Understanding the Living Wage in the United States

The Living Wage movement has gained momentum in the United States and over 48 other countries, presenting a structural improvement for the lowest paid earners. Whereas countries like the United Kingdom sanction a generally national living wage with one special allocation for London, the United States' living wage variations are more complex.

The U.S. Living Wage Standard sanctioned by Living Wage for US (LW4US) leans into the Anker Methodology introduced by Richard Anker and Martha Anker to create accurate estimates across the US that are aligned in principle with global best practice yet locally applicable in the US. The method looks at the costs of living in specific counties, calibrating local costs according to family needs to cover housing, food, healthcare, transport, and a variety of additional costs that are essential to a basic but decent living from a human rights lens.

County level measures are then grouped by commuting zone and the lowest cost county in each commuting zone is used for certification across all counties in the zone to the living wage standard. For Hospitality staff who receive tips, the tips necessary above a base wage to reach a living wage should be guaranteed. So a tipped worker that takes home $15/hr in tips in a typical scenario, but needs at least $5/hr of that to reach a living wage when added to their base wage, would have that $5/hr in tips ensured by their employer.

The initial entry point for being considered a Tier 1 “Living Wage For US Employer” is to have all payroll workers receiving at least $15-18 per hour depending on the location across the U.S.. Additionally, employers need to outline actions to meet actual LW4US living wage, keeping up with cost of living increases in living wage estimates and closing the gap to a family living wage by 3% on average each year. Tier 2 employers are those that have met the living wage - up to $32 per hour in places like New York.

Full Standard

Methodology modeling

Geography: County-level, aggregated for lowest cost within a commuting zone
Family Size: Four people with two adults and two children
No. Earners per Family: 1.7565 workers per family estimated
Food Cost: USDA Low Cost Diet, accounting for local food costs by monitoring data on individual price differences in food items county by county.
Housing Cost: HUD Fair Market Rents considering quality, number rooms for family and utility costs and further adjusted for local specificity at the county level
Childcare: Child Care Aware of America data (State-adjusted child care costs without subsidies)
Transportation: Center for Neighborhood Technology (CNT) county level transportation data
Healthcare: based on silver level plan accounting for subsidies available on the ACA marketplace for a family at a living income level of household income from Kaiser Family Foundation as well as typical out of pocket expenses
Other Costs of essential items like cleaners and clothing are calculated using household expenditure surveys for workers earning a living wage and applying ratios of essential costs to food+housing to adjust regional data to local levels

A 5% buffer is taken into consideration for final hourly calculations to cover unexpected expenses, as well as statutory tax payments in 3,143 taxing jurisdictions across 50 states.

Outside of pay rate, must ensure that workers accrue sick time or PTO that can be used as sick time so that a 40 hour per week worker would receive 10 paid days off a year in order to stay home when ill.