What Is A Living Wage (And Is It A Moral Imperative)?

In the last couple of years, we have heard a lot about a "living wage". The idea is that anyone who works hard at a full-time job should make a wage that keeps them out of poverty. Democrats have tried to raise the minimum wage to $15 an hour (over several years), but Republicans have blocked it. The Republicans want to keep the current minimum wage ($7.25 an hour), even though it leaves many full-time workers unable to lift their families out of poverty -- and some Republicans would like to abolish the minimum wage altogether.

This raises a couple of questions. Just what is a living wage? And, is it a moral imperative for a business to pay a living wage?

Here's just a part of what Nick Romeo says on this topic in The New York Times:

The idea of a living wage is an old dream, with origins in the work of thinkers as ideologically diverse as Adam Smith, St. Thomas Aquinas and Karl Marx. While its exact meaning is often left conveniently vague, Theodore Roosevelt offered a basic definitionin a 1912 speech: A living wage should let workers “secure the elements of a normal standard of living,” including education, recreation, child care, a cushion for periods of sickness and savings for old age.

Roosevelt was making a moral claim, not just an economic one. He saw paying workers enough to meet these basic standards as a matter of justice.

More than a century later, millions of working Americans are still paid too little to afford the modest elements in Roosevelt’s vision. Such low wages are not inevitable; they reflect political and moral choices about what defines a “normal standard of living,” and who deserves to enjoy one. . . .

Not paying people enough to live implies indifference to whether they continue to live, undermining basic standards of decency and further eroding the foundations of a functional democracy. With many companies now inching toward more humane compensation, the question of how to define a living wage deserves broader public discussion.

For much of American history, people understood that morality was profoundly relevant to wage-setting. The idea for a living wage was pioneered by religious thinkers like John Ryan, a priest whose 1906 book, “A Living Wage: Its Ethical and Economic Aspects,” argued it should enable not only the absolutely essential, but also “the conditions of wider and fuller life.” Other Progressive figures like Roosevelt and the labor leader Samuel Gompers also embraced this argument, and workers themselves lobbied for the creation of the Bureau of Labor Statistics so that they would have accurate data on wages to inform their campaigns.

Around the same time, however, followers of a very different tradition were claiming that morality had no relevance to the question of wages. In 1926, one scholar called a “just” wage “a contradiction in terms.” By the 1980s, many economists had fully embraced this view, and a philosopher claimed the competitive market was a “morally free zone.”

But to exclude moral considerations from markets is itself a moral choice, even if the calculus is not always simple. Some employers with razor-thin margins might be unable to pay a living wage, and even Ryan argued that such businesses should not be obligated to do so during a rough patch. In the long run, however, Ryan held that part of being a successful business was paying a living wage. Those that did not should eventually go out of business.

And while it is a common refrain that a living wage would force employers to hire fewer workers and thus destroy jobs, there are persuasive empirical and philosophical responses to this objection. The stagnation of real wages for American workers does not reflect their low productivity so much as the increasing concentration of wealth within companies. In 1965, the average top chief executive made 21 times as much as a typical worker in America. In 2020, the ratio was 351 to 1. . . .

 The line between “living” and merely subsisting is something that a democratic society must publicly debate and ultimately embody in lasting policies.

Gompers argued in 1898 that a living wage should be “sufficient to maintain an average-sized family in a manner consistent with whatever the contemporary local civilization recognizes as indispensable to physical and mental health, or as required by the rational self-respect of human beings.” For anyone less than pleased with the direction that America’s “contemporary local civilization” is trending, it’s worth asking whether all of our fellow citizens have access to jobs that pay what “the rational self-respect of human beings” requires.

NOTE -- One of the most widely used "living wage calculators" is by Amy Glasmeier at MIT. You can access it here.