What Exactly Is A Living Wage

Fast Food Workers Deman Living Wage
Fast food workers demand a living wage

AFRICANGLOBE – Workers at fast food restaurants recently demonstrated outside their places of work, highlighting the low wages they receive and demanding more. They say twice as much, or $15 an hour, will provide them with a living wage.

In Washington, D.C., the City Council has sent legislation to Mayor Vincent Gray, requiring “big box” stores like Wal-Mart and Best Buy to pay $12.50, more than the DC minimum wage of $8.25 an hour.

Someone who earns $8.25 an hour (which is a dollar more an hour than the federal minimum wage) earns $17,160 per year if they work full time (40 hours) all year (52 weeks).

Although taxes for the low income are low, they are still deducted, especially the Social Security tax (about 7 percent). Too many minimum workers don’t work full-time, full-year. Many have their hours cut so that companies can avoid paying benefits. This means full time, full year work is the best-case scenario. For many, it can be much worse.

Below Poverty Line

The poverty line for one adult and two children is $19,530, which puts the $8.25 worker below the poverty line. The parent who earns this scant wage struggles to make ends meet, and often cannot.

Congress is in the process of cutting SNAP so low that 5 million of the roughly 47 million people on the program will be cut. Some receive medical assistance through Medicaid. Some cities subsidize summer programs or other efforts, offering day care possibilities for those who struggle to afford it.

According to the Economic Policy Institute, the average cost of childcare in the District of Columbia is $1300 a month, or $13,600 a year. Poverty line $23,550, childcare costs $13,600 per year. Go figure.

In other parts of the country, full-time, full-year workers earn less than D.C. workers.

Those who earn the federal minimum wage of $7.25 an hour earn $15,160 per year, less than the poverty line for one parent and one child. Those who earn $12.50 per hour, the proposed wage for D.C. big box stores, will earn $26,000 a year. The $15 an hour that some fast food workers suggest would push their wages to $31,200 a year.

Some feel these low wages are acceptable, especially some Tea Party members of Congress, yet they earn at least $174,000 per year.

Adequate Living Costs

The Economic Policy Institute (epi.org) has developed budgets for “adequate” living in certain cities. (Full disclosure – I sit on the organization’s board).

This tool shows the wide variety of realistic and adequate living costs, which range from more than $90,000 in New York City, to around $40,000 in parts of Mississippi. These are adequate living standards, not extravagant ones, taking into account rent, transportation, and other costs.

Many quibble about the level of the minimum wage, but the more relevant issue is the living wage. Millions are pushed below the poverty line because too many employers do not take the cost of living into consideration when they set wage levels.


Julianne Malveaux is a D.C.-based economist and author.


Dr. Claude Anderson – Powernomics