Building an Economy that Works for Everyone

How do you calculate a living wage?

Looking for some clarity in the debate on what makes a living wage? Last month, Erica Barnett over at Publicola decided to round up the varying reports on living wage calculations.

A couple of left-leaning economic policy experts took issue with an MIT study we cited in Morning Fizz last week, which concluded that Washington state’s minimum wage ($9.19 last year, increasing to $9.32 this year) was actually higher than the state’s “living wage”—that is, the level someone would need to make to support him- or herself in a particular state. In Washington, the study (cited in the Huffington Post) concluded, the minimum wage is just over 101 percent of a “living wage.

According to the living wage calculator the story cites, the “living wage” for a single person with one child jumps to $19.49 an hour (in contrast, it’s $13.89 for two adults without a kid, largely because the cost of living doesn’t include the cost of child care.

As Barnett notes, there are a number of living wage calculations for Washington. Calculations can fluctuate widely depending on the costs they account for including health care, child care and savings.

For example, the Economic Policy Institute’s Basic Family Budget calculator cites a living wage of $25.44 living wage for one adult and one child, and the Self-Sufficiency Standard created by the UW School of Social Work’s Center for Women’s Welfare says a living wage for one adult with no savings is $14.10 an hour.

Meanwhile, the Alliance for a Just Society just released a report concluding that the living wage for a single full-time worker is $16.04; AJS director LeeAnn Hall says the MIT study calculated a “survival wage,” not an acual “living wage,” which would provide “a better standard of living that allows workers and their families to move beyond living paycheck-to-paycheck. For example, we assume a one-bedroom apartment for a single adult rather than a studio, but no smart phone or cellphone, Internet, or cable.”

Check out the whole piece on Publicola.

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