Living wage

A living wage is a wage benchmark intended to cover basic living costs for workers and their families in a specific place. It is distinct from a statutory minimum wage, which is set by law.

Minimum wage: The lowest hourly or periodic pay that employers may legally provide under a jurisdiction’s labor law. Unlike a living wage estimate, it is a legal floor that may not cover local basic costs.
MIT Living Wage Calculator: A United States tool estimating the hourly wages needed to meet basic needs in counties and metropolitan areas. It illustrates a location-specific method for converting household expenses into hourly wage estimates.
Living Wage Foundation: A United Kingdom organization that promotes voluntary wage rates based on the cost of living. Its accreditation scheme is a prominent example of the benchmark applied to employers.
Income inequality: The unequal distribution of income among individuals or households in a population. Higher wage floors can change the distribution of earnings between low-paid workers and others.
Cost of living: The amount of money needed to maintain a given standard of living in a particular place and time. Local prices determine how much income a living wage must provide.
Anker methodology: A method for estimating living wages from local costs of food, housing, other essential needs, and taxes. It provides a widely used framework for calculating benchmarks in diverse countries.
Fair Trade USA: A nonprofit organization that certifies products and businesses against standards for ethical trade and labor practices. Living wage goals appear in debates over whether ethical supply chains ensure adequate worker pay.
Labor economics: The study of labor markets, including wages, employment, worker behavior, and employer decisions. It supplies frameworks for evaluating the effects and trade-offs of wage policies.
Household budget: A plan for a household’s income and spending over a set period. Living wage calculations translate essential household expenses into required earnings.
Living wage certification: A process by which an organization verifies that employers meet a specified living wage standard. Certification turns a benchmark into a monitored commitment by employers.

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