The living wage and the European Union

Living wages in context

“…The purpose of this assessment is not to advocate for any preferred approach, but to identify points of convergence and divergence across methodologies, and thereby inform the debate about how the living wage should be fixed and promote convergence towards common and robust practices. 6 The review complements and builds upon previous similar analysis (e.g. Anker (2011[9]); Anker and Anker (2017 [16]); Eurofound (2018[18]); Hirsch and Valadez-Martinez (2017 [4]); Hurley (2021 [23])) and ongoing undertakings (e.g.…”

“…The main justification for a living wage is that it raises living standards for the workers that receive it, including providing a route out of poverty for some of the working poor (Swaffield et al, 2018[5]; Horton and Wills, 2019 [6]). Other justifications include improved self-esteem and work-life balance for employees, improvements in productivity, recruitment and retention for employers (Bennett, 2013[7]), and healthier and more socially engaged citizens (Hirsch and Valadez-Martinez, 2017[4]).…”

“…The focus on stylised households enables broad country coverage, timely results and model use by a broad range of users without requiring access to household micro-data. 52 While these simplifying assumptions are needed to operationalise the link between pre-tax individual earnings and post-tax household income, whether a living wage prevents in-work poverty depends on a range of additional factors, such as working hours, the number of household members to be supported, and the availability of household income from sources other than wages (Horton and Wills, 2019 [6]). 53 Thus, not every worker who is paid below a living wage is necessarily poor, and the ability of a living wage to avoid in-work poverty depends crucially on the extent to which low pay and low household income overlap (Hirsch, 2017[35]).…”

“…Franklin D. Roosevelt described the federal wage as a "living wage" when first introducing it in 1933.Roosevelt had a clear-cut understanding that the minimum wage should be set at a level allowing a decent living standard and not just subsistence; however, the failure to underpin this with any formula for maintaining its value over time led to a long period of decline in its real level from the 1960s onwards (Hirsch and Valadez-Martinez, 2017[4]). 6 The remainder of this section is based on publicly available information. For each methodology or initiative, references are provided in Annex A.…”