A living wage does not include some basic buffers needed to improve one's quality of life or protect aqainst emergencies. For example, it doesn't provide enough income for ever eating at restaurants, save for a rainy day or pay for education loans. It doesn't include insurance, including medical, or auto or renters/homeowners. In other words, it's enough to keep you out of a homeless shelter, but you'd still have to live paycheck-to-paycheck. If you can't afford insurance, and you get sick, you could still wind up homeless.
Living Wage Calculator:
The most well-known calculator is from M.I.T. It was developed in 2004 and was most recently updated in June 2012. It shows costs for each of the 50 states, and the living wage needed to pay those basic costs. It compares this to the minimum wage, and the poverty wage. It also shows which occupations in the area typically pay less than the living wage. See MIT Living Wage Calculator.
The Economic Policy Institute has another calculator designed more for a family with children. It also used Federal data for the major metropolitan areas. Since it was lasted updated in 2008, its cost of living estimates are lower. See EPI Living Wage Calculator.
Living Wage Campaign:
The living wage campaign is a popular cause among voters because 60% of Americans have, at one time in their lives, been paid the minimum wage, and know what it feels like. Support has grown as income inequality in the U.S. has increased. Although most people are opposed to handouts (such as unemployment benefits) to those who don't work, they like to see hard workers be rewarded.(Source: New York Times, What Is a Living Wage?, January 15, 2006)
There are several living wage campaigns.
- Raise the Minimum Wage -- Works with the National Employment Labor Project to coordinate living wage campaigns across the country.
- ACORN -- This now-defunct group successfully raised the minimum wage in many cities across the country in the late 1990s. At its peak, it had 400,000 member families belonging to 1,200 neighborhood chapters in 75 U.S. cities.
- The Universal Wage Campaign -- This group seeks to tie increases in the minimum wage to the cost of housing. The goal is for no one to pay more than 30% of income (Federally recommended percentage) for adequate housing.
Living Wage vs Minimum Wage:
Living on Minimum Wage:
One reason the minimum wage is lower than the living wage is that it has not kept up with the cost of living. If it had been indexed to the CPI over the last 40 years, the minimum wage would now be $10.41. If it had kept pace with executive level pay increases, it would be $23/hour. (Source: Raise the Minimum Wage)
Living Wage vs Poverty Level:
To make things simpler, a single person must earn $11,170, or $5.21 an hour to be above the poverty level. For that person, the minimum wage would be adequate.
Compare the Living Wage to the Minimum Wage and Poverty Level:
However, just because a single person is making the minimum wage and living above the poverty level doesn't mean they are making enough to provide for a living wage in even the cheapest city in the country, Winston-Salem, North Carolina (according to Kiplinger's). The MIT living wage calculator says that a single person must earn $8.11/hour to afford the average housing, medical, food and transportation costs.
Some cities have a higher minimum wage than the national level, just to solve this problem. For example, the second cheapest city (again, according to Kiplinger's) is Springfield, Illinois. Here, a living wage is $7.89. Since the national minimum wage wasn't enough, the city raised the minimum wage to $8.00/hour. This is enough for a single person, but falls short for a family of four, which requires $17.78 to cover the basic costs. Even if both parents work full-time, making a total of $16.00/hour, it's not enough.
The government has some role in setting a minimum wage, if only to institute child labor protection and prevent the worst kind of abuses in pay. However, it's not the government's role to protect workers at the expense of a healthy economy. Article updated January 29, 2013