Graph showing the discrepancies between living and minimum wage

Minimum Wage vs. Living Wage

Minimum wage is the lowest amount that an employer is permitted to pay its employees. The federal minimum wage in America is $7.25 an hour. However, different states have their own laws regarding minimum wages, with some of them running significantly higher, particularly in states where cost of living is very expensive.

A living wage is distinct from a minimum wage because, in many cases, minimum wage is not enough to live on. A living wage is what a worker must make in order to fulfill all basic needs, including housing, food, and clothing. Many workers must have two or three jobs and work far more than a typical 40-hour work week in order to make enough money to support themselves, particularly if they are raising a family.

The living wage varies from city to city, as there are many different factors that determine it. Calculating a living wage can be a complicated process due to these varied and wide-ranging factors. Moreover, employers are often threatened by the talk of paying employees a living wage because they will be required to pay much more, significantly eating into profits or putting them out of business. On the other hand, if the poorest segments of the population are paid in such a way that they have disposable income, they will be able to help bolster the local economy.

The most important thing about the living wage debate is that it is getting people talking about strategies that will improve the lives of workers while still allowing employers to stay in business. Bosses and employees alike must both be served by any legislation that arises so that businesses can continue to offer jobs to those who are in need of them and the employees can work steadily without needing to forgo necessities just to be able to pay for basic housing and food.

Last Updated: February 16, 2015