Living wage

In public policy, a living wage is the minimum hourly 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. 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.

The ILO uses various criteria to recommend minimum wage levels: the needs of workers and their families, the general level of wages in a county, the cost of living, social security benefits, the relative living standards of social groups and economic factors such as economic development and employment maintenance. The living wage focuses more on the needs of worker units, social security benefits and cost of living.

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

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 off of individual workers.

Catholic social teaching

The living wage is a concept central to the Catholic social teaching tradition beginning with the foundational document Rerum Novarum, a papal encyclical by Pope Leo XIII, issued in 1891 to combat the excesses of both laissez-faire capitalism on the one hand and communism on the other. In this letter, Pope Leo affirms the right to private property while insisting on the role of the state to require a living wage. The means of production were considered by the pope to be both private property requiring state protection and a dimension of the common good requiring state regulation.

Pope Leo XIII first described a living wage in terms that as could be generalized for application in nations throughout the world. Rerum Novarum touched off legislative reform movements throughout the world, eliminating child labor, reducing the work week, and establishing minimum wages.

• "If a worker receives a wage sufficiently large to enable him to provide comfortably for himself, his wife and his children, he will, if prudent, gladly strive to practice thrift; and the result will be, as nature itself seems to counsel, that after expenditures are deducted there will remain something over and above through which he can come into the possession of a little wealth. We have seen, in fact, that the whole question under consideration cannot be settled effectually unless it is assumed and established as a principle, that the right of private property must be regarded as sacred. Wherefore, the law ought to favor this right and, so far as it can, see that the largest possible number among the masses of the population prefer to own property." (#65)

• "Wealthy owners of the means of production and employers must never forget that both divine and human law forbid them to squeeze the poor and wretched for the sake of gain or to profit from the helplessness of others." (#17)

• "As regards protection of this world’s good, the first task is to save the wretched workers from the brutality of those who make use of human beings as mere instruments for the unrestrained acquisition of wealth." (#43)

• "Care must be taken, therefore, not to lengthen the working day beyond a man’s capacity. How much time there must be for rest depends upon the type of work, the circumstances of time and place and, particularly, the health of the workers." (#43)

Rerum Novarum, Pope Leo XIII, 1891

In Quadragesimo Anno, Pope Pius XI clarifies Rerum Novarum by warning that, in seeking to protect the worker from exploitation, society must not exploit the employer.

• "...(T)he wealthy class violates (the common good) no less, when, as if free from care on account of its wealth, it thinks it the right order of things for it to get everything and the worker nothing, than does the...working class when, angered deeply at outraged justice and too ready to assert wrongly the one right it is conscious of, it demands for itself everything as if produced by its own hands, and attacks and seeks to abolish, therefore, all property and returns or incomes, of whatever kind they are or whatever the function they perform in human society, that have not been obtained by labor, and for no other reason save that they are of such a nature." (#57)

Quadragesimo Anno, Pope Pius XI, 1931

Supporters

Activists argue that a wage is more than just compensation for labor. It is a means of securing a living and it leads to public policies that address both the level of the wage and its decency.

Adam Smith was a supporter of living wages and viewed them as a way to achieve economic growth and equity. In his Wealth of Nations, Smith recognized that the rising real wages lead to the "improvement in the circumstances of the lower ranks of people" was an advantage to society. Growth and a system of liberty were the means by which the laboring poor were able to secure high wages and an acceptable standard of living. This societal advantage is secured through political institutions and government policies. Smith advocated for a system of liberty whereupon the poor were able to secure high wages and an acceptable standard of living.

• "Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity,besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged."

Smith WN, I .viii.36

Smith advocated that labor should receive an equitable share of what labor produces; According to Smith, this equitable share amount to beyond subsistence. Smith equated the interests of labor and the interests of land with overarching societal interests. He reasoned that as wages and rents rise, societal growth will occur thus increasing the quality of life for the greater good.

The greater good for society is achieved through justice. The government should in turn attempt to align the interests of those pursuing profits with the interests of the labor in order to grow the nation’s economy. Smith argued that high wages lead to higher productivity and overall growth. Based on his writings, one can infer that Smith would support a living wage law to ensure liberty for individuals and stable growth for society.

Today, one of major supporting groups for the Living Wage is the Universal Living Wage group. The group currently has over 1,500 followers and continues to grow.

Implementations

The national and international living wage movements are supported by many labor (trade) unions and community action groups such as ACORN.

Australia

In Australia, the 1907 Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community" to live in "frugal comfort estimated by current... standards," regardless of the employer's capacity to pay. Justice Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers. The judgment was later overturned but remains influential. From the Harvester Judgement arose the Australian industrial concept of the basic wage. For most skilled workers, in addition to the Basic Wage they received a margin on top of the basic wage, in proportion to a court or commission's judgement of a group of worker's skill levels. In 1913, to compensate for the rising cost of living, the basic wage was increased to 8/- per day, the first increase since the minimum was set. The first Retail Price Index in Australia was published late in 1912, the A Series Index. From 1934, the basic wage was indexed against the C Series Index of household prices. The concept of a basic wage was repeatedly challenged by employer groups through the Basic wage cases and Metal Trades Award cases where the employers argued that the basic wage and margin ought to be replaced by a "total wage". The basic wage system remained in place in Australia until 1967. It was also adopted by some state tribunals and was in use in some states during the 1980s.

United States

In the United States, the state of Maryland and several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum that requires all jobs to meet the living wage for that region. This usually works out to be $3 to $7 above the federal minimum wage. However, San Francisco, California and Santa Fe, New Mexico have notably passed very wide-reaching living wage ordinances. U.S. cities with living wage laws include Santa Fe and Albuquerque in New Mexico; San Francisco, California; and Washington D.C. (The city of Chicago, Illinois also passed a living wage ordinance in 2006, but it was vetoed by the mayor.) Living wage laws typically cover only businesses that receive state assistance or have contracts with the government.

This effort began in 1994 when an alliance between a labor union and religious leaders in Baltimore launched a successful campaign requiring city service contractors to pay a living wage. Subsequent to this effort, community advocates have won similar ordinances in cities such as Boston, Los Angeles, San Francisco, and St. Louis. In 2007, there were at least 140 living wage ordinances in cities throughout the United States and more than 100 living wage campaigns underway in cities, counties, states, and college campuses. .

Although these ordinances are recent, a number of studies have attempted to measure the impact of these policies on wages and employment. Researchers have had difficulty measuring the impact of this policies because it is difficult to isolate a control group for comparison. A notable study defined the control group as the subset of cities that attempted to pass a living wage law but were unsuccessful. This comparison indicates that living wages raise the average wage level in cities, however, it reduces the likelihood of employment for individuals in the bottom percentile of wage distribution.

United Kingdom

In the United Kingdom, many campaigning organisations have responded to the low level of the National Minimum Wage by asserting the need for it to be increased to a level more comparable to a living wage. For instance, the Mayor of London's office hosts a Living Wage Unit which monitors the level needed for a living wage in London (which has considerably higher living costs than the rest of the UK). Other organisations with an interest in living wage issues include the Living Wage Campaign, and the Church Action on Poverty and the Scottish Low Pay Unit. The Guardian newspaper columnist Polly Toynbee is also a major supporter of the campaign for a living wage. The charity London Citizens is campaigning for a living wage to be implemented across London. The activist group Bloomsbury Fightback! are campaigning for a living wage to be implemented across the University of London. The Labour Party leader, Ed Miliband actively supports the living wage saying that the living wage 'can make Britain both a fairer and more prosperous place'.

Impact

Research shows that minimum wage laws and living wage legislation impact poverty differently: evidence demonstrates that living wage legislation reduces poverty. The parties impacted by minimum wage laws and living wage laws differ as living wage legislation generally applies to a more limited sector of the population. It is estimated that workers who qualify for the living wage legislation are currently between 1-2% of the bottom quartile of wage distribution. One must consider that the impact of living wage laws depends heavily on the degree to which these ordinances are enforced.

“There is evidence that living wage ordinances modestly reduce the poverty rates in locations in which these ordinances are enacted.However, there is no evidence that state minimum wage laws do so.” With minimum wage laws, the increased costs are passed to employers who in turn charge consumers higher prices if possible. Faced with higher prices, consumers purchase fewer goods thus leading to a redistribution among low wage workers. Those impacted by living wage legislation are typically low wage employees who are selling services to the local governments.

Living Wage Estimates

As of 2003, there are 122 living wage ordinances in American cities and an additional 75 under discussion. Article 23 of the United Nations Universal Declaration of Human Rights states that “ Everyone who works has the right to just and favourable remuneration ensuring for himself and for his family an existence worthy of human dignity.” In addition to legislative acts, many corporations have adopted voluntary codes of conduct. The Sullivan Principles in South Africa an example of a voluntary code of conduct which state that firms should compensate workers to at least cover their basic needs.

Country	One full-time worker (four person household)	Average number of full-time worker equivalents in country(four person household)	One full-time worker( household size varies by country)	Average number of full-time worker equivalents in each country
Bangladesh	1.61	1.14	2.02	1.44
India	1.55	1.32	1.79	1.52
Zimbabwe	2.43	1.70	3.18	2.22
Low income average	1.86	1.39	2.33	1.72
Armenia	3.03	2.05	2.52	1.70
Ecuador	1.94	1.74	2. 23	2.01
Egypt	1.96	1.77	2.45	2.21
China	2.08	1.47	1.95	1.38
South Africa	3.10	2.60	3.35	2.81
Lower Middle Income Average	2.42	1.93	2.50	2.02
Lithuania	4.62	3.21	3.97	2.76
Costa Rica	3.68	3.38	3.90	3.58
Upper Middle Income Average	4.14	3.30	3.94	3.17
United States	13.10	11.00	13.36	11.23
Switzerland	16.41	13.23	14.76	11.91
High Income Average	14.75	12.10	14.06	11.57

In the above table, cross national comparable living wages were estimated for twelve countries and reported in local currencies and purchasing power parity(PPP). Living wage estimates for the year 2000, range from US $1.7 PPP per hour in low-income examples to approximately US$11.6 PPP per hour in high-income examples.

Living Wage Social Movements

New York City Living Wage

The proposed law will inform taxpayer of where their investment dollars go and will hold developers to more stringent employment standards. The proposed act will require developers who receive substantial tax-payer funded subsidies to pay employees a minimum living wage. The law is designed to raise quality of life and stimulate local economy. Specifically the proposed act will guarantee that workers in large developmental projects will receive a wage of at least $10.00 an hour. The living wage will get indexed so that it keeps up with cost of living increases. Furthermore the act will require that employees who do not receive health insurance from their employer will receive an additional $1.50 an hour to subsidize their healthcare expenses. Workers employed at a subsidized development will also be entitled to the living wage guarantee.

Many city officials have opposed living wage requirements because they believe that they restrict business climate thus making cities less appealing to potential industries. Logistically cities must hire employees to administer the ordinance. Conversely advocates for the legislation have acknowledged that when wages aren’t sufficient, low-wage workers are often forced to rely on public assistance in the form of food stamps or Medicaid.

James Parrott of the Fiscal Policy Institute testified during a May 2011 New York City Council meeting that real wages for low-wage workers in the city have declined substantially over the last 20 years, despite dramatic increases in average education levels. A report by the Fiscal Policy Institute indicated that business tax subsidies have grown two and a half times faster than overall New York City tax collections and asks why these public resources are invested in poverty-level jobs. Mr. Parrott testified that income inequality in New York City exceeds that of other large cities, with the highest-earning 1 percent receiving 44 percent of all income.

A spreadsheet comparing the living wage , minimum wage , and poverty wage in New York City can be seen on the following link. Living Wage Calculator

The Harvard Living Wage Campaign

Harvard University students began organizing a campaign to combat the issue of low living wages for Harvard workers beginning in 1998. After failed attempts to get a meeting with Harvard president Neil Rudenstine, The Living Wage Campaign began to take action. As the movement gained momentum, The Living Wage Campaign held rallies with the support of students, alumni, faculty, staff, community members and organizations. Most importantly, the rallies gained the support of the Harvard workers, strengthening the campaign's demands for a higher wage. After various measures trying to provoke change among the administration, the movement took its most drastic measure. Approximately fifty students occupied the office of the president and university administrators in 2001 for a three week sit-in. While students were in the office of the president, supports would sleep outside the building to show solidarity. At the end of the sit-in dining hall workers were able to agree on a contract to raise the pay of workers. After the sit-in, The Living Wage Campaign sparked unions, contract and service workers to begin negotiating for fair wages.

Miami University Living Wage Campaign

The Miami University Living Wage Campaign began after it became known that Miami University wage was 18-19% below the market value. In 2003 the members of the Miami University Fair Labor Coalition began marching for university staff wages. After negotiations fail with the university and the American Federation of State and County Municipal Employees (AFSCME), workers went on strike. For two weeks workers protested and students created a tent city as a way of showing support for the strikers. Eventually more students, faculty and community members came out to show support. Even the union president at the time also went on a hunger strike as another means of protesting wages. In late 2003 the union was able to make an agreement with the university for gradual raises totaling about 10.25%. There was still an ongoing push for Miami University to adopt a living wage police.

Johns Hopkins University

The Student Labor Action Committee (SLAC) of Johns Hopkins University took action by conducting a sit-in until the administration listen to their demands. In 1999, after a petition with thousands of signatures, John’s Hopkins president, William R. Brody raised the hourly wage (to only $7.75) but did not include healthcare benefits nor would the wage adjust for inflation. The sit-in began in early 2000 to meet the demands of students for the university to adopt a living wage. A few weeks later, a settlement was made with the administration. SLAC now just ensures that the living wage policy is implemented.

Swarthmore Living Wage and Democracy Campaign

Starting in 2000, the Living Wage and Democracy Campaign of Swarthmore College began as small meetings between students and staff to voice concerns about their wages the lack of respect. Over the next two years the Living Wage and Democracy Campaign voiced concerns to the university administration. As a response in 2002, the wage is increased from $6.66 to $9 an hour. While the campaign was pleased with this first step, the believed the college still had a long way to go. The college president, Al Bloom created the Ad Hoc Committee to help learn what the living wage was and released a committee report. In the report suggested an hourly wage, childcare benefit, health coverage for employees and families.

Asia Floor Wage

Launched in 2009, Asia Floor Wage is a loose coalition of labour and other groups seeking to implement a Living Wage throughout Asia, with a particular focus on the garment industry. There are member associations in Bangladesh, Cambodia, Hong Kong S.A.R., India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand and Turkey as well as supporters in Europe and North America. The campaign targets multinational employers who do not pay their developing world workers a living wage.

University of Virginia Living Wage Campaign

The Living Wage Campaign at the University of Virginia in Charlottesville, Virginia, composed of University students, faculty, staff, and community members, began in 1995 during the administration of University President John Casteen and continues under the administration of President Teresa Sullivan. The campaign has demanded that the university raise wages to meet basic standards of cost-of-living in the Charlottesville area, as calculated by the nonpartisan Economic Policy Institute.

In 2000, the campaign succeeded in persuading university administrators to raise the wage floor from $6.10 to $8.19; however, this wage increase soon fell to inflation and cost-of-living increases, and only applied to direct employees, not contracted workers. In the spring of 2006, the campaign garnered national media attention when 17 students staged a sit-in in the university president's office in Madison Hall. A professor was arrested on the first day of the protest. The 17 students were arrested after 4 days of protest and later acquitted at trial.

Beginning in 2010, the campaign has staged a series of rallies and other events to draw attention to the necessity of the living wage for UVA employees. They have also met with members of the administration numerous times, including with the president. . In making the argument for a living wage, the campaign has claimed that continuing to pay low wages is inconsistent with the University's values of the "Community of Trust." They have also noted that University President Sullivan's 2011 co-written textbook, The Social Organization of Work, states that, "Being paid a living wage for one’s work is a necessary condition for self-actualization." After rallies and meetings in the spring of 2011, President Sullivan posted a "Commitment to Lowest-Paid Employees" on the University President's website including a letter addressed to the Campaign. However, the university still does not pay a living wage. The campaign is actively organizing to pressure the University to increase wages [2].

See also

• Trade Boards Act 1909
• Catholic social teaching
• Distributism
• Guaranteed Minimum Income
• Labor market
• Positive rights
• Supply and demand
• Working poor
• precarious work

References

• S Webb and B Webb, Industrial Democracy (Longmans 1902)
• Ryan, John A. Living Wage Macmillan, New York 1906 OCLC 39046728
• Gertner, Jon, "What is a Living Wage?", The New York Times, January 15, 2006
• Sklar, Holly; Mykyta, Laryssa; Wefald, Susan, "Raise The Floor: Wages and Policies That Work For All Of Us", 2002, South End Press. [3] ISBN 0-89608-683-6
• Nadeem, Shehzad, “The Living Wage Movement and the Economics of Morality,”, Research in Social Movements, Conflicts, and Change 28: 137-167 (2008)

External links

• Rerum Novarum, Official Text
• Template:Dmoz
• Measuring the Full Impact of Minimum and Living Wage Laws from Dollars & Sense magazine
• LaborFair Resources - Link to Fair Labor Practices
• The Economic Policy Institute - Living Wage
• The Economic Policy Institute Family Budget Calculator
• (London) Living Wage Unit page
• Living Wage Calculator
• ACORN Living Wage campaign
• Universal Living Wage Campaign
• [4]-Link to New York Living Wage Campaign
• The Living Wage Campaign at The University of Virginia