Posted: March 24th, 2023

Living Wage versus Minimum Wage

The living and minimum wage concepts are usually confused in meaning and context. The two strategies aim to set a minimum amount an employee in the United States should earn. The economic terms help the poor in the country to advance their living standards. Although both the living and minimum wage concepts seek to improve workers’ conditions and welfare, they differ in their calculation, regulation, and criteria for determining the actual wage amount.

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Living and minimum wages are types of wage floors set by the government. The two aspects differ because the former requires a higher wage floor than the latter because their level is directly connected to the wage rates that offer “livable income” (Pollin et al. 211). For example, the government can set a federal poverty level for a three-member household to determine the living wage. Notably, the minimum wage does not have specific rates as it is the case with living wages. Therefore, the two strategies differ in the way they are calculated.

Whether setting a living wage instead of a maximum income could support the economy and employee engagement remains debatable. The strategy helps the government protect people from poverty’s adverse effects (Bregman 56). The administration ensures that all employees can comfortably afford necessities like housing, food, and clothing. Although the living wage might motivate employees to improve productivity, no evidence is available to support its role in stimulating a country’s economic performance.

The government implements various mechanisms to improve employee participation in building a stronger economy. Living and minimum wages are some of the initiatives that ensure workers can afford their basic needs and continue working to advance the economy. However, research evidence is inadequate to prove the actual positive economic impact of living wages in the country.


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