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Campus Living Wage Resources: What's a Living Wage?
» What's a Living Wage?
» What is a "just wage",
"competitve wage", or "prevailing wage"?
» What's included in a living wage?
» Why assume a family of four?
» What's wrong with how the government
» Talking points: Common
Arguments Against the Living Wage
What's a Living Wage?
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.
A living wage is a complete consideration of the cost
of living. Wages vary according to location, as costs
of living vary. A living wage in rural Louisiana is
around $9.33, while in Washington, DC it's closer to
$15 an hour. (learn how to calculate a living wage here:
Living Wage 101) A
living wage as opposed to the federal poverty line,
takes into account the many necessary factors in calculating
the actual costs in a specific geographic area. Both
Policy Institute’s “Basic Family Budget”
Opportunities for Women’s “Self Sufficiency
Standard” use thorough research into the seven
components of the cost of living to arrive at similar
minimum incomes. You would do best to read the two organizations’
own descriptions and detail of their data and approach,
but both are summarized here.
Find the original texts for EPI in their publication
Hardships in America: The Real story of Working Families.
You’ll have to buy the book from EPI for about
$7, but it’s worth it if you are in any way working
with these numbers in order to understand where they
came from. The book’s intro and executive summary
are online at: http://www.epinet.org/content.cfm/books_hardships
All of WOW’s information is free online. Read
any of their Self Sufficiency Standards and data background
online at: http://www.sixstrategies.org/sixstrategies/selfsufficiencystandard.cfm
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What's a "just wage", "competitive
wage", or"prevailing wage"?
A living wage is not a just wage! Since a
living wage cover only the very basic necessities and
don't even account for savings or emergencies, it is
only one small step towards a truly just wage. Many
religious traditions and political philosophies relate
the concept of just wages to a radically fairer redistribution
"Prevailing wages" are established by the
US Dept. of Labor and reflect what most people doing
the same job are earning. "Competitive wages"
are also based on what others doing the same job are
earning. Since most service workers' wages are far below
a living wage, it doesn't mean much when employers claim
to pay prevailing or competitive wages.
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What's included in a living wage?
The seven factors in calculating the basic cost of
a safe and decent standard of living are:
Other basic necessities
read more about the seven factors and sources for
EPI and WOW use federal and local data to calculate
each of these. EPI bases food calculations, for example,
on the Dept. of Agriculture’s “low-cost
food plan”. Transportation data is based on the
different driving distances for a given area or, if
available, the cost of public transportation. While
most of the data used by both WOW and EPI are from federal
sources, it is sometimes supplemented with local research
where federal research is not available, as is the case
for the cost of childcare in Washington D.C.
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Why assume a family of four?
A family of four is an average. In reality low wage
earners have more complicated networks of family and
dependents. Most recent immigrant low wage workers send
remittances to family’s abroad, and many workers
support partners, other relatives, more than two children
or elderly parents. Some live alone without dependents.
Some are single mothers or fathers, or are teenagers
contributing to their family’s income. Thus, the
guideline of a family of four is a meeting point for
the varying networks of dependents on the income of
a low wage worker. Note that it assumes both parents
work for a living wage.
EPI and WOW's two studies are reliable assessments
of the actual cost of living for an individual or family.
They take into detailed account the seven most basic
factors of living in a given area. Federal minimums
and poverty assessments are reckless and simplistic.
The federal minimum wage is based on little more than
precedent. Minimum wage earners, however, cannot eat
precedent. Read further to understand why the federal
poverty thresholds are pitiful underestimates of poverty.
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What’s wrong with how the government
The federal poverty line is outdated, skewed and unreliable.
It is the general consensus among economists to abandon
it as a reliable gauge of families in need. It’s
best to avoid it if possible when calculating a living
wage for your campaign. While many municipal living
wage campaigns have used the federal poverty line or
multiplications of it as the basis for their local living
wage levels for lack of other research or for the sake
of political compromise, the standards do not reflect
a decent annual income. Real living wages must be based
on the real cost of living!
The government developed the federal poverty line standard
in 1963. At the time Americans spent on average 1/3
of their income on food, and thus the federal poverty
line was simply the cost of a minimal nutritional intake,
the “thrifty food plan”, multiplied by three.
According to the USDA, the thrifty food plan, the cheapest
of four plans developed by the Department of Agriculture,
was meant for temporary or emergency use, and only when
funds were low. Since 1963 housing costs have skyrocketed,
and other costs of living have increased such that the
simplified 1/3 ratio is woefully insufficient to determine
the cost of living in the US.
The federal minimum wage is in no
way connected to even government measures of poverty.
It is instead an arbitrary rate dependent on congressionally
mandated raises instead of the actual rate of inflation
or the cost of living. Because of this detachment from
inflation, the real value of the minimum wage has steadily
declined since 1968. The 1968 federal minimum wage in
200 dollars is $8.98. The last time it was updated was
1997. In 1968 the minimum wage was 117 percent of the
poverty threshold for a family of three (though inadequate
as the poverty threshold calculation is), while in 1998
it was only 80% of that same threshold.
For more information, history and fuel for talking
points, read Jessie Willis’s article, “How
We Measure Poverty”, found at http://www.ocpp.org/poverty/how.htm
Also read the beginning of Chapter 1 in the Economic
Policy Institute’s Hardships in America
Some brief talking points on the federal poverty line
(taken from Hardships in America):
• Families no longer spend 1/3 of their income
on food. The measure has undergone minimal adjustment
in its approach, and as a result this assumption is
• The federal poverty line has not been adjusted
for the growth of real income.
• Those who fall below the poverty line today
are worse off than families below the poverty line thirty
• The poverty threshold takes no account of geographical
differences in cost of living
• Congress acknowledged the insufficiency of the
standard in the 1990’s, but the majority of recommendations
resulting from its commissioned study by the National
Research Council of the National Academy of Sciences
went unheeded. Their suggestions included geographic
adjustments, inclusion of value of non-cash federal
benefits to income threshold, and the subtraction of
costs of childcare and healthcare from income.
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