If you follow the national news, you know about the debate between the employees of large retail stores and fast-food restaurants and the companies about the minimum wage and the living wage. Many of these businesses pay the minimum wage per hour set by federal or state laws. Workers are asking for an hourly pay rate closer to the living wage. This article does not take sides in the debate. Its purpose is to inform you, my gentle readers, about the issues, allowing you to make up your own mind about the issue.
Simply stated, the minimum wage is the lowest pay rate mandated by federal, state or local law, while the living wage is a social justice concept that provides a rate of pay tied to the local cost of living or the Consumer Price Index (CPI). Both types of wages are an effort to insure that workers receive a base pay rate. This is a concept that is as old as the Bible. In Deuteronomy 24:14, we are told, “do not take advantage of a hired man who is poor and needy” and Timothy tells us “do not take advantage of a hired man who is poor and needy” (1 Timothy 24:14). Both the minimum wage and living wage are designed to help workers with limited education, job skills or work experience support themselves.
Minimum Wage Law
The minimum wage law was implemented in 1938 as part of the Fair Labor Standards Act (FLSA). The initial minimum pay rate was $0.25 per hour, and it reached $0.40 per hour in 1945. The minimum wage has been raised by Congress 29 times since 1938. Many states have laws that set a high minimum wage. For example, as of January 1, 2013, the minimum wage in Alaska was $7.75, Florida – $7.79,Michigan – $7.40, Ohio – $7.85 and Oregon – $8.95 per hour. Cities and counties may also have their own minimum wage laws. In San Francisco City and County, the minimum wage was $10.55 in 2013 while the state minimum wage was $8.00 per hour.
So how do workers know which wage applies based on where they live? The law that provides the most benefit to the worker is the one that applies. Therefore, minimum-wage workers in Alaska would be paid the state minimum wage of $7.75 rather than the federal minimum wage of $7.25 per hour while workers in San Francisco would be paid $10.55 per hour rather than the California minimum wage of $8.00 an hour. In states where there is no minimum wage law or the minimum wage is lower than the federal minimum wage; the federal rate is the mandatory base pay.
In some states, people who work for wages plus tips, such as restaurant workers and bar tenders have a lower minimum wage than the state or federally mandated wage. For example, bar tenders in Michigan earn a minimum wage of $2.65 per hour plus tips.
Read More About It: If you want to know what you state minimum wage rate is, please visit the U.S. Department of Labor’s Wage and Hour Division web site. It shows rates as of January, 2013.
The living wage concept was introduced by Pope Leo XIII, in an encyclical (a public letter) published in 1891. He declared that the living wage was a protection against poverty. Since that time, the living wage has been supported by labor, religious and social service organizations. The concept is that those who work full time should not have to live in poverty. A worker earning a living wage has the income necessary to pay for basic needs, such as housing, food, clothing, and transportation and would not need government assistance such as Medicaid or Food Stamps. The living wage is also designed to reward hard work and reduce the number of working poor.
Since 1994, the concept of a living wage has been incorporated in state and local laws in 140 locations throughout the United States, including the state of Maryland and the cities of Boston, St. Louis and Los Angeles. When it is a law, it is usually higher than both the federal and state minimum wages. In Boston, the 2013 living wage rate was $13.76, while the Massachusetts state minimum wage was $8.00 per hour.
In many areas, companies that work with city or county government agencies must pay the local living wage. In some areas, ordinances may even mandate a stipend to cover health care costs. In Los Angeles County, companies doing business with government agencies must pay their full-time workers the local living wage of $9.64 per hour plus $2.20 per hour for health care.
Read More About It: Thanks the Massachusetts Institute of technology (MIT), you can look up the living wage for the area in which you live using the MIT Living Wage Calculator .
Consumer Price Index
The living wage is tied to the Consumer Price Index. The CPI is a “measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services” maintained by the U.S. Bureau of Labor Statistics. The CPI tracks price changes in food, transportation, housing, education, health care, recreation and other goods and services.
Read More About It: The U.S. Bureau of Labor Statistics offers information about the CPI on its website – Consumer Price Index Frequently Asked Questions.