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Hourly wage needed to cover basic household expenses plus all relevant taxes for a household of one adult and two children (Living wage)
Current Value
$51.12
Definition
"The hourly wage needed to cover basic household expenses plus all relevant taxes for a household of one adult and two children.
Dr. Amy Glasmeier and colleagues at the Massachusetts Institute of Technology calculate this living wage estimate for twelve different household compositions. We include a measure of Living Wage reflecting a household of three with one adult working full-time and two children.
Living wage represents the minimum income necessary for financial independence to meet the basic needs of an individual or family without requiring public assistance in the form of income-conditioned benefits like the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), Earned Income Tax Credit (EITC), and Temporary Assistance for Needy Families (TANF). The Living Wage measure specifically accounts for basic household needs, including food, child care, health care, housing, transportation, and other necessities such as clothing, broadband service, and cell phone service. The costs of many elements of the basic needs budget are based on market-derived data, which vary according to geographic region. This makes the Living Wage measure a much more accurate determination of household needs than the U.S. poverty thresholds.
In the United States, living wages have been implemented in varied ways, such as through county- and city-level ordinances (especially in large cities) that require certain local employers to pay their employees a living wage or through voluntary implementation by employers. In practice, living wages mandated by local ordinances are usually set at rates required to lift a family of four above the federal poverty threshold and are not based on the income necessary to cover basic needs. There is some evidence that living wage ordinances can reduce poverty for covered low-wage workers. Additionally, living wage ordinances have been associated with reductions in property-related crime. Reducing poverty is especially important for families with children, as childhood poverty is associated with lasting effects on academic achievement, health, and income into adulthood. Earning a living wage may also improve the psychological well-being of workers.
Of note, the $15 wage advocated for by the Fight for $15 movement is sometimes called a living wage but has no methodology or formula to support the $15 rate. A $15 minimum wage may not be an adequate living wage across the U.S. for all household structures."
Comparison
Story Behind the Curve
Partners
What Works
Strategy
Data Sources and Measure Methods
Data Source
"The Living Wage Calculator: The Living Wage calculator estimates the cost of living in your community or region based on typical expenses. The tool helps individuals, communities, and employers determine a local wage rate for residents to meet minimum living standards."
Measure Methods
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"Living Wage is a dollar amount: Living Wage reflects an hourly wage."
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"Living Wage is created using statistical modeling: The measure depends on household composition, varies geographically, and is based on market-driven costs for each element of the basic needs budget; savings and leisure expenditures are not included in the Living Wage. Basic household expenses include the cost of food (USDA low-cost food plan), childcare, health care (insurance premiums and out-of-pocket costs), housing, transportation, other necessities (clothing, personal care items), civic engagement, broadband service, and cell phone service. This contrasts with the official federal poverty thresholds based on a multiple of the most basic food budget (USDA lowest cost, thrifty food plan) for a household and do not vary geographically (they are the same for all states and D.C.)."
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"Living Wage cannot be compared across state lines: For the childcare cost aspect, childcare cost data are based on market-rate surveys reported separately by state, published in different years. Some states only report state- or region-level estimates and thus require county-level imputation. Due to this, states may differ in how estimates are modeled vs. observed."
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"Measure limitations: There is no universally accepted method for calculating a living wage, and several researchers and organizations have calculated their own version of a living wage with varying data sources and definitions of a basic needs budget."
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"Can This Measure Be Used to Track Progress?: This measure can track change over time, but is not intended to measure progress."
Source: Living Wage* | County Health Rankings & Roadmaps
References
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Glasmeier, Amy K. 2020. Living Wage Calculator. Massachusetts Institute of Technology. livingwage.mit.edu.
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Holzer, H.J. 2008. Living wage laws: How much do (can) they matter? Urban Institute. https://www.urban.org/research/publication/living-wage-laws
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Luce, S. 2017. Living wages: a US perspective. Employee Relations 39(6):863-874. https://www.emerald.com/insight/content/doi/10.1108/ER-07-2017-0153/full/html
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Clain, S.H. 2008. How living wage legislation affects U.S. poverty rates. Journal of Labor Research. 29(3):205-18. https://doi.org/10.1007/s12122-007-9028-8
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Fernandez, J. M., Holman, T., and Pepper, J. V. 2014. The Impact of Living Wage Ordinances on Urban Crime. Industrial Relations: A Journal of Economy and Society, 53(3): 478-500. http://dx.doi.org/10.1111/irel.12065
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McCarty, A. T. 2016. Child poverty in the United States: A tale of devastation and the promise of hope. Soc. Compass, 10(7):623-639. https://onlinelibrary.wiley.com/doi/10.1111/soc4.12386
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Hair, N. L., Hanson, J.L., Wolfe, B.L, and Pollak, S.D. 2015. Association of child poverty, brain development, and academic achievement. JAMA Pediatr, 169(9):822-829. https://jamanetwork.com/journals/jamapediatrics/fullarticle/2381542
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Dreyer, B. P. 2013. To create a better world for children and families: the case for ending childhood poverty. Academic Pediatrics, 13(2): 83-90. https://doi.org/10.1016/j.acap.2013.01.005
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Flint, E., Cummins, S., and Wills, J. 2014. Investigating the effect of the London living wage on the psychological wellbeing of low-wage service sector employees: a feasibility study. Journal of Public Health, 36(2): 187–193. https://doi.org/10.1093/pubmed/fdt093
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U.S. Department of Agriculture. Thrifty Food Plan, 2021. August 2021. FNS-916. https://doi.org/10.52570/TFP2021
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Institute for Research on Poverty, University of Wisconsin-Madison. How is Poverty Measured? https://www.irp.wisc.edu/resources/how-is-poverty-measured/
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