Living wage
Encyclopedia
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
.
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. A related concept is that of a family wage
– one sufficient to not only live on oneself, but also to raise a family, though these notions may be conflated.
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.
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.
and community action groups such as ACORN
.
, 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.
, the state of Maryland
and several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring 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.
, 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'.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
, 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
Food
Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
, utilities, transport
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...
, health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
, and recreation
Recreation
Recreation is an activity of leisure, leisure being discretionary time. The "need to do something for recreation" is an essential element of human biology and psychology. Recreational activities are often done for enjoyment, amusement, or pleasure and are considered to be "fun"...
.
The living wage differs from the minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
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
Basic needs
The basic needs approach is one of the major approaches to the measurement of absolute poverty. It attempts to define the absolute minimum resources necessary for long-term physical well-being, usually in terms of consumption goods. The poverty line is then defined as the amount of income...
in that the basic needs model usually measures a minimum level of consumption, without regard for the source of the income. A related concept is that of a family wage
Family wage
A family wage is a wage that is sufficient to raise a family on. This contrasts with a living wage, which is generally taken to mean a wage sufficient for a single individual to live on, but not necessarily sufficient to also support a family...
– one sufficient to not only live on oneself, but also to raise a family, though these notions may be conflated.
Catholic social teaching
The living wage is a concept central to the Catholic social teachingCatholic social teaching
Catholic social teaching is a body of doctrine developed by the Catholic Church on matters of poverty and wealth, economics, social organization and the role of the state...
tradition beginning with the foundational document, Rerum Novarum
Rerum Novarum
Rerum Novarum is an encyclical issued by Pope Leo XIII on May 15, 1891. It was an open letter, passed to all Catholic bishops, that addressed the condition of the working classes. The encyclical is entitled: “Rights and Duties of Capital and Labour”...
, a papal encyclical
Encyclical
An encyclical was originally a circular letter sent to all the churches of a particular area in the ancient Catholic Church. At that time, the word could be used for a letter sent out by any bishop...
by Pope Leo XIII
Pope Leo XIII
Pope Leo XIII , born Vincenzo Gioacchino Raffaele Luigi Pecci to an Italian comital family, was the 256th Pope of the Roman Catholic Church, reigning from 1878 to 1903...
, issued in 1891 to combat the excesses of both laissez-faire capitalism on the one hand and communism
Communism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...
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
Quadragesimo Anno
Quadragesimo Anno is an encyclical written by Pope Pius XI, issued 15 May 1931, 40 years after Leo XIII's Rerum Novarum. Unlike Leo XIII, who addressed the condition of workers, Pius XI discusses the ethical implications of the social and economic order...
, Pope Pius XI clarifies Rerum Novarum
Rerum Novarum
Rerum Novarum is an encyclical issued by Pope Leo XIII on May 15, 1891. It was an open letter, passed to all Catholic bishops, that addressed the condition of the working classes. The encyclical is entitled: “Rights and Duties of Capital and Labour”...
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
Implementations
The national and international living wage movements are supported by many labor (trade) unionsTrade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
and community action groups such as ACORN
Association of Community Organizations for Reform Now
The Association of Community Organizations for Reform Now was a collection of community-based organizations in the United States that advocated for low- and moderate-income families by working on neighborhood safety, voter registration, health care, affordable housing, and other social issues...
.
Australia
In AustraliaAustralia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, the 1907 Harvester Judgment
Harvester Judgment
The Harvester Judgment was a benchmark legal case for ensuring workers in Australia were paid a fair basic wage. The case had national ramifications and was of international significance....
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
Retail Price Index
In the United Kingdom, the Retail Prices Index or Retail Price Index is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a basket of retail goods and services.-History:...
in Australia was published late in 1912, the A Series Index. From 1934, the basic wage was indexed against the C Series Index
C Series Index
The C Series Index was a consumer price index constructed by the Australian Bureau of Statistics in 1921 and discontinued in 1961...
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 StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the state of Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
and several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring 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
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
and Santa Fe, New Mexico
Santa Fe, New Mexico
Santa Fe is the capital of the U.S. state of New Mexico. It is the fourth-largest city in the state and is the seat of . Santa Fe had a population of 67,947 in the 2010 census...
have notably passed very wide-reaching living wage ordinances. U.S. cities with living wage laws include Santa Fe
Santa Fe, New Mexico
Santa Fe is the capital of the U.S. state of New Mexico. It is the fourth-largest city in the state and is the seat of . Santa Fe had a population of 67,947 in the 2010 census...
and Albuquerque in New Mexico
New Mexico
New Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...
; San Francisco, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
; 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
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, Los Angeles
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
, San Francisco, and St. Louis
St. Louis, Missouri
St. Louis is an independent city on the eastern border of Missouri, United States. With a population of 319,294, it was the 58th-largest U.S. city at the 2010 U.S. Census. The Greater St...
. 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.
United Kingdom
In the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, 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
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
newspaper columnist Polly Toynbee
Polly Toynbee
Polly Toynbee is a British journalist and writer, and has been a columnist for The Guardian newspaper since 1998. She is a social democrat and broadly supports the Labour Party, while urging it in many areas to be more left-wing...
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
University of London
-20th century:Shortly after 6 Burlington Gardens was vacated, the University went through a period of rapid expansion. Bedford College, Royal Holloway and the London School of Economics all joined in 1900, Regent's Park College, which had affiliated in 1841 became an official divinity school of the...
. The Labour Party leader, Ed Miliband
Ed Miliband
Edward Samuel Miliband is a British Labour Party politician, currently the Leader of the Labour Party and Leader of the Opposition...
actively supports the living wage saying that the living wage 'can make Britain both a fairer and more prosperous place'.
See also
- Trade Boards Act 1909Trade Boards Act 1909The Trade Boards Act 1909 was a piece of social legislation passed in the United Kingdom in 1909. It provided for the creation of boards which could set minimum wage criteria that were legally enforceable...
- Catholic social teachingCatholic social teachingCatholic social teaching is a body of doctrine developed by the Catholic Church on matters of poverty and wealth, economics, social organization and the role of the state...
- DistributismDistributismDistributism is a third-way economic philosophy formulated by such Catholic thinkers as G. K...
- Guaranteed Minimum IncomeGuaranteed minimum incomeGuaranteed minimum income is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship, a means test and either availability for the labour...
- Labor market
- Positive rights
- Supply and demandSupply and demandSupply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
- Working poorWorking poor- Definition in the United States :There are several popular definitions of "working poor" in the United States. According to the US Department of Labor, the working poor "are persons who spent at least 27 weeks [in the past year] in the labor force , but whose incomes fell below the official...
- precarious workPrecarious workPrecarious work is a term used to describe non-standard employment which is poorly paid, insecure, unprotected, and cannot support a household. In recent decades there has been a dramatic increase in precarious work due to such factors as: globalization, the shift from the manufacturing sector to...
External links
- Rerum Novarum, Official Text
- Measuring the Full Impact of Minimum and Living Wage Laws from Dollars & SenseDollars & SenseDollars & Sense is a magazine dedicated to providing left-wing perspectives on economics.Published six times a year since 1974, it is edited by a collective of economists, journalists, and activists committed to the ideals of social justice and economic democracy.It was initially sponsored by the...
magazine - LaborFair Resources - Link to Fair Labor Practices
- The Economic Policy Institute - Living Wage
- (London) Living Wage Unit page
- Living Wage Calculator
- ACORN Living Wage campaign
- Universal Living Wage Campaign