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The term "living wage" is used by advocates to refer to the minimum hourly wage necessary for a person to achieve some specific standard of living. In the context of developed countries such as the United Kingdom or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and of recreation. This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage.
Implementations In the United States, several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring all jobs to meet the living wage for that region. These ordinances often only apply to certain types of businesses, such as those receiving government contracts. However, Chicago, Illinois, San Francisco, California and Santa Fe, New Mexico have notably passed very wide-reaching living wage ordinances. Living wage laws typically only cover businesses that receive this type of assistance or have contracts with the governmentepi.org In Australia, the 1908 Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community," regardless of his capacity to pay. Justice Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers. In 1913, to compensate for the rising cost of living, the basic wage was increased to 8/- per day, the first increase since the minimum was set. The first Retail Price Index in Australia was published late in 1912. The basic wage system remained in place in Australia until 1967. It was also adopted by some state tribunals and was in use in some states in the 1980s. The national and international living wage movements are supported by many labor unions and community action groups such as ACORN. In the United Kingdom, many campaigning organisations have responded to the low level of the National Minimum Wage by asserting the need for it to be increased to a level more comparable to a living wage. For instance, the Mayor of London's office hosts a Living Wage Unit which monitors the level needed for a living wage in London (which has considerably higher living costs than the rest of the UK). Other organisations with an interest in living wage issues include the Living Wage Campaign: *(again London based), Church Action on Poverty: * and the Scottish Low Pay Unit. The Guardian newspaper columnist Polly Toynbee is also a major supporter of the campaign for a living wage. Criticism Critics argue that basic economic theory suggests a mandated minimum price for labor, a "living wage," is harmful to low-wage workers and increases unemployment. Artificially fixing a price for labor above the market price causes a decrease in the overall demand for labor, leading to increased unemployment and a deadweight loss. Workers who lose their jobs would not receive the living wage. Furthermore, such wage increases can cause inflation, increasing the cost of living and decreasing the relative buying power of the living wage, which leaves the minimum wage earner no better off. Critics of living wage ordinances assert that the government should not intervene in the marketplace because even well intentioned interventions may harm local economies. Living-wage advocates respond that governments intervene in the market to help businesses through subsidies, tax breaks, and other assistance. While this is true, those who oppose government intervention in the marketplace would also oppose government subsidies, tax breaks, and other assistance to business- one bad economic policy should not be used to justify a second bad economic policy. See also | ||||||||
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