Can Workers and Their Families Live on a Living Wage?

Background and Purpose. Raising the federal minimum wage to $15/hour gained political and public currency during the 2020 presidential election cycle. Yet many scholars have documented that $15/hour is not sufficient to meet the basic needs of workers and their family members in many American cities. An alternative is offering a living wage, or a wage sufficient to meet basic needs without relying on public benefits. One method to determine such a wage is to use basic needs budgeting to estimate costs for households of different compositions residing in different geographic areas. This presentation examines the extent to which a “living wage” eliminates hardships experienced by lower-wage workers. We hypothesize that households with incomes at/above a living-wage threshold, according to basic needs budgeting, report fewer hardships compared to households below it. Further, we describe the hardships faced by households at/above the threshold.

Methods. Data come from the second of a three-wave structured survey of lower-wage hospital service workers (n=260). We created the independent variable, income sufficient to basic needs, using the Economic Policy Institute’s Family Budget Calculator (EPI-FBC) for Allegheny County, PA, the study’s site. The EPI-FBC estimates basic needs budgeting costs, providing thresholds for varying family composition and region. For households with 3 or more adults and/or 5 or more children we applied multipliers based on the federal poverty guidelines to the EPI-FBS thresholds. Hardships are defined by broad categories (e.g., medical) as well as specific types (e.g., could not afford medical treatment). We conducted bivariate analyses such as chi-square and t-tests to examine differences in types and numbers of hardships by EPI-FBC status.

Results: Though 75 (28.8%) workers lived in households with incomes at/above the EPI-FBC threshold, unexpectedly, most (92%) experienced at least one hardship. As expected, these workers faced fewer hardships (mean=3.1) than workers with household incomes below the EPI-FBC threshold (mean=6.74; t(258)=6.515, p=.000). Those at/above the EPI-FBC threshold, compared to those below it, were more likely to be older (p<.03), white (p=.000), and with higher educations (p=.000) and were less likely to confront a medical, food, and financial hardship (all p < .01). Examining only workers with incomes at/above the EPI-FBC threshold, the most common specific hardships related to financial concerns - the impact of an emergency on their economic well-being (69.3%), saving for the future (62.7%), and living within their budget (41.3%).

Conclusion and Implications: Not surprisingly, lower-wage workers with higher household incomes face fewer hardships than those with lower household incomes. Yet, even households above basic needs budget income thresholds still encounter numerous challenges. These findings challenge us, as social workers, to rethink assumptions about concepts like adequacy and sufficiency as well as the language we use in our advocacy efforts, and to reexamine how our teaching, research, and policy practice address what it means to be poor in our society and how we can reduce racial and economic inequality.