Understanding the “Living Wage”

March 28, 2019 |

The Living Wage has sparked intense debate as national conversations around wage growth show that while the economy has soared since the recession, worker’s wages have not[1]. The minimum wage of $7.25 per hour has not increased since 2009[2], although the cost of living has gone up by 18% since then[3]. You have likely heard politicians running on a platform of increasing the minimum wage to $15 per hour; a standard that many consider a living wage for most workers. The government has typically calculated the minimum wage based on the federal poverty level, which is an income threshold that determines whether an individual or family earns enough to cover their basic needs, like food and housing. The federal poverty level is the same amount across the 48 contiguous states.

The living wage is more nuanced than that. The Massachusetts Institute of Technology (MIT) developed this alternative model to calculating earnings based off the cost of basic needs, along with other essential costs including childcare, insurance, transportation, clothing, and other necessities. MIT’s living wage model also accounts for differing costs of living in various locations across the country. It is much more expensive to live in New York City than in Charlotte,  so MIT calculates the living wage in each city based on the local cost of goods. Additionally, the living wage increases based on family size.

Charlotte Works has broken down the living hour wages for various family sizes in Mecklenburg County according to MIT’s Living Wage Calculator:

Family Size Living Wage (per hour) Annual Salary
Individual $12.58 $26,166
1 Adult

1 Child

$24.69 $51,355
1 Adult

2 Children

$28.66 $59,612
2 Adults $9.85 each $40,976
2 Adults

1 Child

$13.48 each $56,076
2 Adults

3 Children

$18.14 each $75,462
2 Adults (1 Working) $19.70 $40,976
2 Adults (1 Working)

1 Child

$25.59 $47,902

 

As you can see, wages differ drastically based on family size. A single parent needs to earn more than $50,000 per year to support their family. Families with three children or more need to earn a combined $75,000 each year to live comfortably. If you are interested in learning more, contact Charlotte Works.

To learn more about the living wage in Mecklenburg County and get more details about average expenses, click here.

[1]For most U.S. workers, real wages have barely budged in decades” Pew Research, 2018

[2] Minimum Wage Tracker, Economic Policy Institute, 2019

[3] CPI Inflation Calculator, Bureau of Labor Statistics, 2019