Living Wage In The United Kingdom
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A living wage is defined as the minimum
income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...
necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
tracking
labor productivity Workforce productivity is the amount of goods and services that a group of workers produce in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity, often referred to as labor product ...
. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent
standard of living Standard of living is the level of income, comforts and services available, generally applied to a society or location, rather than to an individual. Standard of living is relevant because it is considered to contribute to an individual's quality ...
through employment without government
subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. A related concept is that of a
family wage A family wage is a wage that is sufficient to raise a family. This contrasts with a living wage, which is generally taken to mean a wage sufficient for a single individual to live on, but not necessarily sufficient to also support a family. As a st ...
– one sufficient to not only support oneself, but also to raise a family. The living wage differs from the
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
in that the latter can fail to meet the requirements for a basic
quality of life Quality of life (QOL) is defined by the World Health Organization as "an individual's perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards ...
which leaves the worker to rely on government programs for additional income. Living wages have typically only been adopted in
municipalities A municipality is usually a single administrative division having corporate status and powers of self-government or jurisdiction as granted by national and regional laws to which it is subordinate. The term ''municipality'' may also mean the go ...
. In
economic An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
terms, a minimum wage is a
price floor A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium p ...
for labor created by a legal threshold, rather than a
reservation wage In labor economics, the reservation wage is the lowest wage rate at which a worker would be willing to accept a particular type of job. This wage is a theoretical representation of the hourly rate at which an individual values their own leisure ...
created by
price discovery In economics and finance, the price discovery process (also called price discovery mechanism) is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers. Overview Price discovery is diff ...
. The living wage is one possible guideline for determining a target price floor, while a minimum wage is a policy to enforce a chosen price floor. In the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
and
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
, advocates define a living wage to mean that a person working 40 hours a week, with no additional income, should be able to afford the basics for a modest but decent life, such as,
food Food is any substance consumed by an organism for nutritional support. Food is usually of plant, animal, or fungal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is inge ...
,
shelter Shelter is a small building giving temporary protection from bad weather or danger. Shelter may also refer to: Places * Port Shelter, Hong Kong * Shelter Bay (disambiguation), various locations * Shelter Cove (disambiguation), various locatio ...
,
utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...
,
transport Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, an ...
,
health care Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...
, and
child care Child care, otherwise known as day care, is the care and supervision of a child or multiple children at a time, whose ages range from two weeks of age to 18 years. Although most parents spend a significant amount of time caring for their child(r ...
. Living wage advocates have further defined a living wage as the wage equivalent to the
poverty line The poverty threshold, poverty limit, poverty line or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for t ...
for a family of four. The income would have to allow the family to 'secure food, shelter, clothing, health care, transportation and other necessities of living in modern society'. A definition of a living wage used by the
Greater London Authority The Greater London Authority (GLA), colloquially known by the metonym "City Hall", is the devolved regional governance body of Greater London. It consists of two political branches: the executive Mayoralty (currently led by Sadiq Khan) and the ...
(GLA) is the threshold wage, calculated as an income of 60% of the median, and an additional 15% to allow for unforeseen events. Living wage campaigns came about partially as a response to
Reaganomics Reaganomics (; a portmanteau of ''Reagan'' and ''economics'' attributed to Paul Harvey), or Reaganism, refers to the neoliberal economic policies promoted by U.S. President Ronald Reagan during the 1980s. These policies are commonly associat ...
and
Thatcherism Thatcherism is a form of British conservative ideology named after Conservative Party leader Margaret Thatcher that relates to not just her political platform and particular policies but also her personal character and general style of manag ...
in the US and UK, respectively, which shifted
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
policy towards
neoliberalism Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
. A living wage, by increasing the
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
of low income workers, is supported by
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and ...
and
post-Keynesian Post-Keynesian economics is a school of economic thought with its origins in ''The General Theory'' of John Maynard Keynes, with subsequent development influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor, Sidney Wei ...
economics which focuses on stimulating demand in order to improve the state of the economy.


History

The concept of a living wage, though it was not defined as such, can be traced back to the works of ancient Greek philosophers such as
Plato Plato ( ; grc-gre, Πλάτων ; 428/427 or 424/423 – 348/347 BC) was a Greek philosopher born in Athens during the Classical period in Ancient Greece. He founded the Platonist school of thought and the Academy, the first institution ...
and
Aristotle Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of phil ...
. Both argued for an income that considers needs, particularly those that ensure the communal good. Aristotle saw self-sufficiency as a requirement for happiness which he defined as, ‘that which on its own makes life worthy of choice and lacking in nothing’. As he placed the responsibility in ensuring that the poor could earn a sustainable living in the state, his ideas are seen as an early example of support for a living wage. The evolution of the concept can be seen later on in medieval scholars such as
Thomas Aquinas Thomas Aquinas, OP (; it, Tommaso d'Aquino, lit=Thomas of Aquino; 1225 – 7 March 1274) was an Italian Dominican friar and priest who was an influential philosopher, theologian and jurist in the tradition of scholasticism; he is known wi ...
who argued for a 'just wage'. The concept of a just wage was related to that of
just price The just price is a theory of ethics in economics that attempts to set standards of fairness in transactions. With intellectual roots in ancient Greek philosophy, it was advanced by Thomas Aquinas based on an argument against usury, which in his ti ...
s, which were those that allowed everyone access to necessities. Prices and wages that prevented access to necessities were considered unjust as they would imperil the virtue of those without access. In ''
Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...
'',
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
recognized that rising real wages lead to the "improvement in the circumstances of the lower ranks of people" and are therefore an advantage to society.( 7761976). An Inquiry into the Nature and Causes of the Wealth of Nations. Growth and a system of liberty were the means by which the laboring poor were able to secure higher wages and an acceptable standard of living. Rising real wages are secured by growth through increasing productivity against stable price levels, i.e. prices not affected by inflation. A system of liberty, secured through political institutions whereupon even the "lower ranks of people" could secure the opportunity for higher wages and an acceptable standard of living. Based on these writings, Smith advocated that labor should receive an equitable share of what labor produces. For Smith, this equitable share amounted to more than subsistence. Smith equated the interests of labor and the interests of land with overarching societal interests. He reasoned that as wages and rents rise, as a result of higher productivity, societal growth will occur thus increasing the quality of life for the greater part of its members. Like Smith, supporters of a living wage argue that the greater good for society is achieved through higher wages and a living wage. It is argued that government should in turn attempt to align the interests of those pursuing profits with the interests of the labor in order to produce societal advantages for the majority of society. Smith argued that higher productivity and overall growth led to higher wages that in turn led to greater benefits for society. Based on his writings, one can infer that Smith would support a living wage commensurate with the overall growth of the economy. This, in turn, would lead to more happiness and joy for people, while helping to keep families and people out of poverty. Political institutions can create a system of liberty for individuals to ensure opportunity for higher wages through higher production and thus stable growth for society. In 1891,
Pope Leo XIII Pope Leo XIII ( it, Leone XIII; born Vincenzo Gioacchino Raffaele Luigi Pecci; 2 March 1810 – 20 July 1903) was the head of the Catholic Church from 20 February 1878 to his death in July 1903. Living until the age of 93, he was the second-old ...
issued a papal bull entitled ''
Rerum novarum ''Rerum novarum'' (from its incipit, with the direct translation of the Latin meaning "of revolutionary change"), or ''Rights and Duties of Capital and Labor'', is an encyclical issued by Pope Leo XIII on 15 May 1891. It is an open letter, pass ...
'', which is considered the Catholic Church's first expression of a view supportive of a living wage. The church recognized that wages should be sufficient to support a family. This position has been widely supported by the church since that time, and has been reaffirmed by the papacy on multiple occasions, such as by
Pope Pius XI Pope Pius XI ( it, Pio XI), born Ambrogio Damiano Achille Ratti (; 31 May 1857 – 10 February 1939), was head of the Catholic Church from 6 February 1922 to his death in February 1939. He was the first sovereign of Vatican City fro ...
in 1931 '' Quadragesimo anno'' and again in 1961, by
Pope John XXIII Pope John XXIII ( la, Ioannes XXIII; it, Giovanni XXIII; born Angelo Giuseppe Roncalli, ; 25 November 18813 June 1963) was head of the Catholic Church and sovereign of the Vatican City State from 28 October 1958 until his death in June 19 ...
writing in the encyclical ''
Mater et magistra ''Mater et magistra'' is the encyclical written by Pope John XXIII on the topic of "Christianity and Social Progress". It was promulgated on 15 May 1961. The title means "mother and teacher", referring to the role of the church. It describes a ...
.'' More recently,
Pope John Paul II Pope John Paul II ( la, Ioannes Paulus II; it, Giovanni Paolo II; pl, Jan Paweł II; born Karol Józef Wojtyła ; 18 May 19202 April 2005) was the head of the Catholic Church and sovereign of the Vatican City State from 1978 until his ...
wrote, "Hence in every case a just wage is the concrete means of verifying the whole socioeconomic system and, in any case, of checking that it is functioning justly."


Contemporary thought

Different ideas on a living wage have been advanced by modern campaigns that have pushed for localities to adopt them. Supporters of a living wage have argued that a wage is more than just compensation for labour. It is a means of securing a living and it leads to public policies that address both the level of the wage and its decency. Contemporary research by Andrea Werner and Ming Lim has analyzed the works of John Ryan, Jerold Waltman and Donald Stabile for their philosophical and ethical insights on a living wage. John Ryan argues for a living wage from a rights perspective. He considers a living wage to be a right that all labourers are entitled to from the 'common bounty of nature'. He argues that private ownership of resources precludes access to them by others who would need them to maintain themselves. As such, the obligation to fulfill the right of a living wage rests on the owners and employers of private resources. His argument goes beyond that a wage should provide mere subsistence but that it should provide humans with the capabilities to 'develop within reasonable limits all
heir Inheritance is the practice of receiving private property, titles, debts, entitlements, privileges, rights, and obligations upon the death of an individual. The rules of inheritance differ among societies and have changed over time. Officiall ...
faculties, physical, intellectual, moral and spiritual.' A living wage for him is 'the amount of remuneration that is sufficient to maintain decently the laborer.'' Jerold Waltman, in ''A Case for the Living Wage,'' argues for a living wage not based on individual rights but from a communal, or ' civic republicanism', perspective. He sees the need for citizens to be connected to their community, and thus, sees individual and communal interests as inseparably bound. Two major problems that are antithetical to civic republicanism are poverty and inequality. A living wage is meant to address these by providing the material basis that allows individuals a degree of autonomy and prevents disproportionate income and wealth that would inevitably lead to a societal fissure between the rich and poor. A living wage further allows for political participation by all classes of people which is required to prevent the political interests of the rich from undermining the needs of the poor. These arguments for a living wage, taken together, can be seen as necessary elements for 'social sustainability and cohesion'. Donald Stabile argues for a living wage based on moral economic thought and its related themes of sustainability, capability and
externality In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...
. Broadly speaking, Stabile indicates that sustainability in the economy may require that people have the means for 'decent accommodation, transport, clothing and personal care'. He qualifies the statement as he sees individual necessities as contextual and therefore able to change over time, between cultures and under different macroeconomic circumstances. This suggests that the concept and definition of a living wage cannot be made objective over all places and in all times. Stabile's thoughts on capabilities make direct reference to
Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher, who since 1972 has taught and worked in the United Kingdom and the United States. Sen has made contributions to welfare economics, social choice theory, econom ...
's work on
capability approach The capability approach (also referred to as the capabilities approach) is a normative approach to human welfare that concentrates on the actual capability of persons to achieve lives they value rather than solely having a right or freedom to do ...
. The tie-in with a living wage is the idea that income is an important, though not exclusive, means for capabilities. The enhancement of people's capabilities allows them to better function both in society and as workers. These capabilities are further passed down from parents to children. Finally, Stabile analyses the lack of a living wage as the imposition of
negative externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...
on others. These externalities take the form of depleting the stock of workers by 'exploiting and exhausting the workforce'. This leads to economic inefficiency as businesses end up overproducing their products due to not paying the full cost of labour. Other contemporary accounts have taken up the theme of
externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...
arising due to a lack of living wage. Muilenburg and Singh see welfare programs, such as housing and school meals, as being a subsidy for employers that allow them to pay low wages. This subsidy, taking the form of an externality, is of course paid for by society in the form of taxes. This thought is repeated by Grimshaw who argues that employers offset the social costs of maintaining their workforce through tax credits, housing, benefits and other wage subsidies. The issue was raised during the Democratic party primary election of 2016 in the United States, when presidential candidate
Bernie Sanders Bernard Sanders (born September8, 1941) is an American politician who has served as the junior United States senator from Vermont since 2007. He was the U.S. representative for the state's at-large congressional district from 1991 to 2007 ...
mentioned that "struggling working families should not have to subsidise the wealthiest family in the country", and therefore, implied that the large retailer
Walmart Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
, who is owned by the wealthiest family in the country, was not paying fair wages and was being subsidised by taxpayers. Those in favor of living wage ordinances primarily research the negative impacts of insufficient minimum wages. In a cross-comparison between minimum wage and living wage ordinances, there are profound psychological impacts to living wage implementations. Those in favor of living wage oriented policies assert that it is important to acknowledge the region-specific costs that is severely lacking in minimum wage measurements. This line of thinking argues that a living wage can both enhance engagement and performance if implemented.


Implementations


Australia

In
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
, the 1907
Harvester Judgement ''Ex parte H.V. McKay'',''Ex parte H.V. McKay'(1907) 2 CAR 1 commonly referred to as the ''Harvester case'', is a landmark Australian labour law decision of the Commonwealth Court of Conciliation and Arbitration. The case arose under the ''Exci ...
ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community" to live in "frugal comfort estimated by current... standards," regardless of the employer's capacity to pay. Justice
H. B. Higgins Henry Bournes Higgins KC (30 June 1851 – 13 January 1929) was an Australian lawyer, politician, and judge. He served on the High Court of Australia from 1906 until his death in 1929, after briefly serving as Attorney-General of Australia in ...
established a wage of 7/- ( 7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers.


Bangladesh

In Bangladesh, salaries are among the lowest in the world. During 2012 wages hovered around US$38 per month depending on the exchange rate. Studies by Professor Doug Miller during 2010 to 2012, has highlighted the evolving global trade practices in ''Towards Sustainable Labour Costing in UK Fashion Retail''. This white paper published in 2013 by University of Manchester, appears to suggest that the competition among buying organisation has implications to low wages in countries such as Bangladesh. It has laid down a road map to achieve sustainable wages.


United Kingdom

Municipal regulation of wage levels began in some towns in the British Isles in 1524. National
minimum wage law Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation. History Until r ...
began with
Winston Churchill Sir Winston Leonard Spencer Churchill (30 November 187424 January 1965) was a British statesman, soldier, and writer who served as Prime Minister of the United Kingdom twice, from 1940 to 1945 Winston Churchill in the Second World War, dur ...
's
Trade Boards Act 1909 The Trade Boards Act 1909 was a piece of social legislation passed in the United Kingdom in 1909. It provided for the creation of boards which could set minimum wage criteria that were legally enforceable. It was expanded and updated in the Trade ...
, and the
Wages Councils Act 1945 The Wages Councils Act 1945 (''c.'' 17) was a UK Act of Parliament, concerning the setting of minimum wages and encouraging collective bargaining. It played a central role in post-war UK labour law. It was repealed by the Wages Act 1986. See al ...
set minimum wage standards in many sectors of the economy. Wages Councils were abolished in 1993 and subsequently replaced with a single statutory national
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
by the
National Minimum Wage Act 1998 The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom.. E McGaughey, ''A Casebook on Labour Law'' (Hart 2019) ch 6(1) From 1 April 2022 this was £9.50 for people age 23 and over, £9.18 for 21- to 22-year-olds, £6. ...
, which is still in force. The rates are reviewed each year by the country's
Low Pay Commission The Low Pay Commission (LPC) is an independent body in the United Kingdom, established in 1997, that advises the government on the National Minimum Wage. It is an advisory non-departmental public body of the Department for Business, Energy and I ...
. From 1 April 2016 the minimum wage has been paid as a mandatory
National Living Wage The National Living Wage is an obligatory minimum wage payable to workers in the United Kingdom aged 23 and over which came into effect on 1 April 2016. it is £9.50 per hour and it is set to rise to £10.42 in April 2023. It was implemented at a ...
for workers over 25. It is being phased in between 2016 and 2020 and is set at a significantly higher level than previous minimum wage rates. By 2020 it is expected to have risen to at least £9 per hour and represent a full-time annual pay equivalent to 60% of the median UK earnings. The National Living Wage is nevertheless lower than the value of the Living Wage calculated by the
Living Wage Foundation The Living Wage Foundation is a campaigning organisation in the United Kingdom which aims to persuade employers to pay a living wage. The organisation was established in 2011, publishes an annual Living Wage figure and for a fee accredits employer ...
. Some organisations voluntarily pay a living wage to their staff, at a level somewhat higher than the statutory level. From September 2014 all
NHS Wales NHS Wales ( cy, GIG (Gwasanaeth Iechyd Gwladol) Cymru) is the publicly-funded healthcare system in Wales, and one of the four systems which make up the National Health Service in the United Kingdom. NHS Wales was formed as part of the public ...
staff have been paid a minimum of the "living wage" recommended by the Living Wage Commission. About 2,400 employees received an initial salary increase of up to £470 above the UK-wide
Agenda for Change Agenda for Change (AfC) is the current National Health Service (NHS) grading and pay system for NHS staff, with the exception of doctors, dentists, apprentices and some senior managers. It covers more than 1 million people and harmonises their pay ...
rates.


United States

As of 2006, U.S. cities with living wage laws include Santa Fe and
Albuquerque Albuquerque ( ; ), ; kee, Arawageeki; tow, Vakêêke; zun, Alo:ke:k'ya; apj, Gołgéeki'yé. abbreviated ABQ, is the most populous city in the U.S. state of New Mexico. Its nicknames, The Duke City and Burque, both reference its founding in ...
in
New Mexico ) , population_demonym = New Mexican ( es, Neomexicano, Neomejicano, Nuevo Mexicano) , seat = Santa Fe , LargestCity = Albuquerque , LargestMetro = Tiguex , OfficialLang = None , Languages = English, Spanish ( New Mexican), Navajo, Ker ...
;
San Francisco, California San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
; and
Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
The city of
Chicago, Illinois (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...
also passed a living wage ordinance in 2006, but it was vetoed by Mayor
Richard M. Daley Richard Michael Daley (born April 24, 1942) is an American politician who served as the 54th mayor of Chicago, Illinois, from 1989 to 2011. Daley was elected mayor in 1989 and was reelected five times until declining to run for a seventh term ...
. Living wage laws typically cover only businesses that receive state assistance or have contracts with the government. In 2014, Wisconsin Service Employees International Union teamed up with public officials against legislation to eliminate local living wages. According to U.S. Department of Labor data, Wisconsin Jobs Now - a non-profit organization fighting inequality through higher wages - has received at least $2.5 million from SEIU organizations from 2011 to 2013. Although these ordinances are recent, a number of studies have attempted to measure the impact of these policies on wages and employment. Researchers have had difficulty measuring the impact of these policies because it is difficult to isolate a control group for comparison. A notable study defined the control group as the subset of cities that attempted to pass a living wage law but were unsuccessful. This comparison indicates that living wages raise the average wage level in cities, however, it reduces the likelihood of employment for individuals in the bottom percentile of wage distribution.


Impact

Research shows that minimum wage laws and living wage legislation impact poverty differently: evidence demonstrates that living wage legislation reduces poverty. The parties impacted by minimum wage laws and living wage laws differ as living wage legislation generally applies to a more limited sector of the population. It is estimated that workers who qualify for the living wage legislation are currently between 1-2% of the bottom quartile of wage distribution.Real life implications to living wage legislation is important to address. Raising wages can decrease job opportunities for low wage workers as it cuts costs for profit seeking organizations and companies. The pool gets smaller despite an increase in wage rates. Neumark and Adams, in their paper, "Do living wage ordinances reduce urban poverty?", state, "There is evidence that living wage ordinances modestly reduce the poverty rates in locations in which these ordinances are enacted. However, there is no evidence that state minimum wage laws do so." A study carried out in
Hamilton, Canada Hamilton is a port city in the Canadian province of Ontario. Hamilton has a population of 569,353, and its census metropolitan area, which includes Burlington and Grimsby, has a population of 785,184. The city is approximately southwest of To ...
by Zeng and Honig indicated that living wage workers have higher affective commitment and lower turnover intention. Workers paid a living wage were more likely to support the organization they work for in various ways including: "protecting the organizations public image, helping colleagues solve problems, improving their skills and techniques, providing suggestions or advice to a management team, and caring about the organization." The authors interpret these finding through
social exchange theory Social exchange theory is a sociological and psychological theory that studies the social behavior in the interaction of two parties that implement a cost-benefit analysis to determine risks and benefits. The theory also involves economic relation ...
, which points out the mutual obligation employers and employees feel towards each other when employees perceive they are provided favorable treatment.


Living wage estimates

As of 2003, there are 122 living wage ordinances in American cities and an additional 75 under discussion.Anker, R. (2006). Living wages around the world: A new methodology and internationally comparable estimates. International Labour Review, 145(4), 308-338. Article 23 of the
United Nations Universal Declaration of Human Rights The Universal Declaration of Human Rights (UDHR) is an international document adopted by the United Nations General Assembly that enshrines the Human rights, rights and freedoms of all human beings. Drafted by a UN Drafting of the Universal De ...
states that "Everyone who works has the right to just and favourable remuneration ensuring for himself and for his family an existence worthy of human dignity." In addition to legislative acts, many corporations have adopted voluntary codes of conduct. The Sullivan Principles in South Africa are an example of a voluntary code of conduct that state that firms should compensate workers to at least cover their basic needs. In the table below, cross national comparable living wages were estimated for twelve countries and reported in local currencies and
purchasing power parity Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
(PPP). Living wage estimates for the year 2000 range from US$1.7 PPP per hour, in low-income examples, to approximately US$11.6 PPP per hour, in high-income examples. Living wage estimates vary considerably by area, and may be calculated in different ways. In a 2019 report, the U.S. advocacy group
National Low Income Housing Coalition The National Low Income Housing Coalition (NLIHC) is a non-profit organization dedicated to ending America's affordable housing crisis. It aims to expand and preserve housing for people with extremely low incomes. NLIHC provides current informat ...
calculated the necessary full-time hourly wage to spend 30% of income on rental of a fair-market, 2-bedroom apartment. Estimates range from a high of $36.82/hr in Hawaii (where minimum wage is $10.10/hr) to $14.26 in Arkansas (the lowest state, raising its minimum from $9.25 to $11/hr) and $9.59/hr in Puerto Rico (where minimum wage is $7.25/hr).


Living wage movements


Living Wage Foundation

The Living Wage Campaign in the United Kingdom originated in London, where it was launched in 2001 by members of the community organisation London Citizens (now
Citizens UK Citizens UK is a grassroots alliance of many local communities working together. Citizens UK has 17 chapters across the UK made up of local institutions, including schools, universities, churches, mosques, synagogues, parent groups, health trus ...
). It engaged in a series of Living Wage campaigns and in 2005 the
Greater London Authority The Greater London Authority (GLA), colloquially known by the metonym "City Hall", is the devolved regional governance body of Greater London. It consists of two political branches: the executive Mayoralty (currently led by Sadiq Khan) and the ...
established the Living Wage Unit to calculate the London Living Wage, although the authority had no power to enforce it. The London Living Wage was developed in 2008 when Trust for London awarded a grant of over £1 million for campaigning, research and an employer accreditation scheme. The Living Wage campaign subsequently grew into a national movement with local campaigns across the UK. The
Joseph Rowntree Foundation The Joseph Rowntree Foundation (JRF) is a charity that conducts and funds research aimed at solving poverty in the UK. JRF's stated aim is to "inspire action and change that will create a prosperous UK without poverty." Originally called the ...
funded the
Centre for Research in Social Policy The Centre for Research in Social Policy (CRSP) is a self-funding research centre based within the Department of Social Sciences at Loughborough University in the market town of Loughborough, Leicestershire, in the East Midlands, England. The C ...
(CRSP) at
Loughborough University Loughborough University (abbreviated as ''Lough'' or ''Lboro'' for post-nominals) is a public research university in the market town of Loughborough, Leicestershire, England. It has been a university since 1966, but it dates back to 1909, when L ...
to calculate a UK-wide Minimum Income Standard (MIS) figure, an average across the whole of the UK independent of the higher living costs in London. In 2011 the CRSP used the MIS as the basis for developing a standard model for setting the UK Living Wage outside of London.
Citizens UK Citizens UK is a grassroots alliance of many local communities working together. Citizens UK has 17 chapters across the UK made up of local institutions, including schools, universities, churches, mosques, synagogues, parent groups, health trus ...
, a nationwide community organising institution developed out of London Citizens, launched the
Living Wage Foundation The Living Wage Foundation is a campaigning organisation in the United Kingdom which aims to persuade employers to pay a living wage. The organisation was established in 2011, publishes an annual Living Wage figure and for a fee accredits employer ...
and Living Wage Employer mark. Since 2011, the Living Wage Foundation has accredited thousands of employers that pay its proposed living wage. The living wage in London is calculated by GLA Economics and the CRSP calculates the out-of-London Living Wage. Their recommended hourly rates for 2015 are £9.40 for London and £8.25 for the rest of the UK. These rates are updated annually in November. In January 2016 the Living Wage Foundation set up a new Living Wage Commission to oversee the calculation of the Living Wage rates in the UK. In 2012, research into the costs and benefits of a living wage in London was funded by the
Trust for London {{Use dmy dates, date=April 2022 Trust for London is an independent charitable foundation which aims to tackle poverty and inequality in London and its root causes. It was established in 1891 as the City Parochial Foundation and changed its name to ...
and carried out by
Queen Mary University of London , mottoeng = With united powers , established = 1785 – The London Hospital Medical College1843 – St Bartholomew's Hospital Medical College1882 – Westfield College1887 – East London College/Queen Mary College , type = Public researc ...
. Further research was published in 2014 in a number of reports on the potential impact of raising the UK's statutory national minimum wage to the same level as the Living Wage Foundation's living wage recommendation. This included two reports funded by the Trust for London and carried out by the
Institute for Public Policy Research The Institute for Public Policy Research (IPPR) is a progressive think tank based in London. It was founded in 1988 and is an independent registered charity. IPPR has offices in Newcastle upon Tyne, Manchester, and Edinburgh. Funding comes from ...
(IPPR) and
Resolution Foundation The Resolution Foundation is an independent British think tank established in 2005. Its stated aim is to improve the standard of living of low- and middle-income families. Appointments In June 2015, the former Conservative MP David Willetts to ...
: "Beyond the Bottom Line" and "What Price a Living Wage?" Additionally, Landman Economics published "The Economic Impact of Extending the Living Wage to all Employees in the UK". A 2014 report by the Living Wage Commission, chaired by Doctor
John Sentamu John Tucker Mugabi Sentamu, Baron Sentamu, (; ; born 10 June 1949) is a retired Anglican bishop and life peer. He was Archbishop of York and Primate of England from 2005 to 2020. Born near Kampala in Uganda, Sentamu studied law at Makerere U ...
, the
Archbishop of York The archbishop of York is a senior bishop in the Church of England, second only to the archbishop of Canterbury. The archbishop is the diocesan bishop of the Diocese of York and the metropolitan bishop of the province of York, which covers th ...
, recommended that the UK government should pay its own workers a "living wage", but that it should be voluntary for the private sector. Data published in late 2014 by
New Policy Institute The New Policy Institute, often shortened to just NPI, is a British think tank based in London. It was established in 1996, and focusses on social and economic issues from a progressive perspective. History The New Policy Institute was founded i ...
and Trust for London found 20% of employees in London were paid below the Living Wage Foundation's recommended living wage between 2011 and 2013. The proportion of residents paid less than this rate was highest in
Newham The London Borough of Newham is a London borough created in 1965 by the London Government Act 1963. It covers an area previously administered by the Essex county boroughs of West Ham and East Ham, authorities that were both abolished by the s ...
(37%) and Brent (32%). Research by the
Office for National Statistics The Office for National Statistics (ONS; cy, Swyddfa Ystadegau Gwladol) is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament. Overview The ONS is responsible for th ...
in 2014 indicated that at that time the proportion of jobs outside London paying less than the living wage was 23%. The equivalent figure within London was 19%. Research by Loughborough University, commissioned by Trust for London, shows 4 in 10 Londoners cannot afford a decent standard of living - that is one that allows them to meet their basic needs and participate in society at a minimum level. This is significantly higher than the 30% that fall below the standard in the UK as a whole. This represents 3.5 million Londoners, an increase of 400,000 since 2010/11. The research highlights the need to improve incomes through better wages, mainly, the London Living Wage, to ensure more Londoners reach a decent standard of living.
Ed Miliband Edward Samuel "Ed" Miliband (born 24 December 1969) is a British politician serving as Shadow Secretary of State for Climate Change and Net Zero since 2021. He has been the Member of Parliament (MP) for Doncaster North since 2005. Miliband ...
, the leader of the Labour Party in opposition from 2010 until 2015, supported a living wage and proposed tax breaks for employers who adopted it. The Labour Party has implemented a living wage in some local councils which it controls, such as in
Birmingham Birmingham ( ) is a city and metropolitan borough in the metropolitan county of West Midlands in England. It is the second-largest city in the United Kingdom with a population of 1.145 million in the city proper, 2.92 million in the West ...
and
Cardiff Cardiff (; cy, Caerdydd ) is the capital and largest city of Wales. It forms a principal area, officially known as the City and County of Cardiff ( cy, Dinas a Sir Caerdydd, links=no), and the city is the eleventh-largest in the United Kingd ...
councils. The
Green Party A green party is a formally organized political party based on the principles of green politics, such as social justice, environmentalism and nonviolence. Greens believe that these issues are inherently related to one another as a foundation ...
also supports the introduction of a living wage, believing that the national minimum wage should be 60% of net national average earnings.
Sinn Féin Sinn Féin ( , ; en, " eOurselves") is an Irish republican and democratic socialist political party active throughout both the Republic of Ireland and Northern Ireland. The original Sinn Féin organisation was founded in 1905 by Arthur Gri ...
also supports the introduction of a living wage for
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
. Other supporters include ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' newspaper columnist
Polly Toynbee Mary Louisa "Polly" Toynbee (; born 27 December 1946) is a British journalist and writer. She has been a columnist for ''The Guardian'' newspaper since 1998. She is a social democrat and was a candidate for the Social Democratic Party in the 19 ...
,
Church Action on Poverty Church Action on Poverty is a UK-based national ecumenical Christian social justice charity, committed to tackling poverty in the United Kingdom. Church Action on Poverty works in partnership with churches and with people in poverty themselves t ...
, the Scottish Low Pay Unit, and Bloomsbury Fightback!.


Republic of Ireland

There has been an active living wage campaign in the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 counties of the island of Ireland. The capital and largest city is Dublin, on the eastern side of the island. A ...
since 2014. It is supported by The Vincentian Partnership for Social Justice (VPSJ), Nevin Economic Research Institute (NERI), TASC, Social Justice Ireland, UCD School of Social Policy, Social Work and Social Justice,
SIPTU SIPTU (; ''Services, Industrial, Professional and Technical Union''; ga, An Ceardchumann Seirbhísí, Tionsclaíoch, Gairmiúil agus Teicniúil) is Ireland's largest trade union, with around 200,000 members. Most of these members are in the Rep ...
,
Unite the Union Unite the Union, commonly known as Unite, is a British and Irish trade union which was formed on 1 May 2007 by the merger of Amicus and the Transport and General Workers' Union (TGWU). Unite is the second largest trade union in the UK (after ...
and the
Society of St Vincent de Paul The Society of St Vincent de Paul (SVP or SVdP or SSVP) is an international voluntary organization in the Catholic Church, founded in 1833 for the sanctification of its members by personal service of the poor. Innumerable Catholic parishes have ...
. Below is a table of the hourly minimum wage (for adults), and the living wage recommended by the living wage campaign, for each year since 2014. It is calculated on the basis of the VPSJ’s Minimum Essential Standard of Living (MESL) research, and set by the Living Wage Technical Group, benchmarked against the cost of minimum
standard of living Standard of living is the level of income, comforts and services available, generally applied to a society or location, rather than to an individual. Standard of living is relevant because it is considered to contribute to an individual's quality ...
. It is supported by the political parties
Sinn Féin Sinn Féin ( , ; en, " eOurselves") is an Irish republican and democratic socialist political party active throughout both the Republic of Ireland and Northern Ireland. The original Sinn Féin organisation was founded in 1905 by Arthur Gri ...
,
Labour Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the labour ...
and the
Social Democrats Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote so ...
, while
Solidarity–People Before Profit People Before Profit/Solidarity ( ga, Pobal Roimh Bhrabús/Dlúthphairtíocht, PBPS, PBP/S, or S-PBP) is a left-wing electoral alliance in the Republic of Ireland. It was formed by members of two socialist political parties in the Republic of I ...
recommend a living wage of €15.
Aontú Aontú (; "Unite") is an all-Ireland political party that was formally launched in January 2019, and operates in both the Republic of Ireland and Northern Ireland. Ideologically, Aontú is opposed to abortion and combines elements of social con ...
support a living wage, with different regional rates, and have also recommended a "living pension." It has been opposed by employers including
Ibec Ibec is an Irish business representative lobbying organisation and human resources services provider According to the Standards in Public Office Commission register it is the organisation that is doing "the most lobbying" in Ireland. Ibec is ...
and the Irish Small Firms Association (ISFA), while the supermarket chains
Lidl Lidl Stiftung & Co. KG (; ) is a German international discount retailer chain that operates over 11,000 stores across Europe and the United States. Headquartered in Neckarsulm, Baden-Württemberg, the company belongs to the Schwarz Group, whi ...
and
Aldi Aldi (stylised as ALDI) is the common company brand name of two German multinational family-owned discount supermarket chains operating over 10,000 stores in 20 countries. The chain was founded by brothers Karl and Theo Albrecht in 1946, when t ...
committed to pay all their employees the living wage in 2020. In 2021, the Low Pay Commission began to study the living wage, and to decide if there should be different living wages for different age categories or regions.


Asia Floor Wage

Launched in 2009, Asia Floor Wage is a loose coalition of labour and other groups seeking to implement a Living Wage throughout Asia, with a particular focus on
textile manufacturing Textile Manufacturing or Textile Engineering is a major industry. It is largely based on the conversion of fibre into yarn, then yarn into fabric. These are then dyed or printed, fabricated into cloth which is then converted into useful goods ...
. There are member associations in Bangladesh, Cambodia, Hong Kong S.A.R., India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand and Turkey as well as supporters in Europe and North America. The campaign targets multinational employers who do not pay their developing world workers a living wage.


United States living wage campaigns


New York City

The proposed law will inform tax-payers of where their investment dollars go and will hold developers to more stringent employment standards. The proposed act will require developers who receive substantial tax-payer funded subsidies to pay employees a minimum living wage. The law is designed to raise quality of life and stimulate local economy. Specifically the proposed act will guarantee that workers in large developmental projects will receive a wage of at least $10.00 an hour. The living wage will get indexed so that it keeps up with
cost of living Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a c ...
increases. Furthermore, the act will require that employees who do not receive health insurance from their employer will receive an additional $1.50 an hour to subsidize their healthcare expenses. Workers employed at a subsidized development will also be entitled to the living wage guarantee. Many city officials have opposed living wage requirements because they believe that they restrict business climate thus making cities less appealing to potential industries. Logistically cities must hire employees to administer the ordinance. Conversely advocates for the legislation have acknowledged that when wages aren't sufficient, low-wage workers are often forced to rely on
public assistance Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
in the form of
food stamps In the United States, the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is a federal program that provides food-purchasing assistance for low- and no-income people. It is a federal aid program, ad ...
or
Medicaid Medicaid in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and pers ...
. James Parrott of the
Fiscal Policy Institute Fiscal usually refers to public finance, government finance. In this context, it may refer to: Economics * Fiscal policy, use of government expenditure to influence economic development * Fiscal policy debate * Fiscal adjustment, a reduction in t ...
testified during a May 2011 New York City Council meeting that real wages for low-wage workers in the city have declined substantially over the last 20 years, despite dramatic increases in average education levels.
report
by the Fiscal Policy Institute indicated that business tax subsidies have grown two and a half times faster than overall New York City tax collections and asks why these public resources are invested in poverty-level jobs. Mr. Parrott testified that
income inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
in New York City exceeds that of other large cities, with the highest-earning 1 percent receiving 44 percent of all income.


Miami-Dade County

The Community Coalition for a Living Wage (CCLW) was launched in 1997 in
Miami Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a East Coast of the United States, coastal metropolis and the County seat, county seat of Miami-Dade County, Florida, Miami-Dade C ...
,
Florida Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...
, as a partnership between local
anti-poverty Poverty reduction, poverty relief, or poverty alleviation, is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty. Measures, like those promoted by Henry George in his economics clas ...
and
labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the labour ...
organizations Catalyst Miami, Legal Services of Greater Miami, and the South Florida
AFL–CIO The American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) is the largest federation of unions in the United States. It is made up of 56 national and international unions, together representing more than 12 million ac ...
. The CCLW organized the successful campaign for the passage of a
Miami-Dade County Miami-Dade County is a county located in the southeastern part of the U.S. state of Florida. The county had a population of 2,701,767 as of the 2020 census, making it the most populous county in Florida and the seventh-most populous county in ...
living wage ordinance in 1999, the first of its kind in the South. The ordinance requires
Miami-Dade County Miami-Dade County is a county located in the southeastern part of the U.S. state of Florida. The county had a population of 2,701,767 as of the 2020 census, making it the most populous county in Florida and the seventh-most populous county in ...
and its contractors to pay all employees a living wage pegged to inflation: $12.63/hr with benefits, or $15 without (as of 2018).


University of Virginia

In February 2012, a Living Wage Campaign at the
University of Virginia The University of Virginia (UVA) is a Public university#United States, public research university in Charlottesville, Virginia. Founded in 1819 by Thomas Jefferson, the university is ranked among the top academic institutions in the United S ...
released a series of demands to University administrators calling for a living wage policy at the University. These demands included a requirement that the University "explicitly address" the issue by 17 February. Although University President Teresa Sullivan did respond to the demands in a mass email sent to the University community shortly before the end of the day on 17 February, the Campaign criticized her response as "intentionally misleading" and vowed to take action. On 18 February, the campaign announced that 12 students would begin a hunger strike to publicize the plight of low-paid workers.


Criticism

Criticisms against the implementation living wage laws have taken similar forms to those against
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
. Economically, both can be analyzed as a
price floor A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium p ...
for labor. A
price floor A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium p ...
, if above the
equilibrium price In economics, economic equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the ( equilibrium) values of economic variables will not change. For example, in the st ...
and thus effective, necessarily leads to a surplus. This means the number of employees an employer is willing to hire at a living wage is below the number they would be willing to hire at the equilibrium wage price. Many argue that, in the context of a labor market, this would reduce the
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
aggregate demand In macroeconomics, aggregate demand (AD) or domestic final demand (DFD) is the total demand for final goods and services in an economy at a given time. It is often called effective demand, though at other times this term is distinguished. This is ...
for labor across all employers, and so presume setting the minimum wage at a living wage would possibly raise unemployment. Rehn and Meidner instead proposed a higher minimum wage would induce productivity growth from
structural change In economics, structural change is a shift or change in the basic ways a market or economy functions or operates. Such change can be caused by such factors as economic development, global shifts in capital and labor, changes in resource availabil ...
, reorganizing workers into different jobs across employers with different
microeconomic Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics fo ...
labor demands, rather than reducing aggregate demand for labor. A large amount of empirical study has focused on the employment effects of minimum wage, much of it following a study by
David Card David Edward Card (born 1956) is a Canadian-American labour economist and professor of economics at the University of California, Berkeley. He was awarded half of the 2021 Nobel Memorial Prize in Economic Sciences "for his empirical contribution ...
and
Alan Krueger Alan Bennett Krueger (September 17, 1960 – March 16, 2019) was an American economist who was the James Madison Professor of Political Economy at Princeton University and Research Associate at the National Bureau of Economic Research. He served ...
finding no difference in unemployment rates in two states following a minimum wage increase in one. A contention that often impedes the progression of a living wage ordinance has to do with the scope; it is controversial whether it should apply to an individual or an entire family as wages can be nuanced when there are multiple types of households among a state. Potential solutions to the complexity of a living wage ordinance include a “specific employer provision,” which seeks to evaluate the pros and cons to a living wage on a company to company basis. An argument In favor of this approach asserts that it can help bolster employee morale and increase social capital. Critics have warned of not just an increase in unemployment but also price increases and a lack of entry level jobs due to labor substitutions effects. The voluntary undertaking of a living wage is criticized as impossible due to the competitive advantage other businesses in the same market would have over the one adopting a living wage. The economic argument would be that,
ceteris paribus ' (also spelled '; () is a Latin phrase, meaning "other things equal"; some other English translations of the phrase are "all other things being equal", "other things held constant", "all else unchanged", and "all else being equal". A statement ...
(all other things being equal), a company that paid its workers more than required by the market would be unable to
compete Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indivi ...
with those that pay according to market rates. Another issue that has emerged is that living wages may be a less effective anti-poverty tool than other measures. Authors point to living wages as being only a limited way of addressing the problems of rising
economic inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
, the increase of long-term low-wage jobs, and a decline of unions and legal protection for workers. Since living wage ordinances attempt to address the issue of a living wage, defined by some of its proponents as a ''family'' wage, rather than as an ''individual'' wage, many of the beneficiaries may already be in families that make substantially more than that necessary to provide an adequate standard of living; this argument focuses on the portion benefitting who are in poverty, rather than the portion in poverty who are benefitting. According to a survey of labor economists by the Employment Policies Institute in 2000, only 31% viewed living wages as a very or somewhat effective anti-poverty tool, while 98% viewed policies like the US earned income tax credit and general welfare grants in a similar vein. On the other hand, according to Zagros Madjd-Sadjadi, an economist with the State of California's Division of Labor Statistics and Research, the living wage may be seen by the public as preferable to other methods because it reinforces the
work ethic Work ethic is a belief that work and diligence have a moral benefit and an inherent ability, virtue or value to strengthen character and individual abilities. It is a set of values centered on importance of work and manifested by determination o ...
and ensures that there is something of value produced, unlike welfare, that is often believed to be a pure cash "gift" from the public coffers." The concept of a living wage based on its definition as a family wage has been criticized by some for emphasizing the role of men as breadwinners.


See also

*
Cost of living Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a c ...
*
Distributism Distributism is an economic theory asserting that the world's productive assets should be widely owned rather than concentrated. Developed in the late 19th and early 20th centuries, distributism was based upon Catholic social teaching prin ...
*
Family wage A family wage is a wage that is sufficient to raise a family. This contrasts with a living wage, which is generally taken to mean a wage sufficient for a single individual to live on, but not necessarily sufficient to also support a family. As a st ...
*
Guaranteed minimum income Guaranteed minimum income (GMI), also called minimum income (or mincome for short), is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typical ...
* Labor market *
Maximum wage A maximum wage, also often called a wage ceiling, is a legal limit on how much income an individual can earn. It is a prescribed limitation which can be used to effect change in an economic structure, but its effects are unrelated to those of minim ...
*
Minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
*
Positive rights Negative and positive rights are rights that oblige either inaction (''negative rights'') or action (''positive rights''). These obligations may be of either a legal or moral character. The notion of positive and negative rights may also be ap ...
*
Precarious work Precarious work is a term that critics use to describe non-standard or temporary employment that may be poorly paid, insecure, unprotected, and unable to support a household. From this perspective, globalization, the shift from the manufacturing se ...
* Solidarity wage *
Supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
*
Trade Boards Act 1909 The Trade Boards Act 1909 was a piece of social legislation passed in the United Kingdom in 1909. It provided for the creation of boards which could set minimum wage criteria that were legally enforceable. It was expanded and updated in the Trade ...
*
Working poor The working poor are working people whose incomes fall below a given poverty line due to low-income jobs and low familial household income. These are people who spend at least 27 weeks in a year working or looking for employment, but remain und ...


Notes


References

* S Webb and B Webb, ''
Industrial Democracy Industrial democracy is an arrangement which involves workers making decisions, sharing responsibility and authority in the workplace. While in participative management organizational designs workers are listened to and take part in the decisi ...
'' (Longmans 1902) * Ryan, John A. ''Living Wage'' Macmillan, New York 1906 * Gertner, Jon
"What is a Living Wage?"
The New York Times, 15 January 2006 * Madjd-Sadjadi, Zagros, ''Living Wages: The Issues and the Impact'' Division of Labor Statistics and Research, California Department of Industrial Relations, San Francisco, 2001 * Sklar, Holly; Mykyta, Laryssa; Wefald, Susan, "Raise The Floor: Wages and Policies That Work For All Of Us", 2002, South End Press
South End Press , Raise the Floor
* Nadeem, Shehzad
"The Living Wage Movement and the Economics of Morality,"
Research in Social Movements, Conflicts, and Change 28: 137–67 (2008) *


External links


Living Wage Calculator
New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
:
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
/living wage/ poverty wage (
PSU PSU may refer to: Organizations Military *Police Support Unit, a paramilitary wing of the Zimbabwe Republic Police *Port Security Unit, a U.S. Coast Guard expeditionary force protection unit Political parties * Parti Socialiste Unifié (disambig ...
).
Living Wage Calculator
(
PSU PSU may refer to: Organizations Military *Police Support Unit, a paramilitary wing of the Zimbabwe Republic Police *Port Security Unit, a U.S. Coast Guard expeditionary force protection unit Political parties * Parti Socialiste Unifié (disambig ...
).
Living Wage Calculator
(
MIT The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the m ...
). * .
Universal Living Wage Campaign

ACORN Living Wage campaign

Economic Policy Institute – Living Wage

Economic Policy Institute – Family Budget Calculator

London Living Wage Unit page

New York Living Wage Campaign

LaborFair Resources
– Fair Labor Practices.
Living Wage Campaign at The University of Virginia

Use IE techniques to determine Living Wage
(Doug Miller,
Northumbria University , mottoeng = A lifetime of learning , established = 1877 - Rutherford College of Technology1969 - Newcastle Polytechnic1992 - gained university status , type = Public , budget = ...
, UK).
Measuring the Full Impact of Minimum and Living Wage Laws
( Dollars & Sense Magazine).
Living Wages, Rarity for U.S. Fast-Food Workers, Served Up in Denmark
''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
.'' (October 2014). {{DEFAULTSORT:Living Wage Wages and salaries Catholic social teaching