Living Wage

Description and History

According to the Global Living Wage Coalition, a living wage is “the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events” (2024). 

Unlike the federal minimum wage, living wages vary by place and its associated standard of living. In many cases, the living wage is distinct—and often higher—than the minimum wage. While living wages take into account the actual costs of living, minimum wages often do not; they are the absolute minimum amount an employer can legally pay a worker. For example, the minimum wage in Virginia is $12.41/hour (Virginia Department of Labor and Industry 2024). However, a living wage in Loudoun County, Virginia—the wealthiest county in the United States (Johnson 2023)—is $47.85/hour (Living Wage for US n.d.). This means that for every hour worked, the employee is making $35 less than what is needed to meet their basic needs; assuming a 40-hour work week—rarely the case for those making a minimum wage as they often need to work 2-3 jobs to make ends meet (Shipler 2005)—that’s nearly $1500 in lost wages per week! 

While advocacy for fair wages for workers has existed as early as the days of Plutarch (Living Wage for US n.d.), the living wage movement traces its origins back to the advent of wage labor. Around the time of the Industrial Revolution, workers became increasingly divorced from the means of production. As a result, wages—not the physical output of an individual’s labor—became a proxy for true ownership (Bernstein 2004). To advocate for workers, labor unions—like the American Federation of Labor, founded in 1886—promoted a “general living wage” that would enable all workers to “maintain an American standard of living” (University of Maryland University Libraries n.d.).  State and federal governments have sometimes defended workers’ right to a fair wage. For example, Massachusetts passed the first minimum wage law in the United States in 1912, followed by the Fair Labor Standards Act—which instituted the federal minimum wage (at an amount of $0.25/hour)—in 1938 (Sneed n.d.). While a helpful first step, as noted above, we still have a ways to go. 

Since then, however, wages in the US have stagnated—dramatically so for low-wage workers while increasing by 41% between 1979 and 2013 for very high wage workers. Further, while worker productivity has increased, wages have remained about the same across the same time period (Mishel et al 2015). Living wage ordinances proliferated at the turn of the century (Samuel 1999; Bernstein 2002), but more recent conservative state preemption has made local action toward fair wages increasingly difficult (Huizar and Lathrop 2019). 

Living Wage, Fair Work, and the Community Wealth Building Wedge 

In a system of wage-labor, a living wage is the critical first step toward fair work. Indeed, once engaged in dignified, reliable work with a livable wage, workers have more time to contribute to and be productively engaged in community and, more urgently, democratic activity (e.g. voting, volunteering, etc.).

At a basic level, when workers are paid a living wage, they are better able to afford the basics—from food (Rodgers 2016) to heat (Bhattacharya et al 2002), save for emergencies (Federal Reserve Board’s Division of Consumer and Community Affairs 2019), and rely less on public services (Du and Leigh 2017). Further, a living wage would not only diversify the workforce, but guarantee that the most disadvantaged Americans would no longer need to negotiate between basic needs. Indeed, 60% of adult women, 25% of Latinx workers, and a third of Black workers are those who would benefit most from both minimum and living wage increases (Rosen et al 2022).

Examples

Business Assistance Living Wage Laws

Perhaps the most obvious way to ensure a living wage for workers is to leverage the anchor role of local governments. In 2010, the Center for American Progress (CAP), examined the effects of business assistance living wage laws—laws that mandated businesses receiving local government contracts to pay their workers a living wage—across 15 localities. They compared the impacts on both workers and businesses in these cities to those in 16 other cities without such laws. Contrary to popular opinion at the time, researchers found that increasing job quality did not, in fact, decrease job availability (Lester and Jacobs 2010). 

Since then, cities across the United States, including New York (NYC Consumer & Worker Protection n.d.) and San Francisco (San Francisco Living Wage 2024), have enacted similar legislation, ensuring that Americans’ tax dollars do not subsidize poverty wages. 

Living Wage Certified Employers

Living Wage For US is an organization that both educates and certifies U.S. employers to pay their workers a living wage. To determine wage rates, For US uses the lowest cost county in an employer’s commuting zone, taking into consideration the cost of food, housing, childcare, transportation, health, taxes, and more. 

According to their website, Tier I employers “pay the Entry Wage…listed for each commuting zone (...ranging between $15-$19/hr) and commit to increasing remuneration every year by inflation plus 3% until they reach the Tier II family living wage rate for all workers” (Living Wage For US n.d.). The Tier II certification accounts for benefits (i.e. healthcare, retirement, etc.) that reduce the overall cost of living, ensuring employers pay base cash wage in addition to the gap that enables a family living wage. 

To date, For US has certified 75 employers, spanning two dozen industries with annual revenues up to and over $5 billion (Living Wage For US n.d.). 

Challenges & Limitations

The most significant political challenge confronting living wage advocates is the abuse of state preemption by conservative legislators. For example, in 2024, 27 states across the country have some kind of legislation that preempts local governments from raising the minimum wage, much less introducing a living wage (Economic Policy Institute 2024). Often, these critics believe that a living wage is either “bad for business” or a drain on municipal resources (Harvey 2002). 

In a comprehensive examination of living wage ordinances in the United States, one researcher argues that when living wage policy and legislation is geared toward workers in a specific industry or employed by a specific employer (e.g. those who contract with local government), it precludes the opportunity to raise the wage floor for all low wage workers (Bernstein 2004). 

Others argue that fights for higher wages are often myopic, not taking into consideration benefits and the overarching quality of work. Of course, in order for higher wages to make a significant contribution to fair work, they must be paired with a comprehensive renegotiation of labor writ large. 

Taking It Forward

For employers seeking to pay their workers a living wage, Living Wage for US has designed a certification program that guides business leaders through the process and provides insights for making the “business case” to upper management. Other place-based certification programs (as well as a toolkit to start your own) can be found through the Living Wage Network. Foundations like the Living Wage Foundation in the UK can also influence non-profit employers they fund to provide their employees with a living wage.  

Beyond interventions within individual workplaces, local government officials and policymakers can step in to offer more structural solutions. Local living-wage ordinances, for example, are a good place to start when advocating for fair wages across diverse industries in a particular place. Advocating to eradicate subminimum wages for tipped workers is also another successful strategy that has been led by state chapters of the national advocacy organization One Fair Wage. When preempted by conservative legislation, local leaders can leverage public procurement processes to influence and incentivize “high road” employers who pay a living wage (Urban Institute n.d.). It is important to note here, however, that 13 states across the US have also preempted this kind of policy (Economic Policy Institute 2024). They can also use public dollars to erect public funds that pay the most disadvantaged the difference between the state minimum wage and a local living wage. 

Finally, and perhaps most importantly, data beyond prospective research is needed to support lawmakers in visualizing the full ecosystem of benefits for workers (and their families!) making a living wage (Bernstein 2004). 

Additional Resources