Living Wage Vs. Subsistence Wage – There's An Important Distinction

by Virginia Duan
Originally Published: 
Scary Mommy and Westend61/Getty and Sharon McCutcheon/Unsplash

The latest $1.9 trillion COVID-19 relief bill proposed by House Democrats included a minimum wage hike to $15, including for the currently un-covered tipped workers, youth workers, and workers with disabilities, over the next four years — a move that has caused disagreement among the Democrats themselves. It goes without saying that Republicans are adamantly opposed, because of course; they hate anything that smacks of compassion or reality. (If it doesn’t smell like bootstraps or fetuses, they’re not for it.)

But on February 25th, Senate parliamentarian Elizabeth MacDonough ruled that the provision to increase minimum wage violated the budgetary rules which limit what can be included in the bill. According to the New York Times, this ruling “[A]ll but sealed the fate of Democrats’ push to gradually raise the wage to $15 by 2025, which faces enough opposition from Republicans that it is all but certain to die on its own.”

There are so many things wrong with conservatives and how they say “all lives matter” but prove that statement false by valuing white lives above Black lives, fetuses over birthed humans, and the rich over poor. But that’s outside the scope of this article.

Instead, let’s talk about the $15 minimum wage.

Is $15 an hour even enough? Is that a living wage for people — let alone folks supporting families? How much money do working families need to make per hour in order to sustain themselves and their children and not live in poverty? Why does this even matter? What does it benefit us to pay people fairly?

What is a living wage, anyway?

A living wage is the minimum wage a worker or family needs to meet their basic needs — sometimes confused with subsistence wage, which is the lowest wage required to stay alive. There is a crucial difference. While subsistence wages cover basic needs like food, shelter, and clothing, a living wage provides for a modest but decent life, adding additional necessities such as utilities, health care, child care, and transportation — all met without public or private assistance — you know, that “dependence” conservatives keep despising.

In 2020, the living wage for a U.S. family of two married working adults and two children was calculated to be $21.54 per hour (pre-tax) or $89,606 per year. For a single person, a living wage would be $15.41 per hour or $32,040 per year. Note that the calculations do not include funds for eating out (or take-out), entertainment, or holidays and vacations — activities many of us consider necessities — with the great bulk of costs eaten up by childcare (21.6%), transportation (17.7%), and housing (17.2%).

Also, keep in mind that the living wages vary depending on where you live because many costs are geographically specific. For instance, of the top 100 most populous metropolitan areas, San Jose-Sunnyvale-Santa Clara, Calif. requires $131,266 for a living wage for a family of four, whereas McAllen-Edinburg-Mission, Texas requires $76,222.

How is a living wage different than minimum wage?

Minimum wage is the bare legal minimum employers can get away with paying employees and set by the U.S. Department of Labor and various state and local ordinances. Originally enacted to prevent exploitation of workers in sweatshops, it is a legal definition of compensation — and has little to no bearing on what a person actually needs to either stay alive, let alone have a modest but decent life.

Currently, the federal minimum wage is $7.25 an hour and hasn’t been raised since July 24, 2009. Keep in mind, this does not include workers who make tips like waiters — that is a paltry $2.13 an hour. Two dollars and thirteen cents. Let that sink in a second. I’ll wait.

For the math-challenged, that’s 11.5 years — and while we’re mathing, since Republicans love to math especially when speaking of the benefits of the stock market for personal retirement accounts instead of pensions or government sponsored assistance like social security — that is 11.5 years of zero adjustments for inflation or cost of living. In plain English, that means the actual buying power of that $7.25 (or $2.13 plus tips) has decreased every single year, effectively decreasing the minimum wage every year.

But you know, MATH.

While the federal minimum wage remains at $7.25 per hour, the actual minimum wage varies depending state by state (and sometimes by city). This year, over 20 states raised (or will raise) their minimum wages, but you’re SOL if you’re in Alabama, Georgia, Louisiana, Mississippi, South Carolina, Tennessee, and Wyoming — the seven states where the federal minimum wage applies because they either have no state minimum wages — or have state minimum wages below that of the federal.

Let it be noted that the federal minimum wage is half what the 2020 calculated living wage for a single person with no dependents needs to live a modest and decent life without needing to rely on public or private assistance.


Why we should pay people fairly

I can’t believe I actually need a section explicating why we should pay people a fair wage for their labor. Is this or is this not the country where a bunch of rich, landed white dudes — some of whom considered actual humans to be property, providing them free labor — threw a fucking rebellion because they didn’t want to pay taxes without representation because it wasn’t fair?

Come to think of it, that’s probably why this section is requisite.

First and foremost, it’s the right thing to do. People deserve dignity and are more than the sum total of what labor or service they can provide. People have the right to a decent and modest life — to food, shelter, clothing, utilities, transportation, health care, and child care.

It’s a concept with which the allegedly “Christian” side of politics should be familiar since they’re the ones yammering about the equal value of all people. (Let’s not be coy. They subscribe more to the Orwellian state of equality: all people are equal — but some people are more equal than others.)

Additionally, lower wages make it more difficult for people to take care of themselves and their families. The threat of losing shelter, childcare, and healthcare forces people — especially women — to choose between other necessities such as food, clothing, or safety. Providing a living wage allows people who currently have to work multiple full-time jobs to actually spend time with their families and rest, as well as frees them from relying on government help. It also raises productivity and reduces turnover for employees.

This proposal of a $15 minimum wage is more than just politics — it’s economics. But just like politics, economics is personal — and nothing is more personal than the right to exist and live without fear.

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