A Living Wage — Not a Minimum Wage

At the current minimum wage of $7.25 an hour, a full-time worker makes only $15,080 in a year—well below the poverty line for a family of three. So it’s nothing but good news that President Obama signaled in December 2013 his support for Democratic lawmakers’ push to raise the federal minimum wage to $10.10 an hour. In truth, we need more than just a raise in the minimum wage: we need a living wage and a guaranteed annual income for anyone who is unable to work, for whatever reason.

In an op-ed titled “Better Pay Now,” New York Times columnist Paul Krugman made an impassioned plea for a raise in the minimum wage. Even amid its Great Recession, America is a much richer country now than it was forty years ago, Krugman argued, but that wealth hasn’t reached the hands of workers: “The inflation-adjusted wages of non-supervisory workers in retail trade—who weren’t particularly well paid to begin with—have fallen almost 30 percent since 1973.” He added that raising the minimum wage has been shown to have “little or no adverse effect on employment, while simultaneously increasing workers’ earnings.” Meanwhile, conservative commentators have been mounting opposition to the proposed wage along predictable lines.

The debate here is typical of American politics. Both sides work within the framework of what is “realistic” given the extraordinary power of the 1 percent to shape public discourse. Joining those with a more expansive view of what is possible, Tikkun’s interfaith Network of Spiritual Progressives has issued a call for liberals and progressives to switch their focus from a “minimum wage” to a “living wage.”

What Is a Living Wage?

According to the Living Wage Action Coalition, a living wage is a “decent wage”:

It affords the earner and her or his family the most basic costs of living without need for government support or poverty programs. With a living wage an individual can take pride in her work and enjoy the decency of a life beyond poverty, beyond an endless cycle of working and sleeping, beyond the ditch of poverty wages.

The seven factors that the coalition uses to calculate the basic cost of a safe and decent standard of living are housing, food, child care, transportation, health care, taxes, and other basic necessities (which in some cases include elder care or care for immigrant families’ overseas parents or children).

Dr. Amy Glasmeier, the Department Head of Urban Studies and Planning at MIT, has developed a living wage calculator that estimates a living wage for different cities based on the current cost of living there. Glasmeier cautions that her calculator, which you can access at livingwage.mit.edu, is designed to provide a bare minimum estimate of the cost of living for low-wage families—not an estimate for a middle-class standard of living. According to her living wage calculator site:

The realism of the estimates depend on the type of community under study. Metropolitan counties are typically locations of high cost. In such cases, the calculator is likely to underestimate costs such as housing and child care. Consider the results a minimum cost threshold that serves as a benchmark, but only that. Users can substitute local data when available to generate more nuanced estimates. Adjustments to account for local conditions will provide greater realism and potentially increase the accuracy of the tool.

For example, a living wage for a single adult in Los Angeles is $23,640. If that wage earner also supports a second adult, the amount needed is $35,769. And if he or she supports another adult and one child, the amount needed is $44,972. In Minneapolis the figures in these respective circumstances would be $20,147, $31,805, and $38,823. In San Antonio, Texas, those figures would be $18,008, $28,904 and $36,148. (These figures are for 2013 and would have to be automatically tied to the annual cost of living and inflation.)

A Guaranteed Annual Income

Can employers be expected to pay all of a living wage? In most cases...