living wage / minimum wage
Last updatedDefinition
A living wage is the minimum remuneration a worker needs in order to sustain a fair standard of living, including housing, food, health care, transportation, clothing, and other essential needs. Whereas minimum wage is defined on legal terms, a living wage is less precisely defined and is highly contingent on outside factors, including the cost of living in a particular area. Though the original belief behind a minimum wage was that of a living wage, high housing costs, particularly in urban areas, means this is not always true.
The MIT Living Wage Calculator is one well-known method for understanding an area’s living wage. The term can be used in direct quotes, but it can also be helpful to note that there is no universal living wage and that it is highly contingent on cost of living factors in different areas.
Minimum wage is the lowest remuneration an employer has to legally pay their employees. In the US, there is a federal minimum wage, established by the Fair Labor Standards Act in 1938. It currently stands at $7.25 an hour, the same rate it has been since 2009. States (and sometimes cities or other localities) may have higher rates. While there is no singular picture of an individual earning minimum wage, generally speaking, according to the Bureau of Labor Statistics, they are younger individuals, more likely to be part-time workers, and/or more likely to be employed in the service industry.
The Fair Labor Standards Act of 1938 both established the federal minimum wage and provided for employing certain individuals beneath that rate, called a subminimum wage. This includes student-learners, people with disabilities, and youth under 20 (the Youth Minimum Wage allows employers to pay employees under 20 years of age a lower wage for 90 calendar days after they are first employed). Coverage of incarcerated people in particular may want to note that they are often paid a subminimum wage; in Massachusetts, for example, at least half of an individual’s paycheck goes into an account to be accessed post-incarceration.
Additional references
- What a ‘Living Wage’ Actually Means (New York Times)
- MIT Living Wage Calculator (MIT)
- What is a Living Wage? (Global Living Wage Coalition)
- Minimum Wage (US Department of Labor)
- State Minimum Wage Laws (Department of Labor)
- Characteristics of minimum wage workers, 2020 (US Bureau of Labor Statistics)
- Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage (Department of Labor)
- Prison Labor in America: How Is It Legal? (Atlantic)
- How much do incarcerated people earn in each state? (Prison Policy Initiative)
Summary
Minimum wage is the lowest wage an employer legally has to pay an employee; a living wage is less precisely defined and is highly contingent on outside factors, including the cost of living in a particular area. The MIT Living Wage Calculator is one well-known method for understanding an area’s living wage. The term can be used in direct quotes, but it can also be helpful to note that there is no universal living wage and that it is highly contingent on cost of living factors in different areas.