Living Wage Vs. Minimum Wage

by Gail Sessoms, studioD
Wage laws aim to set minimum standards of pay for hourly workers.


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The movement to establish a living wage for all workers looks at the cost of living in a given area. Some states and local jurisdictions have laws that require payment of living wages to certain workers. The minimum wage established by federal, state and local government law sets the lowest wage an employer may legally pay to workers. Economists calculate the earnings an individual or a family needs to support a decent standard of living. The calculations for living wages and minimum wages use different criteria for determining the income needed to sustain a reasonably comfortable standard of living.

Living Wage

Living wages raise the minimum hourly wage to a level sufficient for workers to meet the basic needs of their families. Some local governments have laws that establish both living wages and minimum wages. Employers that sign contracts with government agencies, or receive subsidies from them, must agree to pay the required living wage. Local governments use living wage standards to ensure that public dollars create well-paid jobs. In 2011, the National Employment Law Project reported that 125 local governments had living wage laws and that some cities had more than one.

Minimum Wage

Minimum wage laws, with some exceptions, apply to all workers in a given jurisdiction, whether in the public or private sector. The Fair Labor Standards Act, or FLSA, established the federal minimum wage and regulations for applying the laws. The FLSA requires employers in every state to pay covered and nonexempt workers at least the federal hourly minimum wage. Some states and cities also have minimum wage laws. Exceptions to the federal minimum wage requirements that allow payment of a lower minimum wage apply to certain workers, including full-time students, workers under the age of 20, workers who receive tips and employees with disabilities.

Covered Workers

While living wage advocates would like all workers to earn living wages, the living wage laws passed by state, city and county governments apply only to employees of companies engaged in business with those governments. The FLSA exempts certain employees from the minimum wage, overtime pay or both. Exemptions are based on the work performed, the job title and the type of business. Exempt workers include, with additional qualification, salespeople who earn commissions, farm workers, computer professionals, drivers and employees paid on a salary basis.

Wage Amounts

Economists calculate recommended living wages based on the cost of living in a given area, household size and other factors, such as the poverty rate. State and local living wage laws require rates that range from $9 to $16 per hour, according to the National Employment Law Project. Some have multiple rates. Maryland's living wage rates are $12.49 and $9.39 per hour, depending on the city or county. Los Angeles County's living wage is $11.84 without health benefits or $9.64 with health benefits valued at $2.20 an hour or more. The 2012 federal minimum wage was $7.25 an hour as of 2012. More than 15 states and a few cities have minimum wage rates that are higher than the federal rate. The FLSA requires employers to pay the higher wage rate to workers who are subject to federal and local minimum wage laws

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