Just Economics announces our 2022 Living Wage Rate as $17.70/hr (with or without health insurance)
In 2021, Just Economics reassessed our formula for determining the living wage. The last time we did that was in 2011, and this is a practice we intend to continue at least every 10 years. Our process included months of listening sessions, surveys and meetings. The idea of a Living Wage is that it reflects what people can live on in our community. The purpose of this reassessment was to ensure that our formula reflects a current reality for workers and a feasibility for employers. In Buncombe County, the disparity between wages and housing costs is a major factor in our local economy and our living wage rate continues to be tied to the cost of housing.
The changes to the Living Wage Formula are as follows:
- Previously, we have used the Fair Market Rent base as 30% of an individual’s monthly income as a measure for housing affordability. The newly adjusted formula uses 33 ⅓ percent taking into consideration that many landlords require proof that tenants earn at least 3 times the rent to qualify for a lease.
- Just Economics has decided to remove wage subtractions, including the subtraction for employers who offer employer provided health benefits because an employee will not make 3x Fair Market Rent at the lower rate. We want to continue to recognize employers who provide health insurance and are adding an icon to our web directory to recognize employers providing health benefits.
- Moving forward, the formula will be based on 2000 working hours instead of 2080 working hours, assuming that most full time working people take some time off during the year.
Frequently Asked Questions:
When does the wage rate go into effect?
For any employers new to our program in 2022, the wage rate is immediately in effect. For employers who have been previously Living Wage Certified, they will have until the end of 2022 to increase wages and will be recertified in 2023 (a process that begins in January). We encourage previously certified employer to make adjustments as soon as is feasible, however, we offer a grace period for employers so they have time to budget in any increases.
While inflation has gone up drastically in 2021, why did the Just Economics Living Wage Rate only go up 40 cents (from $17.30 to $17.70)?
While our living wage rate went up 40 cents for employers who do not provide health insurance to their employees, our wage rate went up $1.90 for employers who do provide health insurance ($15.80 to $17.70).
Additionally, our living wage rate is not tied to inflation, but rather tied to the cost of housing. We use a 4 year average of HUD’s Fair Market Rent (FMR) as a base for our formula and FMR actually went down in 2022 over 2021. While it is a valid argument that FMR has not recently reflected the realities of rentals in our community (rents for many went up from the previous year), FMR is one of the only 3rd party verified numbers indicating the cost of rent. We reserve the right to adjust our formula in the future should we find a more accurate and verified number indicating the cost of rental units in our community.
Is the Living Wage Rate too high for some employers to meet?
We understand the challenging times many businesses are in due to the pandemic, and we also understand the need for small businesses to stay solvent as they face competition from multinational corporations with corporate buying and marketing power. All that being said, the reality for workers and tenants is also extremely challenging. Our living wage rate is a more just minimum than the minimum wage…a better starting point. The idea is that at our living wage rate, a full-time worker could afford a one-bedroom apartment somewhere in the county. Our program is meant to encourage employers to meet this minimum rather than punish those who are striving to get there.
Is the Living Wage Rate too low for some employees to live on?
In a country where the minimum wage ($7.25) has not been raised in over 12 years, our living wage rate is a better starting place for employers to begin to set their wage scale. But we recognize that our living wage rate is not a living wage for everyone. It is based on a single person without dependents, and single parents would likely need more. The basis for our living wage uses Fair Market Rent which is averaged out over the county and individuals living in the City of Asheville would likely need more. Additionally, the costs are based on housing, while many workers may have other large expenses that are not factored in. We know that this living wage rate does not serve everybody, but we feel it is an important benchmark for employers to use as a place to begin.
Why was the health insurance subtraction removed?
The changes to our formula are based on the premise that someone could afford a 1 bedroom apartment somewhere in the county and be able to demonstrate to the landlord that they make 3 times the rent (a common standard). If $1.50 was subtracted from the wage criteria, this worker would not be able to demonstrate the income needed to obtain a rental.
We continue to encourage employers to provide health benefits and will be identifying employers who do on our website with a special icon.
For more information about how we calculate the living wage rate and how increases are made, click here.
