What a ‘Living Wage’ Actually Means

Even so, her work was used to establish such a standard anyway. According to a 1955 survey by the United States Department of Agriculture, the cost of food accounted for a third of the average American family’s budget after taxes. So, using the Agriculture Department’s economy food plan as a baseline, her formula multiplied the cost of food by three. The resulting number became the federal poverty guideline in 1969. That initial number hasn’t been recalculated since. Instead, it has been adjusted according to the Consumer Price Index to match the rising cost of food.

As Ms. Orshansky said, this formula establishes a number below which American households are in poverty, but it doesn’t guarantee that anyone above it is not. It can’t account for things like the actual cost of housing or transportation, data for which was less readily available in the 1960s.

The Living Wage Calculator provides a clearer starting point

Fortunately, today there’s much more data available. In 2004, Amy Glasmeier, now a professor of economic geography and regional planning at the Massachusetts Institute of Technology, developed the Living Wage Calculator. This tool uses more specific data to gauge the basic needs of American families. It estimates the cost of food, child care, health care (both insurance premiums and typical health care costs), housing, transportation and other necessities.

Of course, a family in Los Angeles has different needs than a family in rural Iowa, so the calculator breaks down the data by region, all the way to the county level. It also takes into consideration a more realistic view of American families, with combinations of up to two adults and up to three children. Two-adult families are further broken down into households where either one or two adults work.

When you choose your county, you’ll see a breakdown of what each adult in your household will need to make per hour — rather than per year, since many part-time and hourly jobs aren’t salaried — in order to cover basic expenses. Below that, you’ll see a breakdown of what those expenses like food, health care, and transportation, which is helpful if any of these categories are more expensive for you than the national average.

Article source: https://www.nytimes.com/2019/06/05/smarter-living/what-a-living-wage-actually-means.html?emc=rss&partner=rss