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Guest Essay

The M.I.T. Professor Defining What It Means to Live

By Nick Romeo

Mr. Romeo is working on a book about the people and ideas defining a new paradigm in economics.

The idea of a living wage is an old dream, with origins in the work of thinkers as ideologically diverse as Adam Smith, St. Thomas Aquinas and Karl Marx. While its exact meaning is often left conveniently vague, Theodore Roosevelt offered a basic definition in a 1912 speech: A living wage should let workers “secure the elements of a normal standard of living,” including education, recreation, child care, a cushion for periods of sickness and savings for old age.

Roosevelt was making a moral claim, not just an economic one. He saw paying workers enough to meet these basic standards as a matter of justice.

More than a century later, millions of working Americans are still paid too little to afford the modest elements in Roosevelt’s vision. Such low wages are not inevitable; they reflect political and moral choices about what defines a “normal standard of living,” and who deserves to enjoy one.

Defining a meaningful living wage is a two-part challenge. There’s the moral imperative of framing a generous definition of “living,” and the empirical question of how much it costs in a country as wildly diverse and stratified as the United States. A handful of “living wage calculators” attempt to solve both problems; by far, the most widely cited is maintained by the M.I.T. economic geographer Amy Glasmeier.

Her calculator generates a “living wage” based on the number of children and working adults in a household, as well as the cost of housing, child care, transportation, out-of-pocket health care costs, food and other typical expenses (such as cleaning products) representative of conditions in their communities. She told me recently that roughly 100,000 people visit her living wage calculator every month and that she receives regular questions from many employers large and small who use the tool to set wages.

She also receives dozens of frustrated emails each month from people across America saying they can’t afford to live on her estimate of a living wage. As Dr. Glasmeier readily acknowledges, her tool includes no provision for eating in a restaurant, buying gifts for loved ones, repaying school or credit card debt, saving for retirement or unexpected expenses or taking a vacation, however brief.

Dr. Glasmeier, to her credit, recently made some changes to her calculator. She added the cost of cellphone and broadband service, gathered more granular county data on child care costs and introduced a “civic engagement” category to support recreation, pets, museums, movies and reading material. Those may seem like minor tweaks, but they’re important progress, however partial.

Not paying people enough to live implies indifference to whether they continue to live, undermining basic standards of decency and further eroding the foundations of a functional democracy. With many companies now inching toward more humane compensation, the question of how to define a living wage deserves broader public discussion.

For much of American history, people understood that morality was profoundly relevant to wage-setting. The idea for a living wage was pioneered by religious thinkers like John Ryan, a priest whose 1906 book , “A Living Wage: Its Ethical and Economic Aspects,” argued it should enable not only the absolutely essential but also “the conditions of wider and fuller life.” Other Progressive figures like Roosevelt and the labor leader Samuel Gompers also embraced this argument, and workers themselves lobbied for the creation of the Bureau of Labor Statistics so that they would have accurate data on wages to inform their campaigns.

Around the same time, however, followers of a very different tradition were claiming that morality had no relevance to the question of wages. In 1926, one scholar called a “just” wage “a contradiction in terms.” By the 1980s, many economists had fully embraced this view, and a philosopher claimed the competitive market was a “ morally free zone .”

But to exclude moral considerations from markets is itself a moral choice, even if the calculus is not always simple. Some employers with razor-thin margins might be unable to pay a living wage, and even Ryan argued that such businesses should not be obligated to do so during a rough patch. In the long run, however, Ryan held that part of being a successful business was paying a living wage. Those that did not should eventually go out of business.

And while it is a common refrain that a living wage would force employers to hire fewer workers and thus destroy jobs, there are persuasive empirical and philosophical responses to this objection. The stagnation of real wages for American workers does not reflect their low productivity so much as the increasing concentration of wealth within companies. In 1965, the average top chief executive made 21 times as much as a typical worker in America. In 2020, the ratio was 351 to 1.

For those who want to pay a living wage, Dr. Glasmeier’s tool is a good start. Even with its omissions, the calculator still generates figures for most locations that are far above the federal minimum wage of $7.25. For a single parent of one child in Kansas City, Mo., for instance, its living wage estimate is $30.02 . In Santa Clara County, Calif., the heart of Silicon Valley, it’s $52.12 .

These figures show the inadequacy of a campaign for a $15 minimum wage; in many areas, a more realistic goal would be a $50 minimum wage. And even these numbers likely understate the true cost of living. Phones get dropped, cars get parking tickets, Covid scares require a series of tests, and emergencies mean missed shifts at work or finding a last-minute babysitter: These sorts of costs add up.

Reasonable people can disagree about what sort of life a living wage should make possible. But if it feels wrong that the person who cares for your children or delivers your packages is not paid enough to go out to dinner once a month, save anything for retirement or take a vacation, then the definition of a living wage must include more than Dr. Glasmeier’s current categories. Companies that enjoy the reputational benefits of paying a living wage must also confront the meager subsistence that Dr. Glasmeier’s influential definition actually enables.

While her efforts to create an empirically defensible, geographically precise and broadly used living wage calculator are admirable, the concentration of so much influence in her hands is also unsettling. If Dr. Glasmeier had decided not to include a category for civic engagement in 2021, for instance, would this make it acceptable for the children of working Americans never to join a sports team, go to the movies or attend a summer camp? Conversely, how might recent history have changed if she had made her definition more generous long before the 2016 election and major employers had followed her advice?

It’s encouraging when an economist makes a good moral choice — but there’s nothing specific to economists’ training that equips them to answer the question of whether working Americans deserve to be able to afford to go bowling, buy books or pay for broadband. The Harvard philosopher Michael Sandel has eloquently criticized the growing role of economists as policy advisers, arguing that we too often abandon to technocrats the power to decide questions such as, “What makes for the dignity of work? What do we owe one another as citizens?”

While a living wage calculator is a useful spur to our political imagination, the line between “living” and merely subsisting is something that a democratic society must publicly debate and ultimately embody in lasting policies.

Gompers argued in 1898 that a living wage should be “sufficient to maintain an average-sized family in a manner consistent with whatever the contemporary local civilization recognizes as indispensable to physical and mental health or as required by the rational self-respect of human beings.” For anyone less than pleased with the direction that America’s “contemporary local civilization” is trending, it’s worth asking whether all of our fellow citizens have access to jobs that pay what “the rational self-respect of human beings” requires.

Nick Romeo (@Nickromeoauthor) is working on a book about the people and ideas defining a new paradigm in economics.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

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Argumentative Essay on Minimum Wage

Categories: Income Inequality Minimum Wage

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Published: Mar 5, 2024

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109 Minimum Wage Essay Titles & Examples

🤫 secrets of a powerful minimum wage essay & thesis, 🏆 best minimum wage essay topics & examples, 📌 most interesting minimum wage topics to write about, 👍 good minimum wage research topics, ❓ research questions about minimum wage.

Your argument is the most crucial aspect of your minimum wage essay, whether you are taking a stance for or against raising it. Thus, you will have to cover the unemployment and poverty causes and effects, which create the borderline for people’s bare existence.

However, explaining the mechanism behind the issue is only one of the facets. You will need to pay attention to creating a remarkable minimum wage thesis statement, outline, and more. Here are all the things you need for successful essay writing:

Structure. Ideally, you should write your outline before you begin writing instead of during the process. It should reflect your argument and allow for the creation of a smooth transition between subtopics. Being coherent and easy to read ensures your readers interest in any topics you may mention.
Ideas. These may come from your previous research, thoughts, or brainstorming. The more thought you put into your argument, the more minimum wage essay ideas you may gather and present to your readers. Doing so helps you create an excellent essay that is ready to counter-argue any problem.
Thesis statement. One concise and on-point sentence should embody your whole paper, giving your readers a glimpse of what to expect from your work and what conclusions you hope to draw. If you are not sure of the quality of your thesis statement, then you can read sample sentences online. Continuously ask yourself whether the examples that you have found help the essay writer condense their argument.
Title. Grabbing your readers’ attention is possible when you have understood how to create well-written minimum wage essay titles. Without them, your essay may be overlooked and forgotten, so do not be afraid to experiment with differently worded titles so you can judge, which may have the best effect on a potential audience.
Conclusion . Finalizing your work and drawing coherent resolutions from it is the goal of all minimum wage essay questions. Do not reference any of the research you called upon in this paragraph, but instead make obvious the links between your used sources and final verdict. Your conclusion should be most representative of your work and leave a good impression on your audience.

Apart from these structural elements, you should also pay attention to the research aspect of your paper, integrating different credible titles into your bibliography.

This action demonstrates a comprehensive knowledge of minimum wage essay topics, as well as highlights the congruency of your thoughts with the academic community.

You may use different sources, from books and journals, from contemporary poverty speech performances to deportation laws.

You should not confine yourself to your outlined timeline and can mention modern-day implication of minimum wage, especially if it adds to your argument and does not forget your central issue.

Sticking to your argument is an essential aspect of essay writing. Asses each sentence you write and remove it if it does not suit your thesis statement. Your readers will notice all loose-ended and pointless arguments, which are irrelevant to your central theme.

Removing them will only increase the quality of your essay, allowing you to get better marks by being both coherent and comprehensive.

If doing so has dropped your work below your aspired word count, then you should review your outline and look for ways to develop your argument differently.

Do you want to write an essay that is better than merely “excellent”? Check IvyPanda’s essay samples to find out how!

Minimum Wage: Pros and Cons, Effects of Increase Labor union laws and minimum wage laws have contributed a lot to the current trend of structural unemployment in the United States of America.
The Raising the Minimum Wage Article by Scott Raising the minimum wage: Good for workers, businesses, and the economy. The issue of the federal minimum wage has been long debated as it affects the economic status of the U.S.
Effects of Minimum Wage Increase The proposed increase will indeed benefit workers by raising their overall living standards by granting minimum wage employees a more appropriate pay level to contend with cost-of-living increases and the supply side of the labor […]
Effects of an Increasing Minimum Wage A minimum wage increase is beneficial to the company in the long term but expensive in the short term. The rising minimum wage would lead to reduced research and development in purchasing machinery and software, […]
Definition of the Minimum Wage and Its Aspects An increase in minimum wages will lead to substitution in the market. An increase in wages will be directly proportional to the prices of commodities in the market.
Researching of Minimum Wage and Living Wage Like any other commodity, labor is determined by supply and demand in the market, and any artificial intervention disrupts the market balance, leading to shortages and gray employment.
Raising the Minimum Wage and Its Disadvantages The average leftists will try to achieve an increase in the level of salaries with the help of the minimum wage.
Minimum Wage: Overview and Analysis The pandemic has led to a huge deterioration of the economy, and raising the minimum wage is not something that businesses can handle.
Minimum Wage Legislation in Texas The key objectives for a lobbyist for the organization would be to emphasize the numerous benefits to the working class while presenting arguments that changes will not be disruptive to the economy or businesses.
Increasing Minimum Wage in Los Angeles As already mentioned, it may be critical to evaluate the basic needs of the population precisely and provide sufficient minimum wage. Hence it may be needed to increase the minimum wage in the state of […]
National Minimum Wage Analysis The minimum wage is the legally established wage for the rate fulfilled by the employee. The higher the minimum wage, the higher the taxes.
Minimum Wage and Government Interventions Coming to the issue of minimum wage, it is the “floor price” of labor that is determined by the federal government to guarantee fair wages to the workers.
Raising the Minimum Wage: Positive and Negative Aspects Increasing the minimum wage will increase the social efficiency of society, which is determined by the degree of satisfaction of its needs.
Minimum Wage According to Marxism Analyzing the issue from the Marxist viewpoint, it can be concluded that increases in the minimum wage are beneficial to the working class but not to capitalists.
Minneapolis Government Trends in Minimum Wage Increases According to the report of Associated Press, the City Council of Minneapolis has passed the ordinance to increase the minimum wages in the city to 15 dollars per hour.
Addison Ventures Company’s Minimum Wage vs. Ethics The main problem at Addison Ventures arises from the fact that the company is finding t quite challenging to balance between the cost of labor in terms of the minimum wage for its employees and […]
Minimum Wage Policy in Canada In response, according to Tipton et al, the minimum wage policy was put in place to counter the rising poverty level by ensuring that employees in Canada experienced the basic standards of compensation and employment […]
Increasing Minimum Wage in the US Restaurant Industry With the growing economy and the overall rise in the cost of life, it becomes evident that the minimum wage is insufficient for people to satisfy their basic needs and ensure an appropriate standard of […]
Minimum Wage in California and Other States This paper aims to explore the minimum wage in the state of California as well as the significance of independent minimum wages for separate states and the conditions of workers in outsourced companies.
Should the US Raise the Minimum Wage to $15 an Hour? While increasing the minimum wage is costly for businesses, not increasing the minimum wage is costly for the United States government.
The Minimum Wage in China: Lee Wang Case The point in this case is that the main purpose of labour inspection is to correct the violation of labour ethics by employers, such as a company underpaying its employees, and to defend the employees’ […]
Social Policy: Living on a Minimum Wage One of the primary findings is that the minimum wage is not a living wage. Another matter of concern is the fact that minimum living affects children and their prospects in life.
The Concept of Minimum Wage Moreover, the rise of the minimum wage boosts the economy of the whole country and increases the quality of life. So, if the minimum wage is 10% higher, and that causes the reduction of poverty […]
Minimum Acceptable Remuneration Regulation A comparison of the minimum wages in Australia and the US shows that adopting policies on minimum wages to reflect levels of training and incorporate economic indicators has positive effects on employment.
Fixing an Initial Minimum Wage The paper will also determine the reasons why the minimum wage is important to a nation and the reasons why minimum wage rate should not be constituted in a country.
Long Term Investment Decisions Another policy, which the government may have in the regulation of a market economy is the regulation of the amount of tax levied on products and services.
Minimum Wage in Saudi Arabia and Other Countries In this respect, the fair wage expands the concepts of the living wage and minimum wage to include the conditions of work.
Raising Minimum Wage in the US The current economic recession that continues to impact the U.S.economy The main problem with the proposal of President Obama lies in what the article states as the possibility of companies leaving the U.S.due to the […]
The effects of the introduction of the National Minimum Wage on employment This paper evaluates the theoretical assumptions regarding the effects of the introduction of the National Minimum Wage within the British home care sector.
Minimum Wages in Different American States These criticizers continue to epic that the minimum wage tends to reduce the demand expected of workers where they argue that this is greatly caused by the reduction in the number of the jobs and […]
Minimum Wage Effectiveness However, the minimum wage can be a good stimulus for young people to continue their study instead of joining the “labor market”, and this is very good for the development of society since it leads […]
Minimum Wage Issue: Political Regulation Governments usually impose minimum wage to reduce poverty; indeed, increase in the minimum wage is also said to increase motivation of the workers and hence lead to more productivity. Increase in the minimum wage does […]
The Minimum Wage in the US: Situation Overview Other people argue that increasing the minimum wage would lead to increase in commodity prices by the employers to cover for the increased costs thereby beating the reason for the increase.
Issues that affect low wage earners Low earner hardly afford good housing; they live in houses that do not meet the standards of an adequate housing systems, the reason why they opt for such houses is because they have limited funds […]
The Pros of Raising the Canadian Minimum Wage In turn, the increase in the prices of goods and services will result to the decrease in the company’s profits. The rise in the minimum wage will cause the retrenched employees to join the ranks […]
The Positive Effects of Minimum Wage on the Economy
The Political Economy of the National Minimum Wage Institution
Why the Minimum Wage Matters in the U.S. Industry Economy
Why The Age Requirement Can Start Working For Minimum Wage Jobs
When Is A Good Time To Raise The Minimum Wage
Union Power, Minimum Wage Legislation, Endogenous Labor Supplies and Production
Work-Related Training and the New National Minimum Wage in Britain
Welfare Effects of Minimum Wage and Other Government Policies
What Is Minimum Wage Is Not Ideal And Struggles
Why the Minimum Wage Orthodoxy Reigns Supreme
Wage Distribution And Earnings Inequality Impacts Of The Minimum Wage
The Positive And Negative Effects Of Raising Minimum Wage
The Social Issue of the Minimum Wage and the Need to Raise the Current Minimum Wage in America
Using the EITC to Help Poor Families: New Evidence and a Comparison with the Minimum Wage
United Kingdom: Developing a Progressive Minimum Wage in a Liberal Market Economy
Unemployment Benefit, Minimum Wage And Average Salary Earnings In Romania
Why The Minimum Wage Shouldn’t Be Raised
The Short-Run Effects of the Minimum Wage on Employment and Labor Market Participation: Evidence from an Individual-Level Panel
The National Minimum Wage and Hours of Work: Implications for Low Paid Women
The Negative Impact of Raising the Minimum Wage
The Positive Impacts of Raising the Minimum Wage on the Economy, the Health of the Citizens, and Their Quality of Life
The Optimum Minimum Wage When Labor Services are Taxed
Wage Inequality And Raise The Minimum Wage
Thinking about Minimum Wage Increases in Alberta: Theoretically, Empirically, and Regionally
Welfare Benefits, Minimum Wage Rate and the Duration of Welfare Spells: Evidence from a Natural Experiment in Canada
The Productivity‐Enhancing Impacts of the Minimum Wage: Lessons from Denmark and New Zealand
Why Has the British National Minimum Wage Had Little or No Impact on Employment
Why Minimum Wage Jobs Pay Their Employees Unfairly
Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data
The Rate Of Substitution Between Low Pay Workers and The National Minimum Wage
The Pros and Cons of Raising the Minimum Wage of Workers
The Struggle to Fight the Minimum Wage in America in Nickel and Dimed, a Book by Barbara Ehrenreich
Wage Dispersion and the Minimum Wage Spike in a Search Economy With Wage-Posting
The Role of Risk Preference in Immigration and Minimum Wage Policies
Which Age Should Be The Minimum Wage For Drinking
The Truth Behind the Minimum Wage in America in Nickel and Dimed, a Novel by Barbara Ehrenreich
Using Local Labor Market Data to Re-Examine the Employment Effects of the Minimum Wage
The Wage and Employment Dynamics of Minimum Wage Workers
What Should Be Done About The Minimum Wage
Understanding Wage Theft: Evasion and Avoidance Responses to Minimum Wage Increases
The Negative Effects of Raising the Minimum Wage
The Potential Impact of the Minimum Wage in Rural Areas
Working Conditions At Minimum Wage Jobs
The Unexpected Long-Run Impact of the Minimum Wage: An Educational Cascade
Did the German Minimum Wage Reform Influence Employment Growth in 2015?
Are Wage and Employment Effects Robust to Alternative Minimum Wage Variables?
Does the Minimum Wage Bite Into Fast-Food Prices?
Does the Minimum Wage Cause Inefficient Rationing?
Are There Long-Run Effects of the Minimum Wage?
Does Raising the Minimum Wage Help the Poor?
How Much Would Increasing the Minimum Wage Affect Food Prices?
Does the German Minimum Wage Help Low Income Households?
How Raising Minimum Wage Will Hurt the Economy?
What Are Three Effects of Raising the Federal Minimum Wage?
Did the National Minimum Wage Affect UK Prices?
Why Does the Minimum Wage Exist?
Does the Minimum Wage Affect Employment?
Should the Minimum Wage Be Abolished?
How Does the Minimum Wage Affect Employment via On-The-Job Search Intensity?
Does Increasing Minimum Wage Decrease Poverty?
How Has Minimum Wage Influenced the United States?
Can the Minimum Wage Force the Hand of Small Businesses?
How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital?
Can the Minimum Wage Reduce Poverty?
Does Minimum Wage Affect Workplace Safety?
Has the National Minimum Wage Reduced UK Wage Inequality?
Did the Minimum Wage Affect the Incidence of Second Job Holding in Britain?
Did Minimum Wage Increases Reduce Employment?
How Is the Minimum Wage Debate Viewed Through a Marxist?
How Does the Minimum Wage Affect the Employment Statuses of Youths?
Does the Minimum Wage Affect Welfare Caseloads?
Should Raising Minimum Wage Have Stronger Job Growth?
How Many Americans Are Working for Minimum Wage and Living in Poverty?
Does Increasing the Minimum Wage Reduce Poverty in Developing Countries?
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Life on the minimum wage

“I don’t expect to be rich, I just expect to pay the heat bill.”

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Jordan is finally getting back on his feet after visiting the emergency room several times over the past year with bouts of severe spinal headaches, dizziness, and a thyroid storm. The ER visits left him with about $2,000 in medical bills. It’s going to take a minute: He makes $7.25 an hour working as a cashier at Dollar Tree.

Before I called Jordan, who lives in Kentucky, to talk about what his life is like making the minimum wage, he explained to me that I’d need to dial him on a Kindle tablet. He can’t afford to fix his broken phone at the moment. “It’s not exactly a long-term solution,” he says. But for the time being, it’ll have to do.

Jordan isn’t the type to ask for much, even for Christmas or his birthday. While he recognizes he could probably go on disability for a while until his health gets better, he’s too stubborn. “I’ve always been taught when I was growing up that unless you absolutely can’t do something, then try to do something,” he said. He lives with his mom and kicks in money for the rent when he can.

I ask him what he thinks would be a fairer wage, one that would make his life a little easier. He says $10 an hour, though he knows that his coworkers who are older and have kids would need more, like $15.

Still, he worries a higher federal minimum wage might hurt small businesses, a talking point often spouted by opponents of increasing the minimum wage. But Jordan doesn’t work for a small business: He works for a multibillion-dollar corporation that has been doing gangbuster sales during the pandemic. The day after we spoke, Dollar Tree announced it would open 600 new stores this year and buy back $2 billion more of its shares.

America purports to be a country of workers — a place where if you try hard enough, put in the time and effort, you’ll make it to the middle class, or at the very least be able to build a solid life. But that version of America doesn’t line up with the reality : As of 2019, 39 million people made less than $15 an hour . The federal minimum wage has been stuck at $7.25 since 2009, and 1.6 million workers make that amount or less. Many low-wage workers rely on public assistance to get by . Pew Research Center defines “middle-income” households in the US as starting at about $48,000; a $15 minimum wage at 40 hours a week adds up to $30,000; at $7.25, it’s $15,000.

In recent weeks, I spoke with more than a dozen workers across the country making under $15 about how their wages shape their lives.

Some echoed arguments against a higher minimum wage, or at the very least, expressed concerns about its implications. Jordan said he’s heard warnings that increasing wages too much, too fast could push up prices and cost jobs. The evidence suggests a higher minimum wage would be a net positive for workers, but those concerns are understandable. When you’re living on the margins, it’s scary when your boss starts talking about cutting jobs, or when you imagine the price of groceries you can already barely afford going up even slightly.

Everyone I talked to said that more money in their paychecks would make it easier to pay their bills, add to their savings, and maybe even let them take a vacation. Some workers talked about feeling held back from life transitions, such as moving out of their parents’ homes, or, in one woman’s case, delaying her decision to get a divorce. Others talked about the stresses higher wages would relieve — even something as simple as being able to put some bills on autopay, delete the DoorDash app they use for extra cash, or take a day off.

“It’s completely impossible to live on $8.50”

The political impetus to increase the federal minimum wage to $15 an hour is growing. Many cities and states have already begun to gradually phase in wage hikes, and while Democrats failed to get $15 by 2025 into the $1.9 trillion stimulus bill passed in March, the fight for $15 continues.

Minimum wage increases are popular: A recent Vox/Data for Progress poll found 61 percent of voters supported Democrats’ plan to gradually increase the minimum wage to $15 by 2025. But some low-wage workers still have anxieties about a federal wage increase, even though their current situations aren’t particularly sustainable, and though they know their lives and those of their coworkers would be much better on a more livable wage.

When I talked to Anna, 19, who balances a pair of jobs at Red Lobster and Domino’s on $8.50 an hour, she seemed conflicted about the conversation around a $15 minimum wage. (She asked me to use a pseudonym because she was afraid of being fired.) She’s on a “two-year plan” to save up for school to be a nursing aide, and making more would help her save faster. She also recognizes that many of her colleagues who are much older than her and have families are “barely making it” on the low wages they’re paid. “It’s completely impossible to live on $8.50,” she says.

But she’s also heard warnings that increasing the minimum wage would be harmful. She said she worries it would increase automation, because companies would replace workers with robots, or cause inflation, because they would pass on the cost of higher wages to customers.

I told her that the evidence on minimum wage increases doesn’t really support that, that wages going up for a lot of people doesn’t necessarily mean a bunch of jobs would disappear or that there would be some other disastrous impact on the economy. ( Vox’s Dylan Matthews has a great breakdown of the evidence here .) But it’s hard to be definitive: Economic theories and estimates can’t erase fears that even in a scenario of very few losers, you could be one of them. Especially if, because you’ve been paid so little, you haven’t been able to build up savings to fall back on.

“Every time I get some money, something happens”

Dave Mayton likes his job as a Domino’s delivery driver in Pennsylvania — after all, he has “a million and one pizza jokes” — but trying to survive on $7.25 plus tips is tough, especially with the pizza company’s pre-tipping system. “Domino’s suggests these really ridiculously small amounts. Like 49 cents is an adequate tip to deliver a pizza,” Mayton says.

He emphasizes he doesn’t want a “pity party,” he just wants to be able to more comfortably get by. “Eating, paying for health insurance, all the bills that normal people have — those don’t go away just because you don’t make a lot of money, those things all exist,” he says.

What many minimum-wage workers say isn’t that they necessarily want to live in luxury (though that would be nice), but that it would just be good to be able to, well, live. It’s hard to pinch pennies at every corner, or to have to be so sensitive to every single price fluctuation. Pennsylvania, where Mayton lives, has the highest gas tax in the country, so he drives to Maryland to get gas — it’s about a 30-mile round trip.

According to MIT’s living wage calculator , the federal minimum wage of $7.25 isn’t enough for full-time workers to cover their basic expenses in any state in the union. A single person without kids making the federal minimum wage and working full-time, with no time off or vacations, makes about $3,000 above the poverty line . The minute you start to add in dependents, they fall below it.

Mendy Hughes, an associate at Walmart in Arkansas and mother of four, laid out the myriad strategies she employs to save. She puts off bills in order to buy food, which often amounts to a swing through the drive-through after work, or Lunchables and TV dinners — things she can afford. She figures she’s put more money into her car than it’s worth, but she doesn’t have enough for a new one. The stimulus checks she’s received during the pandemic helped, but she spent them fast. “Every time I get some money, something happens, it seems like,” says Hughes, who is a member of United for Respect, a worker advocacy group.

Hughes isn’t alone: Nearly 4 in 10 households say they wouldn’t be able to cover a $400 emergency with cash, savings, or a credit card charge they could pay off the next month.

She says she makes about $11.85 right now. In a world where she’d make more, Hughes imagines being able to afford more food, save for emergencies, and maybe take a day off of work. In September, Walmart said it would raise wages for 165,000 workers in its bakery, deli, and auto care roles. And this February, the company announced it would increase pay for 425,000 workers in its digital and stocking areas from $13 to $19 an hour. That still leaves out hundreds of thousands of its associates, including Hughes, a cashier. “I don’t think that’s right,” she says. “Why give raises to some but not all?”

Walmart, which clocked a record $152 billion in revenue in the fourth quarter of 2020, pays $11 an hour for entry-level positions, though it says its average is above $15. Its CEO, Doug McMillon, said that its February pay increase for some workers was meant to create a “ladder of opportunity” and that the increases were geared toward people “who have been with us for a longer period of time.” Hughes has been at Walmart for more than a decade.

“I want to know how much the people make who say $15 is too much”

Many workers are skeptical of their employers’ intentions — after all, business is business. For low-wage workers, the tactics their bosses use to get around paying them more, or to incentivize them to do more, can be particularly painful.

Dora Gutierrez, a certified nursing assistant in Texas, works three 12-hour shifts a week at a local hospital. She started at $9 an hour, but thanks to her union, she’s now at $13.68, though she believes $15 would be “awesome” and help her even more. Her husband is a disabled veteran, so she balances work with taking care of him.

During the pandemic, Gutierrez says the hospital has offered extra pay — but only for people who were able to work more hours, which she couldn’t. “If I’m going to pick up extra shifts, I’ve got to find somebody to take care of my husband,” she says. “They want you to go kill yourself before they’re going to give you anything extra.”

Laura, who works for an industrial supply company in Texas and asked to use a pseudonym out of fear of retribution from her company, expressed some similar sentiments. She makes $11 plus commission, which doesn’t sound bad “until you realize it’s a small town and you realize there’s not much to sell,” she says, especially during the pandemic. “They’ve done everything in their power to where they don’t have to pay benefits,” she says, explaining that they’re careful to keep her and her coworkers’ hours just below full-time. Until recently, she had a second job, and she feels fortunate that her mom is able to help pay her rent — for now.

About 8 percent of US workers had more than one job as of early 2018, and women and low-wage workers were likelier to hold multiple jobs. People working more than one job tend to earn less than people with just one job.

According to the Bureau of Labor Statistics , some 5.8 million workers are working part-time for economic reasons — their hours were cut, or they can’t find full-time jobs. They’d rather work 40 hours, but they can’t find work that lets them do that.

“I want to know how much the people make who say $15 is too much and minimum wage is livable, or how much they’ve ever made,” Laura says. “I’ve tried to have this discussion with people that I’m living off of $11 an hour and it’s barely livable only because I’m not having to pay my own rent, and they call me stupid because they say I should get a different job or manage my money better.”

For some workers, it’s hard not to wonder whether those extra hours are worth it. For others, not going above and beyond means not putting food on the table.

DeSean Smith, a student who’s currently working at a grocery store in Philadelphia to help pay his tuition, says he’s just tired of working so hard for $9.25 an hour. “It’s like saving one grain of rice a day,” he says. “You know the company’s making X amount of money, and for the amount of work they ask employees to do — coming in on off days, coming in early, staying late, dealing with customers — I’m not doing it for fun.”

Neither is Cindy Casey, who manages a Burger King in Georgia. She told me she works some 60 hours a week to try to make enough to keep her and her family afloat, since she’s their main source of income. She makes $14 an hour in a full-time role and then puts in an extra 15 to 20 hours a week of overtime just to pay her bills, and she feels like she’s expected to be on call 24/7. “I’m exhausted all the time from working so much,” she says.

And even though she’s managing the franchise where she works, she still can’t afford the health insurance the company offered. “It’s so ridiculously expensive,” she says.

“It feels like it’s keeping me from moving on in my life”

For some low-wage workers, their pay isn’t just an issue of what is (or isn’t) in their bank account and whether they can (or can’t) pay their bills. It also delays life transitions, harms their health, and causes stress and emotional distress. Saving for a down payment on a house or a security deposit on your own apartment when you’re making $8, $10, $12 an hour isn’t an easy task.

Some of the younger workers I spoke with were still living with their parents, and acknowledged that unless and until they got higher-paying jobs, they wouldn’t be able to strike out on their own. “I would have liked to have moved out and be living on my own right now, but I know with the money I’m making now, things would not be much better for me,” says Adam, a Walmart worker in Virginia in his late 20s. “It feels like it’s keeping me from moving on in my life.”

He told me he wished there were a Costco, which pays $16 an hour , in his area.

For many people in the US, getting their own place on the current minimum wage is outright impossible. According to a report from the National Low Income Housing Coalition, there isn’t a single state in the country where people making the minimum wage can afford to rent a one-bedroom apartment at fair market prices while working full-time. Even taking into account states and cities with higher minimum wages, the average minimum-wage worker would need to work 79 hours a week to pay rent on a one-bedroom apartment and 97 hours for a two-bedroom.

Sarah, a former library worker in Colorado, says she was “terrified” that she wouldn’t be able to keep a roof over her head when figuring out whether to separate from her husband, who had been the breadwinner in her family. She’s now divorced, but it’s been a big adjustment to her lifestyle. Until recently, she lived with a roommate on a street “that in my previous life was where all the one-step-away-from-homeless people lived.” She’s now moved to another part of the country to try to get a fresh start and has picked up some gig work to try to make more money.

“To me, the big visual is the refrigerator, and how much is in there, and my own daughter coming over and saying, ‘Oh, my goodness, you don’t have anything,’” she says. “There’s not really a lot for anything extra.”

James, a Papa John’s delivery driver in Florida, works the night shift so he can take care of his mother and grandmother, both of whom have health problems, during the day. This is his first job in the service industry, and it’s changed the way he thinks about the minimum wage — he didn’t realize how hard it was to get by on so little, or who low-wage workers really were.

“I went into this thinking that people that work for minimum wage in the service industry are, generally speaking, a kid in high school and a retired person looking for something to do in their free time, and that’s not the case,” he says. “I think there’s a misconception in this country about what being a minimum-wage or near-minimum-wage worker is.”

When talking about what wages they felt would be fairer, or how making more would change their lives, all the workers I spoke with said they’d of course like to make more money. But many of them also emphasized they didn’t want to come off as greedy — they didn’t want to seem like they had some sob story, or that they weren’t aware there weren’t others worse off than themselves. They just wanted to do, well, better for all of the work they were putting in.

“We don’t want to be poor, either,” Mayton, the Domino’s driver, said at the close of our conversation. “I don’t expect to be rich, I just expect to pay the heat bill.”

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Commentary | Wages, Incomes, and Wealth

The Living Wage Movement—Viewpoints | EPI

Commentary • By Jared Bernstein • March 4, 2002

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Opinion pieces and speeches by EPI staff and associates.

THIS PIECE ORIGINALLY APPEARED IN THE SPRING 1999 COMMUNITY ACTION DIGEST.

The Living Wage Movement: Pointing the Way Toward the High Road

by Jared Bernstein

Despite a surging economy, many low-income working families continue to struggle. Their average income, adjusted for inflation, is 11% lower than it was in 1979, and, at $14,900 in 1997, was about $1,300 below that year’s poverty line for a two-parent family with two children. For working families in the bottom of the income scale, the major cause of this negative trend is the decline in their rates of pay. They are working as much or more than ever, but their paychecks are failing to keep up with the rest of the growing economy. The result: the economic gap between the haves and have-nots currently stands at its highest level in the post-WW II era.

Things are particularly tough in some of our cities, where quality jobs for low-wage workers have been disappearing, only to be replaced by service sector jobs with low pay and few benefits. There are numerous reasons why urban workers have lost ground over the past few decades, including declining unions, the shift from manufacturing to services, urban flight, and reduced political support for cities. But two important and growing problems that have gotten less attention are 1) an increase in the use of tax incentives to draw firms to the area, and 2) the privatization of services formerly provided by the public sector. A third issue facing low-wage urban workers is pressure on the low-wage labor market caused by the welfare-to-work component of welfare reform.

The first problem-tax incentives that don’t deliver-is described in great detail in a fascinating piece of economic journalism by Donald Bartlett and James Steele in a recent Time magazine series on corporate welfare. You’ve got to read this series for yourself, but to sum it up, they present an air-tight case showing that, far from a solution, these tax incentives are a big part of the problem. All too often, they show, cities are sacrificing crucial resources to lure firms, with little payback in the way of quality jobs.

The second problem, privatization, is exemplified in the following anecdote. A friend from a New York City suburb told me that in her town, in order to accommodate a local tax cut, the trash removal service was privatized, which, in this case simply meant that a private firm bought the city’s dump trucks, painted the firm’s name on them, and charged residents a rate that was a bit less than the tax cut (the other change was that now my friend had to bring the trash to the end of the driveway herself). I have no idea if the guys picking up the trash were the same folks who used to work for the city, but you can bet they were paid less. You can also bet that this shift from public to private service provision is taking place throughout the land.

What can we do to combat these trends? Enter the living wage movement. Though living wage ordinances come in a variety of flavors, they all amount to the same thing: they force employers who receive contracts or tax benefits from the locality to pay their workers a wage rate a few bucks over the minimum. The message and purpose are quite simple: if you as an employer have benefited from some form of incentive, then you ought to give a little something back to your workforce.

Sounds simple, right? Well, anytime you’re talking about mandating a wage increase, you can bet somebody will squawk, and those who benefit from privatization and tax giveaways have predictably been squawking pretty loudly. What’s more, their warnings about the negative consequences of living wage ordinances are not only the predictable response of vested interests; some of these arguments are well-grounded and deserve careful consideration.

This essay will explore the debate around this relatively new movement. First, we will look at the different types of living wage ordinances that are currently in place. Next we’ll take a brief tour through the arguments of the opposition. Then we’ll examine some of the evidence regarding the impact of current living wage ordinances, and finally reflect on the relevance of the living wage movement in the larger economic context.

What are “Living Wage” Ordinances? The living wage movement takes as it theme the reasonable position that no one who works for a living should be poor. Thus, wages paid to even the lowest wage workers, should, with full-time work, lift them out of poverty. But how does the movement achieve this goal?

Perhaps the most obvious way to meet this objective would be to push for a federal minimum wage that was high enough to lift full-time workers up to a decent standard of living. However, while those in the living wage movement certainly support a higher federal minimum, given their limited resources, community organizing backgrounds, and recognition of current political realities, most of their energies have been directed at municipal ordinances.

Essentially, these are rules that set a wage level below which certain employers cannot pay their workers. Thus, they are a close relative of federal minimum wage regulations, which set a national floor on wages (some states set their minimum wage above the federal level, but they can’t set it lower than the current $5.15 per hour). What’s different about living wage ordinances (besides the obvious fact that they set a wage level above the federal minimum) is that they are much more narrowly targeted than the federal law. In all cases, the ordinances currently in place cover a subset of a city’s workforce. They usually cover those employed by city contracts and, in some cases, those employed by firms who have benefited from some form of favorable tax treatment by the locality.

A good example is the living wage law passed in the city of Baltimore in 1994. Under this law, firms under contract with the city had to pay those workers who were performing the duties under the contract an hourly wage of $6.10 in 1996, rising incrementally to $7.70 in 1999. Note that only those workers actually working under the city contract are covered by the ordinance. Other workers in the firm are not subject to the living wage ordinance, even if they work at the same site. Another example is the Los Angeles living wage proposal, passed in March of 1997. In this case, covered workers are those under service contracts (or subcontracts) with the city of $25,000 or more, firms with concession agreements, or firms receiving subsidies from the city at least $100,000 annually must be paid an hourly wage of at least $7.25.

So Who Could Object to That? Sounds fair, you’re thinking? Well it won’t come as a shock that employers who benefit from city contracts or tax breaks are not enthusiastically signing onto the living wage movement. Some of those who argue against living wages are simply ideologues who oppose any mandates on the private sector. Others are bound to oppose any policy that will cut into their profits. But opponents of the policy also include employers who genuinely fear that the mandated wage increase will hurt their ability to compete in the marketplace; similarly, city officials worry that if there is a wage ordinance in their city, businesses considering relocation will simply look elsewhere, at the cost of local employment opportunities. Both of these counter-arguments maintain that the ordinances, by raising the cost of doing business to city contractors and entrepreneurs, will cost the city jobs and thus hurt the very people they are designed to help.

How well-founded are these fears? First, even those of us who support living wage ordinances should accept that these arguments cannot be rejected out of hand. In fact, two fundamentals of economic theory support these concern s about the ordinances. The first fundamental is that people are generally paid what they are worth, i.e., their hourly compensation is about as valuable as the goods they produce or the services they perform in that hour. The second, and related, fundamental is that if you raise the price of something, people will buy less of it. In classical economics, this principle holds as much for the bananas you purchase at the supermarket as for the privately contracted refuse worker who carts away your banana peels. A third piece of economic theory relevant to our discussion is that mobile capital will seek the highest return (i.e., firms will seek to locate where they can make the most profits), but more on this one later.

If you believe these theoretical propositions, then you are likely to be troubled about mandated wage increases. After all, if workers are by definition being paid their worth, raising their “price” (their hourly wage) can only be bad (as in wasteful and inefficient) for the economy, and ultimately harmful to the worker herself, who, now overpriced, will have to be let go. The result, as contractors leave the market, will be fewer city contracts and less jobs for low-wage workers. The plan to help them has backfired.

But what if these reasonable sounding propositions don’t hold? What if workers aren’t always paid what they’re worth, and what if employers-the buyers of labor services-respond differently to price increases than do shoppers buying bananas? Then these arguments against the living wage have to be reevaluated.

There is actually an extensive literature in labor economics which examines the validity of these theories, and, at least as far as the labor market goes, finds them lacking. The literature which evaluates the impact of minimum wage increases is particularly germane, and it universally finds that the job-loss predictions of opponents of the policy never materialize. This is not to imply that no one single worker is unemployed by the mandated wage hike; nor is it meant to imply that a huge wage mandate wouldn’t wreak havoc. But, contrary to the predictions of the economic “laws” stated above, it does show that the vast majority of low-wage workers have benefited from the moderate increases in the minimum wage we have implemented.

So are the theories wrong? In the case of the labor market, it appears that, if not wrong, they are pretty unreliable in predicting the impact of mandated wage hikes. The reasons why are not hard to fathom. First, most workers are not paid exactly what they are worth. Wages are set by a number of factors, including the skill, race, and gender of the worker, the conditions of the local labor market (if there are a lot of excess workers, the wage will tend to fall), the nature of the industry and occupation in which the job is located, and, importantly, the bargaining ability of the worker him/herself.

Second, employers will not always respond to the wage hike by laying off workers, for there are other, less disruptive ways they can absorb the price increase. After all, workers are not bananas, and it is much more difficult for an employer to restructure her workforce than for a shopper to switch to oranges until the price of bananas goes back down. As much as they might not want to, employers might find it in their interest to cut their profit margins, or they might try to pass the increase onto their customers through higher prices. Or, instead of laying off their workforce, they are likely to try to get them to increase their productivity, and thus absorb the increase through more efficient production.

That said, there is still an important difference between the federal minimum wage and the municipal living wage. The federal policy is national in scope; thus, no one employer can escape the wage increase by relocating. Recall the third “law” given above: mobile capital seeks the highest return. Since the living wage ordinance applies to a specific geographical area, can’t employers simply relocate to avoid paying the higher wage rate?

This is the motivation for rigorous opposition of living wages by anxious city officials who may have been elected to office on the promise of creating X-million jobs. They reasonably fear that if MoneyBags Enterprises is trying to decide where to build their next factory, stadium, etc., a living wage ordinance is not exactly a draw.

This argument also calls for serious consideration. First, we should acknowledge that this mode of thinking is clearly a blueprint for a race to the bottom. You could probably get every factory and sports team in the world to move to your town if you cut them every tax and environmental break available. But, while you might create some jobs, you’re just as likely to ruin your community. What’s more, you will create an incentive for neighboring communities to compete on the same basis with you, ultimately lowering regional living standards. On the other hand, you would be just as harmful a leader if you raised environmental regulations to impossible levels, taxed profits at 95%, and insisted that all employees be paid like Michael Jordan.

Sound municipal policy calls for a middle ground. Some taxes and regulations need to be in place to avoid the race to the bottom, and to preserve both the city’s tax base and living standards. What’s more, despite their claims to the contrary, employers and contractors will not flee the minute a new regulation is reduced. Instead, they will calculate what the regulation will cost them and, as discussed above, try to figure out ways to absorb the cost increase. And if they can continue to make a profit by doing business with the city, they will stay. The next section provides some evidence on these matters from existing living wage ordinances.

What Does the Evidence Show? Since contemporary living wage ordinances have not been around for very long, there is as yet little evidence of their impact on jobs or economic activity. But what evidence there is shows that the opponents’ dire predictions were once again unwarranted.

The most thorough evaluations (of which I am aware) are two separate studies of the Baltimore living wage ordinance, which was approved by the city council in December of 1994. These studies are by no means the last word on the issue; like all empirical studies, they have limitations, particularly regarding sample size. But they are still very instructive. Their main findings are:

As far as these studies could discern, the cost increase to the city after the living wage ordinance went into effect was less than the rate of inflation;
Again, given data limitations, these studies found no evidence of job loss in response to the wage increases;
There was a small decrease-concentrated among smaller firms–in the number of bids per contract after the ordinance went into effect; this small decline, however, did not appear to lower competitiveness or raise contract costs;
Interviews and case studies with affected employers suggests some absorption of labor cost increases through efficiency gains, particularly lower turnover;
While there is evidence that the ordinance raised wages for those at the bottom of the wage scale, the affected group appears to be small (less than 2,000);
Given their low levels of hours worked, the income/poverty-reducing effect was also small; other benefits include some “spillover” increases to workers above the new wage floor.
Non-compliance on the part of covered employers “remains a significant problem”

Both of these evaluations create the strong impression that the Baltimore living wage ordinance has so far had little impact on either the city’s contracting and budget process, or its business environment. Both studies find a real (inflation- adjusted) decrease in contract costs of the contracts in their sample. But they also (the Johns Hopkins study, in particular) leave the impression that few workers were affected, both because of the limited coverage requirements of the ordinance and the fact that most of the covered workers already earn above the living wage (not to mention non-compliance). In cases where more workers fell into the covered wage range, for example, among public school bus aides, the work tended to be seasonal and part-time.

Summing Up So, at least given the extensive evidence we have on minimum wages and the early returns on living wage ordinances, they appear to be exactly what the doctor ordered to counteract some of the negative economic trends affecting low-wage workers. They force some redistribution of economic resources to those whose boats haven’t been lifted by the rising economic tide, and do so without creating distortions in the local economy.

There are other advantages as well. The ordinances also have the potential to counteract the destructive race to the bottom, as cities try to undercut each other. The more pervasive these ordinances are, the less firms shopping around for the cheapest locality will be able to do so on the basis of cutting wages. This point should not be minimized. There is already evidence (given in the Time magazine series and the Pollin and Luce book cited earlier) that urban competition has hurt cities more than it has helped them. Living wages can help begin to reverse this destructive policy development.

Living wage campaigns also are useful and productive organizing tools. In numerous cities, low-wage urban residents have responded very positively to these campaigns, apparently viewing them as an opportunity to take action against negative trends that directly affect their living standards. In this sense, the campaigns have provided an all too rare opportunity for low-income communities to become actively involved in their economic fates.

Finally, there is a larger lesson from the living wage movement-a lesson about the nature of the labor market. The movement forces you to step back from the narrow economic arguments for and against the living wage and ask yourself the following question: Why does America, the largest and one of the most productive economies in the world, need to subsidize wages so that full-time, adult workers performing essential tasks can achieve a dignified life style? These workers are taking our kids to school, picking up our trash, and maintaining our public infrastructure. How is it possible that our economy has devolved to the point where we have to subsidize these essential services?

Part of the answer is that we have allowed and even encouraged firms to “take the low-road” in terms of their business practices. Instead of creating incentives to be good corporate actors, to play a positive roll in the economic life of the communities wherein they reside, our policies encourage them to minimize their contributions and maximize their personal gain. This may be a profitable strategy in the short-run, but it will ultimately serve to corrode some of our most valuable resources. The living wage movement, by pointing the way to the high road, offers a timely and progressive alternative route.

1. This figure represents the average income of the poorest 20% of working families.

2. A useful web site (with related links) for those who would like to learn more about the living wage movement is http://www.igc.org/newparty/livwag/ . Also, a “must read” for those who want a thorough understanding of the issues surrounding the movement is The Living Wage: Building A Fair Economy by Bob Pollin and Stephanie Luce (1998, The New Press).

3. The community organizing group ACORN keeps an up to date record of living wage ordinances and activities. To learn more about the movement or to get involved with a campaign, call them at 202-547-2500.

4. For a excellent tour through the minimum wage literature, see David Card and Alan Krueger, Myth and Measurement: The New Economics of the Minimum Wage. Princeton, N.J.: Princeton University Press (1995).

5. The first evaluation, released in October of 1996 is by Mark Weisbrot and Michelle Sforza-Roderick: Baltimore’s Living Wage Law: An Analysis of the Fiscal and Economic Costs of Baltimore City Ordinance 442. The Preamble Center for Public Policy, Washington, DC.; the second, which is forthcoming, was prepared for the Economic Policy Institute by various authors from Johns Hopkins Department of Geography and Environmental Engineering.

6. There is evidence from the minimum wage literature that employers keep the wage differentials intact at the low-end of their wage scale by raising the wages of those slightly above the new minimum. See William Spriggs and John Schmitt, 1996. “The Minimum Wage,” In Schafer and Faux (eds.), Reclaiming Prosperity: A Blueprint for Economic Reform. Armonk, NY: M.E. Sharpe.1996.

[ POSTED TO VIEWPOINTS ON JULY 17, 2000 ]

Jared Bernstein is a labor economist at the Economic Policy Institute. He specializes in income and wage inequality issues.

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What Is a Living Wage? Definition, History, and How to Calculate

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies.

What Is a Living Wage?

The term living wage refers to a theoretical income level that allows individuals or families to afford adequate shelter, food, and other necessities. The goal of a living wage is to allow employees to earn enough income for a satisfactory standard of living and prevent them from falling into poverty. Economists suggest it should be enough to ensure that no more than 30% of this income gets spent on housing. As such, living wages are often substantially higher than the legal minimum wage .

Key Takeaways

A living wage is a socially acceptable level of income that provides adequate coverage for basic necessities such as food, shelter, child services, and healthcare.
The living wage standard allows for no more than 30% to be spent on rent or a mortgage and is sufficiently higher than the poverty level.
The concept of living wages isn't new and dates back to early America when workers demanded higher pay.
The living wage shouldn't be confused with the minimum wage, which is the lowest amount of money someone can earn as mandated by law.
Supporters of living wages say they boost productivity and employee morale while critics argue they could hurt the economy and force corporations to reduce hiring.

How a Living Wage Works

What constitutes a living wage may vary slightly depending on who's defining it. According to the Global Living Wage Coalition, some 60+ definitions and descriptions of the term exist. Despite some deviations, the organization found certain common themes when comparing how it is defined in human rights declarations, by non-governmental organizations (NGOs) , and by others. So what exactly is a living wage?

The consensus is that a living wage provides individuals with enough income to support themselves without falling below the federal poverty line (FPL) . In essence, it gives workers and their families the means to maintain a decent standard of living so they can afford:

Regular savings
Other necessities

Although the idea of a living wage isn't new, 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 certain 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.

According to research from MIT, the living wage in the United States was $25.02 per hour ($104,077.70 per year) before taxes per year in 2022 for a family of four (two working adults with two children). That's an increase from $24.16 ($100,498.60 per year) in 2021. Of course, a living wage varies by family size and the cost of living in a particular city or location.

History of the Living Wage

As noted above, the 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 .

Congress passed the Fair Labor Standards Act (FLSA) in 1938, which established the first national minimum wage of $0.25/hour. 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.

The federal minimum wage rose to $7.25 in 2009 and hasn't changed. Many states, cities, and municipalities have minimum wages higher than the federal minimum wage. These minimum hourly rates increased in 22 states in 2024 for as many as 9.9 million workers. For instance, California and New York City-area increased their minimum wages for nonexempt workers from $15.50 and $15 respectively to $16 per hour.

The minimum wage movement is aimed at establishing a living wage.

Living Wage vs. Minimum Wage

Don't confuse the living wage with a minimum wage. The latter is the lowest 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 does not provide enough income to survive as it doesn't rise with inflation; the minimum wage can only increase with congressional action.

Although the minimum wage dollar amount has risen since its introduction by President Franklin Delano Roosevelt in 1938, the constant dollar amount, which accounts for the effects of inflation , has decreased for American households since 1968. As noted above, the federal minimum wage of $7.25 per hour has remained at that level since 2009, which means it hasn't kept up with the cost of living since the late 1960s.

In 1968, the federal minimum wage was $1.60 per hour but had an inflation-adjusted value of around $14.23 per hour. Most states have their own minimum wage laws to try and align it more closely with a living wage. In some states, the minimum wage is actually below the federal minimum wage. When this occurs, the federal minimum applies.

In 2019, the U.S. House of Representatives passed an amended version of the Raise the Wage Act of 2019, which would have gradually increased the federal minimum wage to $15 by 2025. The bill died in the Senate, but the debate about whether to lift the minimum wage rages on. Nonetheless, several states and cities raised the local minimum wage and several companies have done so voluntarily at their workplaces. As noted above, 22 states raised their minimum wages in 2024. The table below indicates the rates for 2023 and 2024 for those that raised their rates.

Living Wage and Poverty Levels

Poverty in the U.S. may partly have to do with the lack of a living wage in all states. The Raise the Wage Act of 2021, an updated version from 2019, could help reduce or eliminate low wages that do not 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.

The federal minimum wage of $7.25 an hour in many states is not enough to raise a family of four above the federal poverty level, which is $30,000 in 2023. As such, 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 Wage

Living wages are very controversial. As such, the idea surrounding them and their effects on the economy are hotly debated. We've outlined some of the arguments for and against living wages.

Supporters of a living wage argue that paying employees higher salaries actually 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 boost employee morale, which can often lead to higher productivity. This, in turn, allows companies to benefit from increased worker output.

Disadvantages

Despite the obvious support, there are critics who suggest leaders should scrap the idea of living wages altogether. Naysayers believe that implementing a living wage establishes a wage floor, which harms the economy by hurting companies, especially small businesses that can't afford to raise salaries.

Moreover, companies may reduce the number of employees hired if they are forced to pay increased wages. This creates higher unemployment, resulting in a deadweight loss , as people who would work for less than a living wage no longer get offered employment.

Benefits corporations

Boosts employee satisfaction

Reduces corporate turnover

Lowers recruitment and training costs

Creates wage floors

Harms economy

Reduces hiring

Increases unemployment through deadweight loss

Calculating the Living Wage

As noted above, a living wage is not the same thing as a minimum wage. Earning a living wage means you can pay necessary costs, including shelter, food, healthcare, childcare, taxes , and transportation. In addition, a living wage may be different depending on your circumstances, including the state and town in which you live. In 2004, MIT created a Living Wage Calculator, which is 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. If you use the calculator, first plug in the state, then choose from a list of counties. The calculator shows you the wages for individuals, couples (one or both working), and families with up to three children.

Alternatives to a Living Wage

One 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. There are various plans around 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. does not offer this type of income yet, although some might suggest President Biden's $1.9 trillion American Rescue Plan was a step in this direction. In July 2021, families who qualified received government-issued cash benefits for each child. The program lasted only for 2021.

What Is the Living Wage in the U.S.?

The living wage in the United States was $25.02 per hour (or $104,077.70) per year before taxes for a family of four with two working adults and two children in 2022. But this varies state by state. The highest livable wage in 2024 was for Massachusetts for a total of $128,086 while Mississippi had the lowest living wage for a total of $80,766. New York's livable wage was $113,131 while California, Texas, and Wisconsin had living wages of $117,478, $89,045, and $96,283 respectively.

Is $15 an Hour Considered a Livable Wage?

Raising the federal minimum wage to $15 an hour from the current $7.25 an hour still doesn't provide a livable wage to many low-income adults and families in certain locations. Earning $15 an hour at a full-time job would equate to approximately $31,200 before taxes, meaning that this increase would still not meet a livable wage in most states.

What Is the Difference Between a Living Wage and a Minimum Wage?

A minimum wage is the lowest amount a worker can be paid hourly determined by law. Paying an individual below the minimum wage is illegal. A living wage is the amount an individual or family would need to make to avoid living in poverty. This amount is usually higher than the minimum wage and is not mandated by law.

A living wage is a hypothetical level of income that is meant to show how much money is needed for people to afford things like food and shelter. This number depends on certain economic factors, including inflation, as well as the cost of living in an individual's area. There is no concrete number, though, as it varies on who is calculating it. But the consensus is that it should be enough to help keep people out of poverty.

National Low Income Housing Coalition. " NLIHC Releases Out of Reach 2022: The High Cost of Housing ."

Global Living Wage Coalition. " What Is a Living Wage? "

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Massachusetts Institute of Technology. " NEW DATA POSTED: 2023 Living Wage Calculator ."

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U.S. Department of Labor. " History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009 ."

U.S. Bureau of Labor Statistics. " CPI Inflation Calculator ."

U.S. Department of Labor. " Minimum Wage ."

U.S. Department of Labor Wage and Hour Division. " State Minimum Wage Laws ."

Economic Policy Institute. " Twenty-two states will increase their minimum wages on January 1, raising pay for nearly 10 million workers ."

State of California Department of Industrial Relations. " Minimum Wage ."

New York State. " Minimum Wage ."

U.S. Congress. " Raise the Wage Act ."

U.S. Congress. " Raise the Wage Act of 2021 ."

U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation. " Poverty Guidelines ."

Congressional Budget Office. " How Increasing the Federal Minimum Wage Could Affect Employment and Family Income ."

Massachusetts Institute of Technology. " About the Living Wage Calculator ."

Massachusetts Institute of Technology. " Living Wage Calculator ."

The White House. " President Biden Announces American Rescue Plan ."

The White House. " The Child Tax Credit ."

World Population Review. " Livable Wage by State 2024 ."

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Demonstrators rally at New York’s City Hall Park to demand a higher minimum wage in November 2022.

We must raise the minimum wage to a living wage

In the richest country on earth, if you work 40 hours a week you shouldn’t have to live in poverty

C ongress can no longer ignore the needs of the working class of this country. At a time of massive and growing income and wealth inequality and record-breaking corporate profits, we must stand up for working families – many of whom are struggling every day to provide a minimal standard of living for their families.

One important way to do that is to raise the federal minimum wage to a living wage. In the year 2023, nobody in the US should be forced to work for starvation wages. It should be a basic truism that in the US, the richest country on earth, if you work 40 hours a week you do not live in poverty. Raising the minimum wage is not only the right thing to do morally. It is also good economics. Putting money into the hands of people who will spend it on basic needs is a strong economic stimulant.

When over 60% of American workers are now living paycheck to paycheck, when the life expectancy of low-income Americans is in decline, when we have the highest rate of childhood poverty of almost any major country, we can no longer tolerate a federal minimum wage of $7.25 an hour, a wage that has not been raised since 2009. Incredibly, the federal minimum wage has lost over 27% of its purchasing power since it was last raised 14 years ago. That is unacceptable. Millions of Americans cannot be allowed to fall further and further behind economically, unable to afford the housing, food, healthcare, childcare and education they desperately need in order to live in health and dignity.

Whether they are greeting us at Walmart, serving us hamburgers at McDonald’s, providing childcare for our kids or waiting on our table at a diner in rural America, there are too many Americans trying to survive and raise families on $9, $10 or $12 an hour. It cannot be done. This injustice must end. Low-income workers need a pay raise and the American people want them to get that raise.

Poll after poll shows overwhelming support for raising the minimum wage to a living wage. But it’s not just polls. In 2021, the Democratic majority in the US House of Representatives voted to increase the minimum wage to $15 an hour. The bad news is that we lacked the votes to pass this legislation through the equally divided Senate. Not only did a $15-an-hour minimum wage bill fail to win the vote of a single Republican in the Senate, eight Democrats voted against it as well.

That was then. Now is now. And things are changing. As a result of years of congressional inaction, cities and states all across the country are taking the low-wage crisis into their own hands and raising their minimum wage. Some are doing it through legislative action. Others are doing it through ballot initiatives.

Since 2013, the people of 12 states – New Jersey, South Dakota, Arkansas (twice), Alaska, Washington, Maine, Colorado, Arizona, Missouri, Florida, Nevada and Nebraska (twice) – have voted on ballot initiatives to raise their state’s minimum wage. Every single one of these initiatives passed, none with less than 55% of the vote. And these are not just strong “blue states” voting for economic justice. In the recent November 2022 midterm election, two states that voted in Republican governors, Nebraska and Nevada, voted to raise the minimum wage. In 2020, the citizens of Florida, with a Republican governor and two Republican senators, also voted to raise the minimum wage to $15 an hour.

The MIT living wage calculator estimates a living wage as a salary that is adequate enough to support a family without luxuries. For two working adults and one child, a living hourly wage for each adult would be $18.69 in West Virginia, $17.55 in South Carolina, $21.57 in Maryland, $20.01 in Utah and $19.33 in Wisconsin. Even in my own state of Vermont, the living wage is $19.58 , more than $6 above the current state minimum wage.

But there are many families that do not have two working adults and rely on single moms who are raising their children on their own. In that case, the required living wage is much higher. As an example, a single mother in West Virginia would need to make $33.39 an hour to support herself and one child.

So it is not radical to suggest that raising the minimum wage to $17 an hour over a period of several years is the right thing to do. In fact, had my 2015 bill to increase the minimum wage to $15 an hour that was indexed to median wages became law, the federal minimum wage this January would be at least $17.40 an hour. And while we deal with the minimum wage, we must also address the scandal of the tipped wage, which has been stuck at an abysmally low $2.13 an hour for more than 30 years thanks, in large part, to the powerful restaurant lobby which has spent millions in campaign contributions and lobbying expenses since 1991 to keep workers in poverty.

Together, these two proposals would provide an increase in pay for tens of millions of desperate Americans – disproportionately women and people of color. It would also be a huge boost to single moms. Let us not forget that these are the essential workers who kept the economy going during the worst of the Covid pandemic. At that time we called them heroes and heroines. Well, rhetorical praise is nice. A livable paycheck is better. Let’s do it.

Bernie Sanders is a US senator from Vermont and the chair of the Senate committee on health, education, labor and pensions

Minimum wage
US politics
Bernie Sanders

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Guest Essay. The M.I.T. Professor Defining What It Means to Live. Dec. 28, 2021. ... While a living wage calculator is a useful spur to our political imagination, the line between “living” and ...
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The current federal minimum wage in the United States is $7.25 per hour, a rate that has not been raised since 2009. Many argue that this rate is not enough to provide a decent standard of living, especially in cities with high costs of living. On the other hand, opponents of raising the minimum wage argue that it could lead to job losses ...
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Decent Essays. 1253 Words. 6 Pages. Open Document. Living or subsistence wage is amount of income needed to maintain basic standard of living. Theoretically, this wage should bring people out of poverty if implemented. The real take home wage for most workers are far below this ‘utopic’ living wage. Absence of living wage for most workers ...
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The Concept of Minimum Wage. Moreover, the rise of the minimum wage boosts the economy of the whole country and increases the quality of life. So, if the minimum wage is 10% higher, and that causes the reduction of poverty […] Minimum Acceptable Remuneration Regulation.
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The federal minimum wage has been stuck at $7.25 since 2009, and 1.6 million workers make that amount or less. Many low-wage workers rely on public assistance to get by. Pew Research Center ...
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The Living Wage Movement: Pointing the Way Toward the High Road. by Jared Bernstein. Despite a surging economy, many low-income working families continue to struggle. Their average income, adjusted for inflation, is 11% lower than it was in 1979, and, at $14,900 in 1997, was about $1,300 below that year’s poverty line for a two-parent family ...
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For two working adults and one child, a living hourly wage for each adult would be $18.69 in West Virginia, $17.55 in South Carolina, $21.57 in Maryland, $20.01 in Utah and $19.33 in Wisconsin.
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Prior to 2014, relatively few living wage papers (n ≤ 5) were published per annum, except for 2005 with two special issues (in Economic Development Quarterly and Industrial Relations), but since 2014 there has been increasing attention in society more broadly, reflecting wider macro-economic shifts, such as the rise of precarious work and the ...