Articles

Who Uses the Living Wage Tool and Why?

Written by Dr. Amy K. Glasmeier on 09/22/2017

People often ask me, “who uses the living wage tool.” My answer mostly reflects the moment. I get several user emails a day. The stories and queries range from “Your calculator has no idea how expensive it is to live in Seattle, I don’t care what the new minimum wage is.” To a single mom who thanks the tool for being there, but then finishes her missive by reciting the current challenge which often is about rent or a problem with the family car, or the difficulty of finding inexpensive child care.

Another storyline arises from a conversation I frequently have with employers who see paying a living wage as a moral issue. Enter Aaron, living in Washington D.C.; a former World Bank employee turned home-cleaning service entrepreneur. Aaron stepped away from international development to pursue as he says, “an experiment.” Well-Paid-Maids is a living wage-paying home cleaning service. Using his observation of self and others, he pondered "who would pay a living wage to have their re...

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Living Wage Rate Tied to the Cost of Housing and Child Care

Written by Dr. Amy K. Glasmeier on 06/14/2017

Living wages include several cost factors; the two most important are housing and child care expenses . The Living Wage Calculator uses the county level Fair Market Rent (FMR) rate produced by the Department of Housing and Urban Development as part of its calculus. Using the same indicator (FMR), new research by The National Low Income Housing Coalition (NLIHC) reinforces the findings of the living wage tool: the cost of living in the overwhelming majority of the nation's counties exceeds significantly a full-time income earned based on the minimum wage (http://nlihc.org/oor). As the NLIHC research shows, rent alone for a two bedroom apartment requires a wage rate that is more than $21.00 an hour. As the study indicates, this level of income is 2.9 times higher than the minimum wage of $7.25 per hour. Our computation of the living wage parallels these findings adding weight to the underlying fact; it is almost impossible to make it in America today based on incomes earned at the ...

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Results from the 2016 Data Update

Written by Dr. Amy K. Glasmeier and Carey Anne Nadeau, OpenDataNation.com on 04/13/2017

Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enables the working poor to achieve financial independence while maintaining housing and food security. When coupled with lowered expenses, for childcare and housing in particular, the living wage might also free up resources for savings, investment, and/or for the purchase of capital assets (e.g. provisions for retirement or home purchases) that build wealth and ensure long-term financial security.

The 2016 analysis of the living wage, compiling geographically specific expenditure data for food, childcare, health care, housing, transportation, and other basic necessities, finds that:
The living wage in the United States is $15.84 per hour, before taxes for a family of four (two working adults, two children), compared to $15.12 in 2015.

The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to...

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Findings from latest Living Wage data update

Written by Dr. Amy K. Glasmeier on 03/24/2017

The data behind the Living Wage Calculator has received another update. It is now current as of February 7th, 2017.

You can read about the latest findings and analysis in this document.

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City of Dallas contracts more expensive, but better workers are sticking around thanks to living wage.

Written by Dr. Amy K. Glasmeier on 03/19/2017

With a year of experience, the city of Dallas, Texas released the results of the first year of the city’s living wage program. Approved in late 2015, the Dallas City Council established a minimum wage rate for city contract employees of $10.37/hour. This increase exceeds the current nation minimum by 3 dollars ( $7.25). While the cost of living differential among cities is difficult to estimate, in Dallas utilities, healthcare, and child care costs surpass the national average. The increase in the contract starting wage (the stated living wage) has had a significant impact on residents of the city: 92% of contract employees indicated they live in the city; 95% of the sanitation workers reported they lived in the city. Where benefits are clearly evident is in improved attendance of employees and improved morale. Lower turnover enabled the city to hire 18 temporary workers into full-time jobs. Leaders in the city acknowledged that wages had been stagnant for a long time. By increasi...

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Four States Pass Minimum Wage Initiatives

Written by Dr. Amy K. Glasmeier on 11/11/2016

In Tuesday’s election, four states passed ballot initiatives to raise the minimum wage. By 2020 minimum wage rates will rise to $12.00/hour in Arizona, Colorado, and Maine. Washington state's minimum wage will increase to $13.50, also by 2020. Initiatives in Arizona and Colorado also require businesses to provide employees with paid sick leave.

More broadly, in 2016 fourteen states raised their minimum wage. These include Alaska, Arkansas, California, Hawaii, New York, Rhode Island and West Virginia. California's wage rate will increase to $15.00/hour by 2022 and applies to the entire state including non-metropolitan areas.

California's law includes differentiated rates by size of firm. An increase in the wage rate goes into effect in 2022 for employers with 26 or more employees . Smaller employers will see a comparable wage rate increase in 2023. The policy can be paused should economic conditions warrant such an action. The rate will be indexed the year following initial...

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New Data: Calculating the Living Wage for U.S. States, Counties and Metro Areas

Written by Carey Nadeau, OpenDataNation Inc. on 08/19/2016

Checked for accuracy on 8/17/2016; Numerical values are consistent with living wage 2015 estimates published on 8/15/2016.

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2015. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, clothe, house, and provide medical care for themselves and their families.

Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enable the working poor to achieve financial independence while maintaining housing and food security. When coupled with lowered expenses, for childcare and housing in particular, the living wage might also free up resources for savings, investment, and/or for the purchase of capital assets (e.g. provisions for retirement or home purchases) that build wealth and ensure long-term financial security.
...

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NEW 2015 Living Wage Data

Written by Dr. Amy K. Glasmeier on 06/20/2016

Rising Income Inequality Makes Living Wages All The More Important

America's middle class families steadily lost share of the nation's income over the 2000-2014 period. http://www.pewsocialtrends.org/2016/05/11/americas-shrinking-middle-class-a-close-look-at-changes-within-metropolitan-areas/. The financial crisis saw incomes erode to levels not seen since 1999. Our new data provide a glimpse into where the cost of living and wages paid to specific occupations allow individuals and families to cover their basic costs. Our results clearly demonstrate that the minimum wage long ago stopped serving as a basis for Americans to get by.

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2015. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, clothe, house, and provide medical care for themselves and...

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Another Dallas Agency Uses MIT Living Wage Tool

Written by Dr. Amy K. Glasmeier and Ms. Ronette Chanel Seeney on 04/26/2016

November 2015 the Dallas City Council approved a wage increase to $10.37 an hour for all contractors and subcontractors hired by the city. This includes groundkeepers, janitors, and trash collectors. Wages of construction contractors are negotiated separately. To identify a living wage, the City Council used the MIT living wage calculator. The campaign for a living wage began in 2010 when Dallas sanitation workers called for a wage increase. The call came amid a period of budget challenges.

Initial plans had the living wage as part of the city’s bid process. Companies would gain more points with proposals that included a living wage. Needing more information, the measure was initially vetoed, but was eventually passed on a 14-1 vote. All bids are now required to include a living wage of $10.37 per hour. Councilors approved the change stating that, “It was the right thing to do.” The living wage is effective immediately and will be included in contract renewals and all ne...

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Ikea Places Number 63 on the 2016 Fortune 100 Best Companies to Work for List

Written by Dr. Amy K. Glasmeier on 03/07/2016

Ikea U.S. placed number 63 on the 2016 Fortune 100 best companies to work for list. Ikea is number seven among retailers on the list.

Co-workers of the company ranked Ikea using the Great Place to Work Trust Index Employee Survey and answered questions about how frequently they experience the behaviors that create a great workplace.

Career Bliss evaluated thousands of independent company reviews posted to their websites by employees who rate their workplace according to factors that can influence one's professional happiness.

The Human Rights Campaign (HRC) Foundation developed the index, which evaluates corporate policies and practices related to LGBT workplace equality. Ikea received a perfect score on the Index.

In June 2014, Ikea announced a new wage structure, which bases minimum hourly wages on local living costs for co-workers as opposed to the local competitive situation.

Ikea US offers retail industry-leading scheduling, providing schedules three weeks in...

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Minimum Wage: Can an Individual or a Family Live on It?

Written by Carey Nadeau, OpenDataNation Inc. and Dr. Amy K. Glasmeier on 01/16/2016

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it failed to approximate the basic expenses of families in 2014. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, clothe, house, and provide medical care for themselves and their families.

Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enable the working poor to achieve financial independence while maintaining housing and food security. When coupled with lowered expenses, for childcare and housing in particular, the living wage might also free up resources for savings, investment, and/or for the purchase of capital assets (e.g. provisions for retirement or home purchases) that build wealth and ensure long-term financial security.

An analysis of the living wage, compiling geographically specific expenditure data for food, childcare, health care, housin...

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2014 Data Indicate That Four in Ten Children Live in Low-Income Families Half of These Are in Poor Families and Nearly Half of Those in Deeply Poor Families

Written by Jessica Carson, Andrew Schaefer, Beth Mattingly on 12/17/2015

Carsey Institute Brief, University of New Hampshire
December 16, 2015

As we approach the holidays, new analysis from the UNH Carsey School of Public Policy illustrates the impact of poverty on the lives of America's children. While most American adults will celebrate the holidays with some level of economic security, almost 50% of the nation's children live in uncertain circumstances attributable to low family income.

KEY FINDINGS

In 2014, more than four in ten children (44.1 percent) lived in low-income families, defined as families with income below 200 percent of the official poverty line.

More than one-fifth of children (21.7 percent) were poor, that is, lived below the poverty line, and nearly one-tenth (9.6 percent) lived in deep poverty, defined as having incomes below 50 percent of the poverty line.

The share of children living in deeply poor, poor, and low-income homes declined between 2013 and 2014.

The share of children living in low-income families...

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The Tipping Point: Most Americans No Longer Are Middle Class

Written by Marilyn Geewax NPR on 12/10/2015

Americans have long lived in a nation made up primarily of middle-class families, neither rich nor poor, but comfortable enough.

This year, that changed, according to the Pew Research Center.

A just-released analysis of government data shows that as of 2015, middle-income households have become the minority. The trend is so firmly established that it may well continue; Americans have experienced "a demographic shift that could signal a tipping point," Pew researchers concluded Wednesday.

Thanks to factory closings and other economic factors, the country now has 120.8 million adults living in middle-income households, the study found. That compares with the 121.3 million who are living in either upper- or lower-income households.

"The hollowing of the middle has proceeded steadily for the past four decades," Pew concluded.

And middle-income Americans not only have shrunk as a share of the population but have fallen further behind financially, with their median income d...

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Health Insurance Costs Rise As Wage Rates Stagnate Placing Families At Risk

Written by Dr. Amy K. Glasmeier on 11/02/2015

Health insurance premiums and wage rates are linked. A major component of the living wage tool is the amount of income individuals and family members must spent to purchase health insurance. Health insurance is critical to workers and families to reduce the prospect that an accident or unexpected illness drains a household’s savings or the lack of access to care compromises a household member’s ability to work. In the press today (http://www.wbur.org/programs/morning-edition), reports indicate health insurance premiums are going up. How will Americans pay for increased costs of health care? According to Sunday’s New York Times certainly not through employer-based increases in wage rates. Brought to light in the paper’s Review section, wage rates continue to stagnate despite declining unemployment and brighter economic conditions (http://www.nytimes.com/2015/11/01/sunday-review/the-mystery-of-the-vanishing-pay-raise.html?_r=0). Reports indicate workers’ share of “corporate income...

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Two New Reports On New Orleans: Brookings Uses Living Wage Calculator to Examine Beneficiaries of Economic Recovery of New Orleans

Written by Dr. Amy K. Glasmeier on 08/14/2015

https://nextcity.org/daily/entry/new-orleans-poverty-jobs-brookings-cluster-theory

Posted at NextCity
New Orleans’ New Normal Is Leaving Many Residents Farther Behind
BY MALCOLM BURNLEY | AUGUST 13, 2015

"New Brookings Institution data released today confirm there’s a murkier picture of economic progress emerging in New Orleans over the last five years than basic macro metrics can attest. The authors of “Opportunity Clusters: Identifying pathways to good jobs in metro New Orleans” also posit a potential anecdote to guide the city to a more equitable future: the “clusters theory” of economic development.

Although New Orleans has been witnessing its best job growth since the 1990s, inequality has surged in lockstep: Poverty is rising, working hours per week are falling, and average wages are too. Earned income for working-age adults who are part of struggling families averaged $21,775 in 2013, several thousand dollars below the national poverty level. And the trails to pros...

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Why Companies and Employers Say They Use the Living Wage Calculator

Written by Dr. Amy K. Glasmeier on 06/26/2015

The recent announcement by IKEA that its 2015 compensation scheme will utilize the values from the living wage calculator has prompted a number from the tool using community.

I am frequently asked, “why do businesses use the living wage tool?" Here I list the top reasons why large and small businesses use the calculator. I do not weigh in on the reasons nor do I rank them. Here are the top answers to the question, "why do firms of all types, sizes and sectors use the tool?

Because they can. Firms use the tool in instances where they feel they can afford to do so;

They acknowledge the relationship between loyalty and compensation;

They see the link between productivity and compensatory wage rates;

Because it is the right thing to do;

The owner has worked low wage jobs and knows how hard it is to make it on low wages;

It is a worthy and moral practice.

Because if people are paid more they spend more.

Costs of living are out of sync with long term wage rat...

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Updating Our Minimum Hourly Wage for Retail Co-Workers

Written by IKEA on 06/26/2015

IKEA US announced that we will once again raise the minimum hourly wage for US retail co-workers, following our move earlier this year to a new minimum wage structure. The change, which will be effective as of January 1, 2016, will take the average minimum hourly wage in existing stores (as of June 2015) from $10.76 to $11.87 - a 10.3% increase and $4.62 above the current federal minimum wage. The minimum hourly wages are based on local living costs for co-workers, and we use the MIT Living Wage Calculator as input.

We continue to invest in making IKEA a great place to work. Fair wages are one part of our employment offer, which includes a competitive health care plan (for co-workers who work more than 20 hours a week), a 401(k) plan, an additional retirement plan, tuition assistance, a co-worker discount, a paid-time off package, and more.

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Update: New Data, New Findings, Always Clarifying the Message Based on User Feedback

Written by Carey Nadeau and Dr. Amy K. Glasmeier on 05/28/2015

Living wage calculations are based on publicly available data. The calculation itself, however is based on a formula that includes multiple sub calculations that we update as new information in the form of user observations reaches our desks. When users of the calculator observe a result that doesn't make sense to them they write us and we dive back into the tool to see what is going on. We encourage you to let us know what you think and also what you find.

Wage data (adjusted for inflation) for 50,846,234 households from the American Community Survey 1-year estimates were compared to the living wage. These households were selected because the family compositions, including age and labor force status, were comparable to the family compositions included in the living wage calculator.

More than one-third of families (37.6%), more than 19.1 million families, earned less than the living wage, compared to 20.3% below the poverty line in 2014. Over 8.6 million families (for whi...

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Minimum Wage Increasing in Key Urban Population Centers: Living Wage Calculator Updated Annually

Written by Dr. Amy K. Glasmeier on 05/20/2015

Recent announcements of an increase in the minimum wage in cities across the U.S. are hopeful signs that local wage rates are coming to reflect closer estimates of the cost of living in key markets around the country such as Boston, Seattle, San Francisco, Chicago and the recently announced increase in Los Angeles, CA. As reported in the Los Angeles Times (LA Times) last night:

> The nation’s second-largest city voted Tuesday to increase its minimum wage from $9 an hour to $15 an hour by 2020, in what is perhaps the most significant victory so far for labor groups and their allies who are engaged in a national push to raise the minimum wage

http://www.nytimes.com/2015/05/20/us/los-angeles-expected-to-raise-minimum-wage-to-15-an-hour.html?emc=edit_th_20150520&nl=todaysheadlines&nlid=15672570&_r=0)/

Like the majority of changes in local minimum wages, these increases in income roll out slowly over time to provide employers with the ability to adjust their business operations ...

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New Data, New Geography, Message Still the Same: American Families Struggle To Get By

Written by Dr. Amy K. Glasmeier on 05/17/2015

Starting its 11th year, the living wage calculator now presents data for 2014. There is new documentation describing the components of the calculator, their spatial scale and date of the data elements. A new addition to the tool is data availability at the metropolitan scale. Now you can study the wage rate in your county of residence and compare it with your metro area.

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2014. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, cloth, house, and provide medical care for themselves and their families.

Wage data for 50,846,234 families and households with a householder living alone (18.6% of families and householders living alone) from the American Community Survey 2012 1-year estimates adjusted for inflation, were compared to the living wage. These ...

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Update on 3/24/2014

Written by Dr. Amy K. Glasmeier on 03/24/2014

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2013. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, cloth, house, and provide medical care for themselves and their families.

Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enable the working poor to achieve financial independence while maintaining housing and food security. When coupled with lowered expenses, for childcare and housing in particular, the living wage might also free up resources for savings, investment, and/or for the purchase of capital assets (e.g. provisions for retirement or home purchases) that build wealth and ensure long-term financial security.

An analysis of the living wage using updated data from 2013 and compiling geographically specific expenditure data for food, chil...

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