Living Wage*
About
The hourly wage needed to cover basic household expenses plus all relevant taxes for a household of one adult and two children. The 2023 County Health Rankings used data from 2022 for this measure.
This living wage estimate is calculated by Dr. Amy Glasmeier and colleagues at the Massachusetts Institute of Technology for twelve different household compositions. We include a measure of Living Wage reflecting a household of three with one adult working full-time and two children.
Living wage represents the minimum income necessary for financial independence to meet the basic needs of an individual or family without requiring public assistance in the form of income-conditioned benefits like the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), Earned Income Tax Credit (EITC), and Temporary Assistance for Needy Families (TANF).1 The Living Wage measure specifically accounts for basic household needs, including food, child care, health care, housing, transportation, and other necessities such as clothing, broadband service, and cell phone service. The costs of many elements of the basic needs budget are based on market-derived data which vary according to geographic region. This makes the Living Wage measure a much more accurate determination of household need as compared to the U.S. poverty thresholds.
In the United States, living wages have been implemented in varied ways, such as through county- and city-level ordinances (especially in large cities) that require certain local employers to pay their employees a living wage or through voluntary implementation by employers. In practice, living wages mandated by local ordinances are usually set at rates required to lift a family of four above the federal poverty threshold, and are not based on the income necessary to cover basic needs.2,3 There is some evidence that living wage ordinances can reduce poverty for covered low-wage workers.2,4 Additionally, living wage ordinances have been associated with reductions in property-related crime.5 Reducing poverty is especially important for families with children, as childhood poverty is associated with lasting effects on academic achievement, health, and income into adulthood.6-8 Earning a living wage may also improve the psychological well-being of workers.9
Of note, the $15 wage advocated for by the Fight for $15 movement is sometimes called a living wage but has no methodology or formula to support the $15 rate.3 A $15 minimum wage may not be an adequate living wage across the U.S. for all household structures.
Data and methods
Data Source
The Living Wage Calculator
The Living Wage calculator estimates the cost of living in your community or region based on typical expenses. The tool helps individuals, communities, and employers determine a local wage rate that allows residents to meet minimum standards of living.
Website to download data
For more detailed methodological information
Key Measure Methods
Living Wage is a dollar amount
Living Wage reflects an hourly wage.
Living Wage is created using statistical modeling
The measure is dependent on household composition, varies geographically, and is based on market-driven costs for each element of the basic needs budget; savings and leisure expenditures are not included in the Living Wage. Basic household expenses include the cost of food (USDA low-cost food plan), childcare, health care (insurance premiums and out of pocket costs), housing, transportation, other necessities (clothing, personal care items), civic engagement, broadband service, and cell phone service.1 This contrasts with the official federal poverty thresholds which are based on a multiple of the most basic food budget (USDA lowest cost, thrifty food plan) for a household and do not vary geographically (they are the same for all states and D.C.).6, 10, 11
Detailed notes about the sources of data and the methods used to calculate the Living Wage can be found in the Technical Documentation for the Living Wage Calculator.
Living Wage cannot be compared across state lines
For the child care cost aspect of the measure, childcare cost data are based on market-rate surveys reported separately by state, published in different years. Some states only report state- or region-level estimates, and thus require county-level imputation. Due to this, states may differ in the extent to which estimates are modeled vs. observed.
Measure limitations
There is no universally accepted method for calculating a living wage and several researchers and organizations have calculated their own version of a living wage with varying data sources and definitions of a basic needs budget.
Can This Measure Be Used to Track Progress
This measure can be used to track change over time, but is not intended to measure progress.
Finding More Data
- Visit the Living Wage Calculator for technical documentation, articles about the use of the living wage by corporations and local governments, and a calculator function which allows users to look up the living wage by location for all twelve family compositions.
- The Family Budget Calculator from the Economic Policy Institute measures the income a family needs in order to attain an adequate standard of living.
- Self Sufficiency Standard from the Center for Women’s Welfare aims to define the income working families need to meet their basic necessities without public or private assistance.
- United for ALICE (Asset Limited, Income Constrained, Employed) is a project that quantifies and describes the number of households that earn above the Federal Poverty Level, but do not earn enough to afford household expenses and avoid financial hardship.
For additional context to understand living wage in your community, look to these measures:
- Children in Single-parent Households: percentage of children living in a household headed by a single parent.
- Children in Poverty: percentage of people under the age of 18 in poverty (children living in a household with income below the poverty threshold set for that household composition).
- Severe Housing Cost Burden: percentage of households that spend 50% or more of their household income on housing.
- Income Inequality: ratio of household income at the 80th percentile to household income at the 20th percentile.
References
1 Glasmeier, Amy K. 2020. Living Wage Calculator. Massachusetts Institute of Technology. livingwage.mit.edu.
2 Holzer, H.J. 2008. Living wage laws: How much do (can) they matter? Urban Institute. https://www.urban.org/research/publication/living-wage-laws
3 Luce, S. 2017. Living wages: a US perspective. Employee Relations 39(6):863-874. https://www.emerald.com/insight/content/doi/10.1108/ER-07-2017-0153/full/html
4 Clain, S.H. 2008. How living wage legislation affects U.S. poverty rates. Journal of Labor Research. 29(3):205-18. https://doi.org/10.1007/s12122-007-9028-8
5 Fernandez, J. M., Holman, T., and Pepper, J. V. 2014. The Impact of Living Wage Ordinances on Urban Crime. Industrial Relations: A Journal of Economy and Society, 53(3): 478-500. http://dx.doi.org/10.1111/irel.12065
6 McCarty, A. T. 2016. Child poverty in the United States: A tale of devastation and the promise of hope. Soc. Compass, 10(7):623-639. https://onlinelibrary.wiley.com/doi/10.1111/soc4.12386
7 Hair, N. L., Hanson, J.L., Wolfe, B.L, and Pollak, S.D. 2015. Association of child poverty, brain development, and academic achievement. JAMA Pediatr, 169(9):822-829. https://jamanetwork.com/journals/jamapediatrics/fullarticle/2381542
8 Dreyer, B. P. 2013. To create a better world for children and families: the case for ending childhood poverty. Academic Pediatrics, 13(2): 83-90. https://doi.org/10.1016/j.acap.2013.01.005
9 Flint, E., Cummins, S., and Wills, J. 2014. Investigating the effect of the London living wage on the psychological wellbeing of low-wage service sector employees: a feasibility study. Journal of Public Health, 36(2): 187–193. https://doi.org/10.1093/pubmed/fdt093
10 U.S. Department of Agriculture. Thrifty Food Plan, 2021. August 2021. FNS-916. https://doi.org/10.52570/TFP2021
11 Institute for Research on Poverty, University of Wisconsin-Madison. How is Poverty Measured? https://www.irp.wisc.edu/resources/how-is-poverty-measured/