Living wages

In public policy, a living wage is the minimum income necessary for a worker to meet their basic needs. This is not necessarily the same as subsistence, which refers to a biological minimum, though the two terms are commonly confused. Some have defined needs to include shelter, food, and other incidentals such as clothing. Due to the flexible nature of the term 'needs', there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. Some definitions include:

The living wage differs from the minimum wage in that the latter is set by national law and can fail to meet the requirements to have a basic quality of life which leaves the family to rely on government programs for additional income. Living wages, on the other hand, have typically only been adopted in municipalities. In economic terms, the living wage is similar to the minimum wage as it is a price floor for labor. It differs somewhat from basic needs in that the basic needs model usually measures a minimum level of consumption, without regard for the source of the income.

In the 1990s, the first living wage campaigns were launched by community initiatives in the US addressing increasing poverty faced by workers and their families. They argued that the employee, employer, and community all benefited with a living wage. Employees would be more willing to work, helping the employer reduce worker turnover, and it would help the community when the citizens have enough to have a decent life. These campaigns came about partially as a response to Reaganomics and Thatcherism in the US and UK, respectively, which shifted macroeconomic policy towards neoliberalism.

A living wage, in increasing the purchasing power of low income workers, is supported by Keynesian and post-Keynesian economics which focuses on stimulating demand in order to improve the state of the economy. A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.

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