Concept: The term "living wage" refers to the hourly wage that will provide a worker and family with the necessities for a simple but decent living. Municipal living wage campaigns entail the principle that taxes flowing to a local government should not be used to pay poverty-level wages to the employees of any company that is hired by the city or town or that receives substantial financial assistance from it.  Living wage ordinances counteract the low wages that some contractors pay their employees in order to bid low on public contracts. 

           The term "minimum wage," in contrast, refers to any wage designated by law as a minimum.  Such protective minimums have their origins in government responses to exploitive industries such as mining instead of in such civic entities as municipalities and their outsourcing of labor.  Minimum wage legislation in America now covers most workplaces to counter the tendency of some employers in all businesses to pay excessively low wages.   

            Scope: Living wages are local, set by towns, cities, and counties (and some universities).  Minimum wages, in contrast, are national or state-wide (and are occasionally set by cities). 

            History: The first minimum wage laws were passed in the 1890s in New Zealand and Australia, in the latter as wage requirements for certain manufacturing and mining industries that paid very low wages.  Today, over 100 nations have minimum wages. 

            The first living wage ordinance was passed about a century later, in 1994, in Baltimore.  In contrast to the industrial basis of the minimum wage, the living wage movement was a grass-roots response to the rise of service companies and the frequent outsourcing of work to such companies.  Two other influences on the growth of living wage campaigns have been the reduced strength of organized labor and the collapse in value of the federal minimum wage.  Significantly, Australia and the United Kingdom, with higher minimum wages than the U.S., lack a living wage movement, with the exception of London, where a living wage requirement for city contracts was initiated by the mayor in 2005.

            Calculation: One can find descriptions of both minimum wages and living wages as the amount a full-time worker should be paid to earn a decent living, to meet basic family needs, to avoid poverty, and so on.  The minimum wage is often described as a "starting wage" or a "wage floor" or "a wage to protect the most vulnerable workers," in contrast to the living wage as a wage that can sustain a family.  Such criteria don't translate easily into exact figures that people can agree on. 

            Because state and federal minimum wages cover a great number and variety of workers over large geographical areas, political reality keeps minimum wages low enough to win legislative and executive approval. Minimum wages are increased at irregular intervals to keep up, more or less, with inflation, but in many years a minimum wage income by itself is not enough to avoid poverty. 

            Living wages are calculated by different formulas in different communities and are higher than minimum wages.  Often the rates of living wages are multiples of the federal poverty threshold.  In other campaigns the living wage is based on the average cost of local housing. 

            Some people argue that the minimum wage should be set at the same level as a living wage, since a legal minimum wage that is less than a family could live on seems contradictory. But the two wages can be seen as serving different purposes. The minimum wage is "negative": it offers legal protection against extreme exploitation by employers.  The living wage is more "positive": it is an acceptable wage for providing a household's basic needs.  

                                               --Brock Haussamen; revised August 2007