More than the Minimum: Why We Need a Liveable Wage

Indian man bends over a piece of cloth and applies a floral wood block print
An artisan block printer at Mehera Shaw doing a sample printing at a workshop in Jaipur, India, in February 2020. Photo by Shari Keller.

When no amount of work is enough to support your family, you live in a system with unjust wages. Living wages are a theory, and for some, a reality that shows a different way is possible.

For a couple with two kids to earn a living wage while making the minimum wage, they would each have to work 76 hours a week, or two full time jobs each, according to MIT research from 2018. According to the National Low Income Housing Coalition’s 2019 Out of Reach report, nowhere in the US can a person making federal minimum wage afford to rent a two-bedroom apartment at market rates.

The federal minimum wage has not increased since 2009. In fact, in 2021, the federal minimum wage is worth the least it has ever been, when accounting for inflation, according to a report from the Economic Policy Institute (EPI). 

The federal minimum wage was enacted “to help ensure that all work would be fairly rewarded and that regular employment would provide a decent quality of life,” according to EPI. The current rate of $7.25 per hour does not achieve that intended goal anywhere in the country. But 29 states and Washington, DC, have minimum wages higher than the federal minimum wage. 

In mid-January, President Biden proposed that Congress raise the federal minimum wage to $15 per hour, which would be a step in the right direction, helping millions of Americans. Green America has supported advocacy campaigns like the Fight for $15 for many years and our Green Business Network members have also raised their voices as business leaders, calling for state and federal minimum wage increases.

What’s a Living Wage?

On one hand, a living wage is what it sounds like: a person can earn enough to cover cost of living, plus a little extra for emergencies. But the technical standard goes deeper—a person should be able to afford necessities like food, water, housing, education, healthcare, transportation, in addition to a small amount to be saved for unexpected events. 

The term “living wage,” was coined in acknowledgment that no one should have to work more than full time to cover basic costs of living. Everyone deserves the opportunity to survive and thrive and low wages should not be a barrier to achieving that. 

Studies show that paying people more will benefit everyone. EPI estimates that raising the wage floor would “generate $118 billion in additional wages, which would ripple out to the families of these workers and their communities”—meaning what is good for families is good for the economy. A recent report by the National Employment Law Project details that about a third of Black and Latinx workers, and about 17 percent of other workers of color currently make wages lower than $15 an hour. 

It’s important to dispel the popular myth that raising wages causes unemployment. The nonprofit Business for a Fair Minimum Wage synthesized research from various economic institutes and the department of labor since the 1960s and found that when the minimum wage is raised, unemployment tends to go down, not increase. One reason for this is that when workers are paid more, they stay in their jobs longer, and less turnover is less costly for employers overall.

It’s Time to Share the Wealth

A recent study from EPI found that “in 2019, the ratio of CEO-to-typical-worker compensation was 320-to-1.” This ratio is particularly shocking when compared to the ratio in 1965, which was 21-to-1. 

The federal minimum wage and many state minimum wages need to increase drastically to achieve a living wage, and understandably, when we have conversations about national changes, it can raise concerns. The pandemic has created additional economic burdens for workers and small businesses in particular. Considering that economic context, it’s understandable that people would worry about increasing prices in stores. It can seem like there just isn’t enough to go around.

The question should not be if businesses can survive paying workers in their operations and supply chains a living wage, but rather, how do we design businesses and an economy that flourish when workers are paid what they deserve? 

Living Wages Go Global

At Green America, we believe that both workers in the US and workers abroad should be paid a living wage. Regardless of industry, workers in global supply chains are often paid below a living wage, even in their home countries where the cost of living may be far lower than in the US. 

In the case of the cocoa industry, farmers in West Africa make less than $1 per day and farmer poverty is a key driver of child labor in cocoa—since farmers may not be able to afford hired adult work, cannot afford to keep their child in school, or need additional income to make ends meet. Because corporations fail to require their suppliers to pay cocoa farmers living wages, it jeopardizes families in the present and the future, as child labor could result in children missing out on school, using dangerous agricultural equipment, or being exposed to harmful pesticides—all of which harms the child’s development. 

While big chocolate companies are still far from paying cocoa farmers a living income, many small businesses are trying to make chocolate fairly. For example, Equal Exchange{GBN} operates under the higher standard of fair trade principles, paying a premium on top of the market price of goods. 

A couple stand next to a cocoa pod tree with large purple cocoa pods.
Equal Exchange{GBN} cocoa farmers Juan Peñaló and Nieve Quezada of CONACADO Cooperative, Dominican Republic. Photo courtesy of Equal Exchange.

“Hundreds of millions of people are maintained in poverty around the world, because there’s a lack of connection between the obligation on the import and consumer side and survival on the production side,” says Rob Everts, former executive co-director of Equal Exchange, who now works on special projects. “[Equal Exchange is] structured as a for-profit business because part of our mission is to demonstrate successful viability of fair trade.”
Equal Exchange is able to pay over 90 percent of its US-based operations staff a living wage according to the MIT living wage calculator, says Everts. The calculator takes into account location, family size, and other personal factors.

For apparel workers, the pandemic has had especially devastating consequences. For decades, apparel workers have been paid abysmally, with no brands known to be paying a living wage, explains Anne Bienias, the living wage coordinator for the Clean Clothes Campaign

When shops closed in spring of 2020, fashion companies canceled billions of dollars’ worth of orders—including some that were already in process or done. Workers who were not paid for those orders were immediately in a dire situation, as they had been paid so little for so many years and had no savings. In some cases they were already relying on loans to cover basic costs. 

It is common for big apparel brands to push their suppliers for lower prices, which puts suppliers in tricky positions.
“A supplier doesn’t have much choice but to cut wages, because other things just cost what they cost, like material or the cost of keeping a factory operating—there’s not much they can lower those prices,” Bienias says. “So, the thing that they will cut first is always workers’ wages.”

While most major brands operate with that dynamic, which keeps workers in poverty generation after generation, the reverse can be true. Mehera Shaw{GBN} has a business model that is designed to be able to pay living wages to workers at its factory in India where textiles are made, printed, and sewn into apparel and household items. There have been many benefits of paying workers fairly.

“Workers can start planning for their families, a lot of people have made a much stronger commitment to keeping their kids in school, keeping their daughters in particular in school,” says Shari Keller, Mehera Shaw’s owner and director. “And so the way they’re thinking about themselves, their own communities, and what they can do, when they can plan is one of the biggest benefits that we see.”

As our Green Business Members demonstrate, it is possible to pay workers in supply chains more fairly and pay a living wage, though both Keller and Evert say it takes a lot more work on the side of the company to keep up those commitments. The cost of higher wages does not necessarily need to be passed on to the consumer. Brands could rethink and re-prioritize expenses, like spending for advertising or renting corporate offices, recommends Bienias.

Pave the Way for Living Wages

There are many actions an individual can take to fight for higher wages in the US and within supply chains. 
Get involved in your community: Many cities across the country have a higher minimum wage than federal or state minimum wages. In fact, in 2021, 32 cities raised their minimum wages and 27 cities or counties’ minimum wage will meet or exceed $15 per hour, according to a 2020 study released by the National Employment Law Project. 
Use your voice and purchasing power:

Purchase products from brands that are transparent about what workers are paid, what the company’s goals are to get to a living wage (hint: look for commitments that are time-bound), and check out certified Green Business Members at greenpages.org

If you can’t find information about a brand’s wages, ask the company about it! Post on social media or contact a brand through their website. While the company may not immediately start paying workers more, if more and more consumers are calling for fair wages and wage transparency, companies will respond. 

Support companies with a high rate of unionization in their supply chain or companies with unionized workplaces within the US. You can find union-made goods at unionlabel.org.

From Green American Magazine Issue