While productivity rates increased 250% since World War II, hourly compensation only increased by 130% nearly all of which occurred before 1977. (The tiny increase around 2007 may reflect the increase in the federal minimum wage that year.) If wages had kept pace with worker productivity since 1977 the median income in
Think how much more federal revenue there would be if the median family income today was $100,000 per year instead if nearly half that amount. Imagine how much less the government would have to spend shoring up low wage workers. If wages had continued to rise on par with productivity over the past 40 years our median income would far exceed current living wage levels.
Even Adam Smith was a supporter of living wages. He viewed them as a way to achieve economic growth and equity. In his Wealth of Nations, Smith recognized that the rising real wages lead to the "improvement in the circumstances of the lower ranks of people" was an advantage to society. According to Smith, the government should align the interests of those pursuing profits with the interests of the labor force in order to grow the nation’s economy. Smith argued that high wages lead to higher productivity and overall growth. In this way, he linked higher wages with increased productivity. For much of our history, this alignment has been evident.
The only reason her employer can pay her minimum wage and count on her coming to work every day is that so much tax money is spent to supplement her wages. If there were no aid to the working poor her employer would have little choice but to pay this woman a living wage. In this sense, all government aid to the working poor is really a hidden tax break for businesses.
Introduction to the Living Wage Calculator
In many American communities, families working in low-wage jobs make insufficient income to live locally given the local cost of living. Recently, in a number of high-cost communities, community organizers and citizens have successfully argued that the prevailing wage offered by the public sector and key businesses should reflect a wage rate required to meet minimum standards of living. Therefore we have developed a living wage calculator to estimate the cost of living in your community or region. The calculator lists typical expenses, the living wage, and typical wages for the selected location.