The ‘living wage’ and low income: Can adequate pay contribute to adequate family living standards?

Abstract

The 'living wage' and low income: can adequate pay contribute to adequate family living standards? AbstractThe success of the contemporary 'living wage' movement has been highlighted by the UK government's decision to increase the statutory minimum wage for over-25s sharply, in the name of improving living standards. This breaks with neo-liberal reluctance to intervene in labour markets, yet raises difficult issues centring around whether minimum hourly pay rates are suited to promoting adequate household incomes. At worst, 'living wages' could distract from other policies with this objective. This article acknowledges recent critiques of the living wage as an anti-poverty measure, but demonstrates that in combination with other policies, wage floors can play a crucial role. It shows that low pay and inadequate working incomes overlap substantially. The article argues that governments promising that work will deliver adequate living standards need a clearer narrative in which pay, public transfers/subsidies and sufficient levels of employment combine to deliver minimum acceptable living standards for working families.

The Low Income Gap: A New Indicator Based on a Minimum Income Standard

“…However, such an approach greatly disadvantages those who are workpoor (i.e. households with nobody working or with few combined working hours relative to the number of adults in the household), by freezing, and in some cases cutting, benefit and (Hirsch et al 2016) tax credit entitlements (Hirsch 2017;Grover 2016). The risk here is that this could help bring some households across the low income line, but at the same time greatly increase depth of low income among work-poor groups.…”

The Living Wage: An Economic Geography Based Explanation for a Policy for Equality

“…Low pay is not spread evenly throughout the demographic groups in British society, and the above analysis suggests that we need to examine whether the living wage would target its assistance at other disadvantaged demographic groups, for it is not just young workers who the living wage literature suggests are particularly disadvantaged by weak regulation in the labour market (Hirsch and Moore, 2012). Women generally, and specifically women in single parent households, and ethnic minority workers, are all specifically identified as subject to problems within the labour market.…”

“…This article has examined the literature on a living wage derived from both an economic and a human geography perspective (Hirsch and Moore, 2012). It has demonstrated that the arguments for regulating low wages within the labour market can be readily identified within the economic and geography literatures identifying imperfect market behaviour and segmented labour markets as suggested by Wills (2009).…”

“…Once we have disaggregated the population into hourly wage rate bands, it is possible to notionally increase public sector hourly wage rates such that all public sector employees currently paid at a rate less than the living wage are instead paid at a level equal to a living wage in order to examine the costs of a living wage on the public sector. Where the living wage has already been implemented, its level has been determined by reference to a relative poverty measure (Hirsch and Moore, 2012). The living wage calculation has been undertaken to identify the cost of living for a household in each geographical location to ensure their household income is above the threshold for the receipt of welfare benefits and thus avoid the high marginal rates of taxation associated with poverty traps.…”

La revendication du Living Wage : renouveau militant, négociation collective ou responsabilité sociale des entreprises ?

“…Le Living Wage est calculé à partir de la valeur d'un panier de biens tandis que l'objectif fixé pour le National Living Wage en 2020 le relie à l'évolution globale des salaires et non à l'évaluation d'un coût de satisfaction des besoins. (Hirsch, 2017b).…”