Minimum wage versus a living wage
A minimum wage is a legal floor. A living wage is an estimate of what a household needs to cover its costs without public assistance. They are different objects, and the gap between them is the story.
What the calculation measures
The standard method takes a market basket, typically rent, food, transport, healthcare, childcare and taxes, and solves for the hourly rate that funds it at a given number of working hours each week. One adult with no children needs less than one adult with two. One earner needs more than two. That is why a living wage is always quoted with a household type attached, and why two credible sources can publish very different numbers for the same city.
The scale of the gap
| Reference | Figure |
|---|---|
| Federal minimum, full time | $15,080 a year gross |
| Federal poverty line, one adult | Below $16,000 |
| Typical living wage, one adult, mid-cost metro | Around $20 an hour |
| Typical living wage, one adult two children | $35 to $45 an hour |
Full-time work at the federal floor sits at or below the poverty line for a single adult and well below it for a family. At $15 an hour, a single adult in a mid-cost metro is roughly at break-even and a family is not.
Why wages have lagged
Housing has outrun general inflation for four decades, so a basket dominated by rent rises faster than a wage indexed to the consumer price index. Childcare has behaved the same way. A rate indexed to headline inflation therefore loses ground against the two largest items in the budget.
What it means for you
Use a living wage figure to judge a number and a legal figure to enforce one. If your metro's one-adult living wage is $22 and you are offered $18, the offer is lawful and still short of covering the budget.