living wage
The per hour amount a full-time worker must earn to cover the basic costs associated with the minimum basic needs for the number of people in their family in the area they live. According to the Living Wage Institute at MIT, there are eight basic needs making up a family budget that affect the living wage of each person:
- food;
- childcare;
- health care;
- housing;
- transportation;
- civic engagement;
- broadband;
- and other necessities.
The Living Wage Institute uses a formula to then calculate the living wage for each community. The living wage equals: basic needs plus income and payroll taxes divided by number of working adults in the household divided by number of hours worked in the year.
In March 2024, the International Labour Organization also adopted a definition of living wage: the wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work; calculated in accordance with the ILO’s principles of estimating the living wage; to be achieved through the wage-setting process in line with ILO principles on wage setting.
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