A Living Wage and You

This post is targeted to workers in the United States because income information is readily available and it’s where I owned a business for 32 years. Similar information is most likely available in the country you reside. I encourage you to seek out this information.

Living Wage – Definition
A wage adequate to permit a wage earner to live and support a family in reasonable comfort.
— Collins English Dictionary

There is a lot of talk about a minimum wage and how much it should be. Yet, not much is discussed about a living wage and how much it should be using actual numbers.

  • A minimum wage is the lowest amount an employer can legally pay an employee for the mental and physical labor performed by that employee. Included are the skills and talents of the employee applied on the job to financially benefit the employer.

    Paying the minimum wage is mandated by law.
  • A living wage is the income paid to an employee to fairly compensate an employee for their contribution of their physical and mental labor, and the application of their skills and talents on the job that financially benefit the employer. And as a result, the employer pays the employee well above the minimum wage established by law as the employer recognizes the benefits to the business of paying employees a fair, living wage.

    Paying a living wage is voluntary.

Unfortunately, only a small percentage of working adults get to the point of actually earning a living wage that provides them with the financial resources they need to realize a life without constant financial stress.

Another perspective of a “living wage” is that it is the income you need to cover necessary and discretionary expenses while still contributing to savings. Using data from the Bureau of Labor Statistics and the 50/30/20 budgeting rule — which allocates 50% of your income to necessities, 30% to discretionary expenses and 20% to savings.

Many “advisors” (myself included) do a great job at addressing the need for budgeting, tracking expenses and saving money. We also make the “spend less than you make” and the “live within your means” mantras seem realistic by anyone earning an income. But….

What do you do when your “means” (income) just isn’t enough?

Here’s the truth, many of those “falling short” simply don’t have an adequate income to save any money other than a dollar or two between paychecks. The money simply isn’t there once their bills for their basic needs are paid.

  • Why is this the case for the many Americans?
  • Isn’t anyone working contributing to the benefit and betterment of society?
  • Shouldn’t every man and woman working a full-time job be worthy of being paid a living wage that allows them to live comfortably as long as they spend their money wisely?

We hear a lot about a living wage. However, there isn’t much detailed discussion about how much income equals a living wage. As you can readily imagine, a living wage in Iowa wouldn’t come close to being a living wage in New Jersey.

In an effort to address this issue, let’s look at the median wage, average wage, and the amount needed to earn a living wage in each state.

But before we get started, we need to understand the difference between the average salary (wage) and the median salary (wage).

Calculating an Average Wage
You can calculate the average base, mean salary, or average salary by adding all the salaries for a select group of employees and then dividing the sum by the number of employees in the group.

Average Wage Example:
Employee 1 earns $40,000, Employee 2 earns $50,000, Employee 3 earns $100,000. The total of $190,000 is divided by 3, providing an average salary of $63,333.

The average wage represents what the “typical employee” earns and can be pulled higher or lower by high salaries or low salaries at the extreme ends of the distribution.

Calculating the Median Wage
You can calculate the median base salary by arranging the salaries for a group of employees in descending order and then locating the salary that represents the midpoint of the distribution. Fifty percent of the salaries are less than the median and fifty percent of the salaries are greater than the median.

Median Wage Example:
Employee 1 earns $40,000, Employee 2 earns $50,000, Employee 3 earns $100,000. The salary in the middle, or the median salary is $50,000.

As the median wage represents a specific point in the distribution, it cannot be pulled higher or lower by salaries at the extreme ends of the distribution. It is therefore considered a more neutral measure of central tendency, especially in a small group of salaries where one extreme value can disproportionately affect the calculation of an average.
Source: Salary.com, Adapted


Alabama
Median Income: $33,740
Average Income: $51,347
Living Wage Income: $60,016

Alaska
Median Income: $48,680
Average Income: $69,789
Living Wage Income: $91,996

Arizona
Median Income: $37,020
Average Income: $57,422
Living Wage Income: $68,504

Arkansas
Median Income: $31,850
Average Income: $48,164
Living Wage Income: $59,461

California
Median Income: $42,430
Average Income: $75,400
Living Wage Income: $99,971

Colorado
Median Income: $42,310
Average Income: $62,375
Living Wage Income: $74,215

Connecticut
Median Income: $46,920
Average Income: $74,405
Living Wage Income: $90,278

Delaware
Median Income: $39,900
Average Income: $62,427
Living Wage Income: $71,254

Florida
Median Income: $34,560
Average Income: $52,728
Living Wage Income: $67,614

Georgia
Median Income: $35,950
Average Income: $58,280
Living Wage Income: $62,074

Hawaii
Median Income: $42,480
Average Income: $59,231
Living Wage Income: $136,437

Idaho
Median Income: $34,260Illinois
Average Income: $49,763
Living Wage Income: $66,486

Illinois
Median Income: $39,950
Average Income: $66,600
Living Wage Income: $66,847

Indiana
Median Income: $35,730
Average Income: $56,754
Living Wage Income: $62,086

Iowa
Median Income: $37,100
Average Income: $52,468
Living Wage Income: $63,397

Kansas
Median Income: $35,950
Average Income: $54,101
Living Wage Income: $62,090

Kentucky
Median Income: $34,650
Average Income: $50,701
Living Wage Income: $63,086

Louisiana
Median Income: $33,390
Average Income: $53,095
Living Wage Income: $63,842

Maine
Median Income: $37,120
Average Income: $50,441
Living Wage Income: $80,336

Maryland
Median Income: $44,690
Average Income: $69,893
Living Wage Income: $92,227

Massachusetts
Median Income: $48,680
Average Income: $76,437
Living Wage Income: $93,895

Michigan
Median Income: $37,620
Average Income: $58,132
Living Wage Income: $67,712

Minnesota
Median Income: $42,630
Average Income: $62,156
Living Wage Income: $68,944

Mississippi
Median Income: $30,580
Average Income: $44,285
Living Wage Income: $58,321

Missouri
Median Income: $36,040
Average Income: $54,580
Living Wage Income: $60,858

Montana
Median Income: $35,080
Average Income: $46,424
Living Wage Income: $70,719

Nebraska
Median Income: $37,130
Average Income: $56,147
Living Wage Income: $65,162

Nevada
Median Income: $35,550
Average Income: $54,842
Living Wage Income: $75,902

New Hampshire
Median Income: $39,870
Average Income: $62,427
Living Wage Income: $74,415

New Jersey
Median Income: $43,600
Average Income: $71,959
Living Wage Income: $86,244

New Mexico
Median Income: $34,120
Average Income: $50,893
Living Wage Income: $63,629

New York
Median Income: $44,990
Average Income: $80,640
Living Wage Income: $95,724

North Carolina
Median Income: $35,750
Average Income: $56,343
Living Wage Income: $64,406

North Dakota
Median Income: $41,340
Average Income: $55,447
Living Wage Income: $69,085

Ohio
Median Income: $37,360
Average Income: $57,764
Living Wage Income: $63,204

Oklahoma
Median Income: $34,560
Average Income: $55,204
Living Wage Income: $60,318

Oregon
Median Income: $39,580
Average Income: $60,306
Living Wage Income: $93,285

Pennsylvania
Median Income: $38,450
Average Income: $64,706
Living Wage Income: $68,581

Rhode Island
Median Income: $42,040
Average Income: $59,055
Living Wage Income: $83,942

South Carolina
Median Income: $33,740
Average Income: $51,670
Living Wage Income: $65,953

South Dakota
Median Income: $33,450
Average Income: $49,827
Living Wage Income: $67,657

Tennessee
Median Income: $34,890
Average Income: $59,121
Living Wage Income: $60,682

Texas
Median Income: $37,100
Average Income: $62,230
Living Wage Income: $63,469

Utah
Median Income: $36,790
Average Income: $54,075
Living Wage Income: $67,807

Vermont
Median Income: $39,720
Average Income: $50,826
Living Wage Income: $83,878

Virginia
Median Income: $40,820
Average Income: $64,517
Living Wage Income: $69,886

Washington
Median Income: $46,100
Average Income: $74,016
Living Wage Income: $77,207

West Virginia
Median Income: $32,640
Average Income: $51,679
Living Wage Income: $62,635

Wisconsin
Median Income: $37,970
Average Income: $56,302
Living Wage Income: $67,667

Wyoming
Median Income: $40,240
Average Income: $55,018
Living Wage Income:

Data Sources
Median and Average Incomes, Bureau of Labor Statistics 2018 via Wikipedia.
Living Wage, GOBankingRates.com


The glaring takeaway from the income data shown above is how large the gap is between the median income in the State and the living wage needed live comfortably and save money. It’s no wonder there is a huge percentage of the population that is struggling every month to just pay for necessities. It also explains why so many Americans are buried in debt. The only way these people can have anything more than the necessities of life is by using credit … and usually by using a high-interest credit card because they don’t qualify for a credit card with a lower interest rate.

Let’s face it, if you are earning less than the median income, you are among the working poor in the United States. In fact, you may be eerily close to living in poverty.

Conclusion

As the median and average income data clearly illustrates, only a small percentage of the working population in the United States earn a living wage. For the rest, getting to the point of being able to earn a living wage may be a life-long struggle. That being the case, you still have bills to pay. That is why it is critical to:

  • Track your expenses so you know where your money is going.
  • Have and follow a monthly budget.
  • Live below your means so can faithfully and frequently save a little money for future use.
  • Avoid any additional debt.
  • Start saving for an Emergency Fund with a minimum of $1,000 but working towards 3 – 6 months of your net (bring home) income.
  • Live a simple life so your lifestyle doesn’t require more money than you make.
  • Don’t allow peer pressure from your friends and family to cause you to live beyond your means.

What do you think about a living wage? Please share your thoughts in the comment section provided.

If you prefer to contact me directly, please email me at mbrown.ec@mail.com.


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Published by W. M. Brown

I am a retired U.S. expat living in Ecuador. I was a business owner for 32 years before retiring in 2012.

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