What is a living wage?

Counting the Cost

Julianne Malveaux | 8/8/2013, midnight
Workers at fast food restaurants recently demonstrated outside their places of employment, highlighting the low wages they receive and demanding ...

The issue of unemployment must be taken into account, when we look at the matter of poverty lines and minimum wages. With an overall unemployment rate of well above 7 percent (unless a miracle occurs on Aug. 2, after this column is filed), and a Black unemployment rate of more than 13 percent, too many households with two adults have only one earner in the household. Another concern is that the federal poverty line is published as a national rate, yet it’s much cheaper to live, for example, in rural Mississippi than it is in New York City. In many instances, the poverty line does not reflect differences in housing costs, healthcare costs, or even transportation costs.

The Economic Policy Institute 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. Paying workers less than they are worth drains our economy because these workers will not be spenders or “economic expanders.”

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

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