What is a Living Wage?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 12 April 2017
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A living wage is a wage which is based upon the cost of living in an area, rather than an arbitrary minimum. Under an ideal living wage, someone who works an ordinary 40 hour per week job would be able to afford shelter, food, health care, and other basic necessities of life. The amount of a living wage could potentially vary quite a bit, as standards of living are different in different parts of the world, and the overall cost of living is also subject to extreme fluctuation.

Proponents of the concept of a living wage argue that everyone is entitled to a comfortable standard of living which is comparable to that enjoyed by other people in the same society. Living wages are not designed to eliminate class differences; obviously, some people make much more than others, and this would continue even under a living wage. A living wage would ensure, however, that everyone in a society would have access to the same basic privileges and services.

Many countries around the world have what is known as a minimum wage. In these areas, all workers must be paid at least the minimum wage for their hourly work, although many governments stress that the minimum wage is a base wage, and that ideally people should make more than minimum wage. Unfortunately, the cost of living often increases much more quickly than the minimum wage, causing economic hardship for people on the lower end of the pay spectrum.

Within some larger countries, individual provinces, states, and cities have set their own minimum wages in an attempt to compensate for cost of living increases, and in a few of these areas, the new minimum wage has become a living wage. Living wages are calculated on the basis of what it costs to live a fairly ordinary life in a simple house with basic needs. Ideally, workers should not spend more than 30% of their income on housing, devoting the rest to food, transportation, health care, education, recreation, and other needs.

People who support the living wage argue that in many areas, people who work minimum wage jobs are actually below the poverty level. It is common for people to work multiple jobs to support themselves, especially if they have children, and in some communities people with full time employment have been forced to rely on homeless shelters, food banks, and other social services because they cannot keep up with the cost of living.

Opponents of the living wage argue that it could potentially hurt the economy, by forcing employers to compensate their employees at a higher rate. Some have also suggested that the institution of a living wage could lead to unemployment, as small businesses might be forced to let workers go because they could not afford their wages. While these arguments are valid, some people feel that ensuring the same basic standard of living for all citizens is worth a brief period of hardship in the transition stages.


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Post 4

Does anyone ever say what the "living wage" includes? Do they tell you it includes eating out in restaurants and days out? Some calculations may even include cell phone and TV contracts. Nice to have, but not exactly "basic necessities of life."

Post 3

That is so true. No one can live on 7.25 an hour and still be expected pay for everything, and now Obamacare is here and that makes it more difficult. People can't afford the cost of living much less insurance, what was he thinking? 40 x 7.25 is 290.00 x 4 = 1160, most people's rent is $600 and above, then food, utilities, clothes and other necessities, and if you have a family, you are just out of luck.

Post 2

I completely agree. I cannot understand how people are able to live on such a low number. The assumption that everyone can just work three minimum wages jobs instead is ridiculous as well, especially if you have a family or other commitments to take care of.

Post 1

I am not sure how the federal minimum wage can be gauged by the living wage or even the poverty line, when $7.25 an hour is so far below the poverty line; no one in this day and age can survive on that. How is a person supposed to live on that amount of money?

One can't pay rent, utilities buy enough food to substantiate oneself. It's time the government changed the standard by which this set the minimum wage to match what is happening in the economy and provide a living wage that allows a person to do more than exist.

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