The Living Wage rate for Just Economics in 2016 is $12.50/hr or $11/hr with employer provided health insurance. For more information about how we calculate the living wage rate and how increases are made, click here
What is a Living Wage?
A “living wage” is the minimum amount that a worker must earn to afford his or her basic necessities, without public or private assistance. In short, a living wage is the real, just, minimum wage.
The living wage for a single individual living in Western North Carolina for 2016 is $12.50/hour without employer provided health insurance, or $11.00/hour with health insurance provided by the employer. This amounts to $26,000/year without benefits, or $22,880/year with benefits, assuming a 40-hour work week, 52 weeks a year.
Why isn’t Minimum Wage Enough?
The federal minimum wage was enacted through the Fair Labor Standards Act of 1938, which purpose was to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.” Despite these intentions, the federal minimum wage has failed to keep up with the rising cost of living, and has instead become a wage that keeps working people in poverty.
Although the dollar amount (nominal value) of minimum wage has increased over time, it now takes more dollars to purchase the same goods and services, so the real value of minimum wage has actually decreased since 1960. In 1968, the value of minimum wage was equivalent to $10 today- that’s almost a living wage!
The increase of the federal minimum wage to $7.25 in 2009 was applauded by many, but because of inflation the real value of minimum wage today is still much lower than it ought to be in order the maintain “the minimum standard of living.”
What are the Benefits of a Living Wage?
Today, millions of working people struggle to cover the cost of housing, food, health care, childcare and other basic necessities for themselves and their families. A worker who is paid the minimum wage of $7.25/hour, or any wage below a living wage, cannot possibly afford basic necessities without assistance. This creates problems not only for workers, but for businesses and the local economy. The living wage movement is an important initiative that can bring improve conditions for working people, businesses and our local economy.
Living Wages Benefit Workers:
Living Wages Benefit Businesses:
Living Wages Benefit the Local Economy:
What is a Minimum Standard of Living?
The purpose of minimum wage, according to the Fair Labor Act, is to enable workers and their families to afford “the minimum standard of living necessary for health, efficiency and general well-being…” But how do we measure “the minimum standard of living”? Minimum wage income keeps workers above the federal poverty threshold, but is the federal poverty threshold a reasonable minimum standard of living?
The poverty threshold was established for statistical purposes, as a means of having something to measure against during the John F. Kennedy and Lyndon Johnson eras and the “War on Poverty”. It is calculated using a method developed in 1963, by the economist Mollie Orshansky. The federal poverty threshold is based on the cost of food and the assumption that food accounts for one-third of a person’s expenses. Using this formula, (the USDA Thrifty Food Plan multiplied by 3) the poverty threshold for one adult in 2010 is $11,161.
Although the poverty threshold is adjusted annually according to change in CPI-U, it does not account for the rising relative costs of housing, childcare, health care and transportation, which now represent a much larger portion of a family’s budget. According the Economic Policy Institute, food represents only 11% of a family’s annual budget today. The poverty threshold also does not factor in regional differences in the cost of living. The U.S. Census Bureau states that purpose of the poverty threshold is, in fact, to act“as a statistical yardstick, not as a complete description of what people and families need to live.”
For this reason, many organizations- such as Just Economics, the Economic Policy Institute, and the NC Justice Center- strive to more accurately calculate a minimum standard of living for workers and their families. The living wage movement is based on the premise that minimum wage should keep workers and their families above the minimum standard of living rather than just above the poverty threshold.
What kinds of jobs pay below a living wage?
Out of nearly 400 different occupations in Buncombe County, 59, or 15%, paid below the Living Wage Rate in 2009. Although the number of low-wage occupations is relatively low, the number of workers occupying these jobs is high. According to Employment Security Commission data released in 2009, 35,820 workers are employed in these low-wage occupations, representing nearly one third (31%) of the Buncombe County workforce.
Of Buncombe County low-wage workers, one third, 34%, are employed in food preparation and serving related occupations. 22% are retail sales workers. 10% work transportation and material moving occupations. 9% are building cleaning workers, and 9% hold office and administrative occupations. These jobs pay between $8 and $10/hour, and typically don’t offer benefits of any kind.
Many of these low-wage occupations are also among the fastest growing occupations in the Mountain Area. Of the 25 fastest growing occupations in the Mountain Area, 11 paid below a living wage in 2009. While 31% of the Buncombe County workforce earns less than a living wage today, growth in low-wage occupations will increase that ratio may be much greater by 2016.
Who Earns Below a Living Wage in our Community?
Because statistics on poverty in America are based on the federal poverty threshold- which underestimates the cost of living today- the true number of people struggling to make ends meet is drastically understated.
These statistics represent the percent of all workers earning below $11.35/hr in Buncombe County who are employed in jobs within those occupational categories. There are also jobs within the same occupational categories (such as management level positions) that do earn a living wage.
The Occupational Employment and Wage Statistics (OES) program collects information on employment and wages by occupation through a semi-annual survey of North Carolina industries. Just Economics used data published in 2009, which estimates of the number of workers and entry, average, and experienced wages by occupation for Buncombe County to calculate living wage statistics. All workers are full-time workers. For confidentiality purposes, data is not available for businesses that could be identified through OES (i.e. businesses of which there are only one in Buncombe County).