Living Wage

In public policy, a living wage or subsistence wage is the minimum income necessary for a worker to meet basic needs (for an extended period of time or for a lifetime). These needs include shelter (housing) and other incidentals such as clothing and nutrition. In some nations such as the United Kingdom and Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation, although in many cases child care, education, saving for retirement, and less commonly legal fees and insurance may cost a family more than food, utilities, transport, or health care. In addition to this definition, living wage activists further define "living wage" as the wage equivalent to the poverty line for a family of four.

The living wage differs from the minimum wage in that the latter is set by law and can fail to meet the requirements of a living wage - or is so low that borrowing or application for top-up benefits is necessary. It differs somewhat from basic needs in that the basic needs model usually measures a minimum level of consumption, without regard for the source of the income.

Living wage is defined by the wage that can meet the basic needs to maintain a safe, decent standard of living within the community and have the ability to save for future needs and goals. The particular amount that must be earned per hour to meet these needs varies depending on location and family circumstances. Currently the minimum wage across the US is $7.25, which in most areas is well below living wage due to high rent or house prices in cities and automobile dependent arrangements of grocery stores, jobs, housing, and services in suburbs and outlying areas, causing combined housing and transportation cost to be high both in the city and in the outlying areas. In 1990 the first living wage campaigns were launched by community initiatives in the US addressing increasing poverty faced by workers and their families. They argued that employee, employer, and the community win with a living wage. Employees would be more willing to work, helping the employer reduce worker turnover ratio and it would help the community when the citizens have enough to have a decent life.

Poverty threshold is the income necessary for a household to be able to consume a low cost, nutritious diet and purchase non-food necessities in a given country. Poverty lines and living wages are measured differently. Poverty lines are measured by household units and living wage is based on individual workers.

A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.