Introducing the

Just Wage
Initiative

Just Wage Forum 2021

Criterion 1: Wage enables decent life for worker and household

A just wage covers the basics necessary for a minimally decent life for a worker and the worker’s household, including hours of work that are predictable, not excessive, and provide regular rest to facilitate a decent life away from work. Further, a just wage rests upon a healthy and safe working environment mitigating stress and facilitating flourishing, providing paid time off in the form of personal days, vacation, and in times of sickness of the worker or another household member. Ultimately, a just wage provides resources, in the form of both pay and time, that foster the worker’s self-development socially, culturally, and spiritually.

Wage enables decent life for worker and household

 

In the USA, the federal minimum wage -- stuck at $7.25/hour since 2009 -- has in recent decades not provided enough income for even a full-time single person to survive on. While some state and local governments have raised the minimum wage in their jurisdictions -- thereby getting a low-wage worker closer to having the means to escape poverty and enjoy a decent life -- it remains a fact that most low-income Americans and their families remain far from a just wage.

Characteristics of minimum wage workers (age, race, industry, etc.) are summarized annually by the Bureau of Labor Statistics, and you can access the 2020 report here. MIT’s Living Wage Calculator measures the wage necessary to escape poverty for households of various sizes in every county in the USA; it shows the gaps separating the minimum wage from what wage is actually needed for a decent life. Meanwhile, the United Way’s ALICE Reports document the extent of those living in poverty or perilously close to it throughout the country. As the United Way concludes, “the size of the workforce in each state that is struggling financially is much higher than traditional federal poverty guidelines suggest.”

There is an ongoing debate amongst labor economists about the likely impacts of raising the minimum wage on various workers, though much recent research suggests that the gains for workers receiving raises outweigh any job losses. Just as important, perhaps, is an approach that considers the low incomes of households rather than individual workers, a recognition that workers are embedded within relationships and communities. As economist David Neumark has argued, “Setting a higher minimum wage seems like a natural way to help lift families out of poverty. However, minimum wages target individual workers with low wages, rather than families with low incomes. As a result, a large share of the higher income from minimum wages flows to higher-income families. Other policies that directly address low family income, such as the earned income tax credit [EITC, see more below], are more effective at reducing poverty.”

Some scholars assert that we must look beyond the direct wages a worker or household earns in order to capture more accurately their broader economic well-being, which may be enhanced by federal transfer programs. There is a lively debate on whether these programs have significantly reduced poverty in contemporary America, as well as how extensive poverty actually is. Within this area, there are differing methods and justifications for measuring the welfare of individuals, as well as for measuring the prevalence of poverty in the US. Much research shows strong results for programs like the EITC, which provide more resources to low-income households. The EITC in particular has been found to promote work and alleviate poverty, especially among children. Moreover, the benefits for children often persist into adulthood; many have better school outcomes, and improved earnings later on in life.

With regard to employers, some scholars such as Zeynep Ton argue that investing in labor is more beneficial than viewing it as a cost to minimize. Bill Bowman, Dean of the Busch School of Business and Economics at the Catholic University of America, similarly claims that “providing just compensation to workers is a sound business strategy,” and that programs associated with higher compensation often pay for themselves, sometimes even within a year.

Going beyond the wage itself to other features of work that contribute to or detract from a decent life (hours, stability, and stress, to name a few), a great place to start is the American Psychological Association’s Work and Well-being Survey, which records workplace experiences, measures employee work-related stress, and asks what mental health resources employees seek from their employers. This ongoing project confirms that employer resources -- particularly, those regarding mental health -- should be included as part of a just wage, as they directly benefit employees and improve their work experience. At the same time, though, simply the presence of these resources/benefits is not enough. For example, the 2018 survey revealed that only 41% of Americans reported working for an organization encouraging its staff to take time off, while 36% left paid vacation time unused in the past year. Clearly, for a workplace to foster a decent life for workers, the employer must urge employees to take advantage of resources like rest and mental health benefits. The 2021 survey, reflecting the challenges of working during the pandemic, probes the “compounding pressures” imparting greater stress among American workers, over 40% of whom report they intend to seek employment elsewhere in the coming year.

Another useful resource is the Better Life Index of the Organisation for Economic Co-Operation and Development (OECD). Though the categories compiled and analyzed range far beyond employment to include housing, education, environment, and more, three of the eleven factors directly relate to the Just Wage Framework: income, jobs, and work-life balance. Moreover, the Better Life Index fosters comparisons among forty different countries, and it facilitates online users to rank the factors most important to them.

 

This page was last updated on November 22, 2021. It was written by Dan Graff, Emily Merola, Edward Prein, and Anastasia Reisinger, with research contributions from Lauren Baumann.

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