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Living Wage:Benefits and Implications

Updated on October 10, 2014

This is a hot topic right now, everyone is wanting a living wage for their families.

Living Wage is an amount above the federally mandated minimum wage that is determined to be enough for a family to live a certain standard of life. This amount is considered to be enough at 40 hours a week for a family to live comfortably, without having a need for a secondary job. The Catholic churches were one of the first to recommend a living wage back in the 1890’s.

Many cities in America has imposed a higher living wage, around 140 ordinances were implemented by 2007, with another 100 cities with similar laws on their docket. Some of the first cities to implement these types of laws are the state of San Fransisco, Santa Fe and even the state of Maryland. Although most of the cities with living wage laws are larger metropolitan communities, even small towns are realizing the benefits of this type of ordinance.

Living wage laws impact the lower paid employees instantly with higher wage to live on. Secondary benefits are felt by government who will collect higher taxes, as well as local retailers where things will be bought with the extra money floating around. This enables lower paying workers to have a foreseeable better future and style of living.

There are some negative effects of this type of law though. Prices increasing due to the higher wages and overhead paid. Companies will not eat the lower profits, even if they are selling more because of the excess money, so excess pricing will be brought to the customer. Companies may also cut the amount of jobs available to be filled and then merely heap more work on current employees. A bump in pay will also cause issues to new hires hired in at or about the same rate as someone who has been with the company for years. This inner turmoil can result in a loss of production, as well as lower working conditions. Living Wage has also been found to reduce the likelihood of employment to the very individuals it is enacted to help.


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    • Joan King profile image

      Joan King 5 years ago

      While businesses have to make a profit, my concern would be with excessive profits on the backs of workers earning minimum wage. Thanks for sharing