The living wage, also known as the livable wage, is the income required to cover basic family needs without reliance on outside assistance. Calculating living costs helps communities and policymakers better understand how much families must earn to maintain self-sufficiency and a minimum standard of living.
Basic needs include food, housing, transportation, insurance, utilities, childcare, taxes, and inflation. However, other expenses, such as vacation, dining out, and savings, are typically not included.
The Massachusetts Institute of Technology's Living Wage Calculator calculates living costs across the United States. Their calculations aim to be holistic and include insurance premiums, healthcare costs, personal care items, and basic broadband and cell phone service, alongside the broader categories such as housing and food.
The living wage should not be confused with the minimum wage, which is the minimum that an employer, by law, can pay an employee for an hour of labor. In contrast, a living wage is determined by the costs of covering basic needs in a particular area.
The U.S. Congress established the minimum wage in 1938 to provide a living wage. However, because the policy has not kept pace with inflation, the federal minimum wage fails to provide a minimum standard of living in many areas. Currently, the federal minimum wage is $7.25 an hour. A full-time worker making the minimum wage would earn $15,000 a year, just slightly above the $13,590 poverty guideline for individuals. For workers providing for family members, earnings from a full-time, minimum-wage job would fall below the federal poverty line.
Thirty U.S. states currently have a minimum wage above the federal minimum. The District of Columbia has the highest minimum wage, at $15.20. Wyoming and Georgia tie for the lowest minimum wage at $5.15. Meanwhile, the living wage for an individual in Washington DC is $20.80 an hour, while the living wage for an individual in Georgia is around $15.99.
The District of Columbia has the highest livable wage for an individual, at $20.80 an hour or $43,258 a year. A family of four with two working adults requires $$112,551 annually to maintain a minimum standard of living. Housing in D.C. is among the nation's most expensive, costing an individual $18,156 a year. Childcare is also costly, setting a family of four back $22,492 a year - more than the same family's annual housing costs.
New York has one of the highest costs of living for an individual, primarily due to housing costs. The average person in the state will spend at least $16,000 annually on housing, while a family of four will spend over $20,000. New Yorkers require $20.05 an hour, or $41,700 annually, to maintain a minimum standard of living. New York's families need $26.50, or $110,225 annually, to provide for a family of four with two working adults. The same family spends $23,000 on childcare and over $18,000 in taxes.
Massachusetts frequently ranks among the best states to live in, especially for families, but the price of entry is steep. The living wage for an individual is $19.91 an hour, or $41,416 a year. Of that, over $16,000 will be spent on housing alone. The living wage for a family of four is $29.19 an hour, or $121,414 a year, the nation's highest. Of that, $19,000 will go to taxes, and over $22,000 be spent on housing. Childcare will cost $31,879 a year, the highest cost in the nation.
Hawaii has one of the nation's highest living costs due to high rents and costs associated with island life, such as imports. Hawaii's living wage is $19.68 an hour, or $40,944 a year for an individual, and $25.89 an hour, or $114,059 annually for a family of four.
California's living wage is $19.41, or $40,371 a year for an individual. A family of four requires $27.42, or $101,378 a year. Childcare costs will cost a family with two working adults $22,259 a year, slightly more than the $24,682 they can expect to spend on housing.
South Dakota has the lowest living wage for individuals, requiring $13.87 an hour, or $28,853 a year. The state's housing costs are among the lowest in the nation, setting an individual back $6,784 a year. A family of four with two working parents will spend $9,639 a year on housing and $15,000 on childcare. They will require $20.02 an hour, or $83,274 a year, to maintain a minimum standard of living.
Kentucky's living wage for an individual is $14.16 an hour, or $29,459 a year. Housing costs an individual $6,907 annually. A family of four requires $20.16 an hour, or $83,274 a year, to cover their basic needs. Annually, they will spend $9,708 on housing, $12,965 on transportation, and $14,955 on childcare.
Arkansas's living wage is $14.18, or $29,491 a year, for an individual. A family of four requires $19.92 an hour, or $82,857 a year, to cover their needs. A family of four can expect to spend $9,037 on housing, $12,965 on transportation, and $13,717 on childcare each year.
Mississippi has one of the lowest living costs in the country, but it also regularly ranks as one of the worst states to live in. To maintain a living wage, an individual will need to make $14.20 an hour, or $29,542 a year. A family of four requires $19.36 an hour, or $80,523 a year. Childcare costs are low, costing the same family $10,663 a year. Housing is also cheap, at $9,444 annually.
Tennessee has the nation's lowest livable wage for a family of four, at $18.94 an hour, or $78,800 a year. Individuals require $14.38, or $29,905 annually, to cover their basic needs.
The livable wage provides a holistic view of the requirements for maintaining a minimum standard of living across the nation. Beyond analyzing the cost of living in certain areas, the livable wage also considers household dynamics to help better understand the needs of families and individuals.