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University Makes Sense of Living Wage Figure

The living wage figure?n average based on different combinations (depending on who is doing the calculation) of family structures and sources of income?ims to bring a family of four to the Federal poverty level.

The concept of a living wage as distinct from the national minimum wage first emerged in Baltimore, Md. in 1994.

The federal minimum wage?urrently $5.15?s set by Congress and is therefore dependent on politics, says Michael Reich, professor of economics at UC-Berkeley and research chair for the Institute of Labor and Employment.

?t a national level, it? a question of what Congress and the President are willing to do,?Reich says.

In some states, the minimum wage?urrently $6.75 in Massachusetts?s aimed to be sufficient for a family to live on.

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But volunteers in soup kitchens and homeless shelters in Baltimore noticed that families with full-time wage-earners were still unable to afford food and housing, says Robert Pollin, professor of economics at the U. Mass.- Amherst.

The original living wage figure was calculated to allow a three-person family in Baltimore to live just above the Federal poverty level.

But that definition of a living wage was criticized as too low, Pollin says, because it did not take into account any measures of what it is to live ?ecently?s opposed to living at the poverty level.

There is no universal definition of the living wage. PSLM gets their estimate from the city of Cambridge, but municipalities, private employers and organizations can all weigh factors differently to come up with a different ?iving wage.?

Some cities currently base their living wage calculation on a family of two, some on a family of three and some on a family of four, Pollin says. But the current trend in defining the living wage figure is to allow a family to live above the national poverty level.

The greatest variable in the living wage figure depends on the cost of living, and how it is calculated) in different areas.

Cambridge adjusts its living wage yearly, based on a set formula that considers the cost of living within the city.

Decades ago, Reich says, the minimum wage was closer to being a ?iving wage.? In other words, the minimum wage was considered by the Federal government to be sufficient to live on.

But although the cost of living continued to increase nationally throughout the 1980s, the minimum wage did not increase at a comparable rate, Reich says, leading to a ?reak?between the minimum and living wage.

Labor economists who argue for a living wage note the 1968 minimum wage figure, which would currently reach at least $7.92 per hour when adjusted for inflation. In contrast, the current federal minimum wage is $5.15 per hour, though the national economy is nearly 60 percent more productive than it was three decades ago, Pollin says.

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