduce staff turnover another advantage to living wages is that they reduce corporate costs associated with recruitment and training proponents of living wages point out that higher wages improve employee morale and this can often lead to higher productivity this in turn allows companies to benefit from increased worker output 3some critics suggest leaders should scrap the idea of living wages altogether naysayers believe that implementing a living wage establishes a wage floor and this harms the economy by hurting companies especially small businesses that can t afford to raise salaries companies may reduce the number of employees hired if they re forced to pay increased wages this creates higher unemployment resulting in a deadweight loss people who would work for less than a living wage are no longer offered employment 17benefits corporationsboosts employee satisfactionreduces corporate turnoverlowers recruitment and training costscreates wage floorsharms economyreduces hiringincreases unemployment through deadweight losscalculating the living wageearning a living wage means that you can pay necessary costs including shelter food healthcare childcare taxes and transportation a living wage may be different depending on your circumstances including the state and town in which you live mit created a living wage calculator in 2004 that s updated in the first quarter of every year this online calculator provides the living wage minimum wage and poverty wage for 50 states plus counties and the district of columbia first plug in the state then choose from a list of counties the calculator shows the wages for individuals couples one or both working and families with up to three children 18alternatives to a living wageone alternative to a living wage could be a liveable federal minimum wage that allows individuals and families to earn enough to pay for basic necessities and medical care another alternative is a universal basic income from the federal government that covers basic living costs various plans address universal income from only giving money to those earning below the poverty line to paying every citizen a certain amount of money the u s doesn t offer this type of income as of 2024 but some might suggest that president biden s 1 9 trillion american rescue plan was a step in this direction 19 families who qualified received government issued cash benefits for each child in july 2021 but the program lasted only for 2021 20