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Living wage is a term used to describe the minimum hourly wage necessary for shelter (housing and incidentals such as clothing and other basic needs) and nutrition for a person for an extended period of time (lifetime). In developed countries such as the United Kingdom or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation.
This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage. It differs somewhat from basic needs in that the basic needs model usually measures a minimum level of consumption, without regard for the source of the income.
The living wage is a concept central to the Catholic social teaching tradition beginning with the foundational document, Rerum Novarum, a papal encyclical by Pope Leo XIII, issued in 1891 to combat the excesses of both laissez-faire capitalism on the one hand and communism on the other. In this letter, Pope Leo affirms the right to private property while insisting on the role of the state to require a living wage. The means of production were considered by the pope to be both private property requiring state protection and a dimension of the common good requiring state regulation.
Pope Leo first described a living wage in such terms as could be generalized for application in nations throughout the world. Rerum Novarum touched off legislative reform movements throughout the world eliminating child labor, reducing the work week, and establishing minimum wages.
- "If a worker receives a wage sufficiently large to enable him to provide comfortably for himself, his wife and his children, he will, if prudent, gladly strive to practice thrift; and the result will be, as nature itself seems to counsel, that after expenditures are deducted there will remain something over and above through which he can come into the possession of a little wealth. We have seen, in fact, that the whole question under consideration cannot be settled effectually unless it is assumed and established as a principle, that the right of private property must be regarded as sacred. Wherefore, the law ought to favor this right and, so far as it can, see that the largest possible number among the masses of the population prefer to own property." (#65)
- "Wealthy owners of the means of production and employers must never forget that both divine and human law forbid them to squeeze the poor and wretched for the sake of gain or to profit from the helplessness of others." (#17)
- "As regards protection of this world’s good, the first task is to save the wretched workers from the brutality of those who make use of human beings as mere instruments for the unrestrained acquisition of wealth." (#43)
- "Care must be taken, therefore, not to lengthen the working day beyond a man’s capacity. How much time there must be for rest depends upon the type of work, the circumstances of time and place and, particularly, the health of the workers." (#43)
- Rerum Novarum, Pope Leo XIII, 1891 
- "...(T)he wealthy class violates (the common good) no less, when, as if free from care on account of its wealth, it thinks it the right order of things for it to get everything and the worker nothing, than does the...working class when, angered deeply at outraged justice and too ready to assert wrongly the one right it is conscious of, it demands for itself everything as if produced by its own hands, and attacks and seeks to abolish, therefore, all property and returns or incomes, of whatever kind they are or whatever the function they perform in human society, that have not been obtained by labor, and for no other reason save that they are of such a nature." (#57)
- Quadragesimo Anno, Pope Pius XI, 1931 
In the United States, the state of Maryland and several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring all jobs to meet the living wage for that region. However, San Francisco, California and Santa Fe, New Mexico have notably passed very wide-reaching living wage ordinances. U.S. cities with living wage laws include Santa Fe and Albuquerque in New Mexico; San Francisco, California; and Washington D.C. (The city of Chicago, Illinois also passed a living wage ordinance in 2006, but it was vetoed by the mayor.) Living wage laws typically cover only businesses that receive state assistance or have contracts with the government.
This effort began in 1994 when an alliance between a labor union and religious leaders in Baltimore launched a successful campaign requiring city service contractors to pay a living wage. Subsequent to this effort, community advocates have won similar ordinances in cities such as Boston, Los Angeles, San Francisco, and St. Louis. In 2007, there were at least 140 living wage ordinances in cities throughout the United States and more than 100 living wage campaigns underway in cities, counties, states, and college campuses.
In Australia, the 1908 Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community," regardless of his capacity to pay. Justice Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers. The judgment was later overturned but remains influential. In 1913, to compensate for the rising cost of living, the basic wage was increased to 8/- per day, the first increase since the minimum was set. The first Retail Price Index in Australia was published late in 1912. The basic wage system remained in place in Australia until 1967. It was also adopted by some state tribunals and was in use in some states in the 1980s.
In the United Kingdom, many campaigning organisations have responded to the low level of the National Minimum Wage by asserting the need for it to be increased to a level more comparable to a living wage. For instance, the Mayor of London's office hosts a Living Wage Unit which monitors the level needed for a living wage in London (which has considerably higher living costs than the rest of the UK). Other organisations with an interest in living wage issues include the Living Wage Campaign, and the Church Action on Poverty  and the Scottish Low Pay Unit. The Guardian newspaper columnist Polly Toynbee is also a major supporter of the campaign for a living wage. The charity London Citizens is campaigning for a living wage to be implemented across London.
Policy Alternatives to a Living Wage Law
Some critics[who?] argue that there are alternative ways to deliver income to the poor, such as the US Earned Income Tax Credit, the UK Working Tax Credit or a negative income tax, that don't have the unemployment and deadweight loss effects that critics claim are the result of living wage law.
- Catholic social teaching
- Guaranteed Minimum Income
- Labor market
- Positive rights
- Supply and demand
- Working poor
- precarious work
- ↑ See the complete text of Rerum Novarum
- ↑ See the complete text of Quadragesimo Anno
- ↑ Bellandi, Deanna (2006-07-27). "Chicago Council Passes 'Living Wage' Act". The Washington Post. The Washington Post Company. http://www.washingtonpost.com/wp-dyn/content/article/2006/07/27/AR2006072700197.html. Retrieved 2007-10-12.
- ↑ "Living Wage: Frequently Asked Questions" (factsheet). http://www.epi.org/content.cfm/issueguides_livingwage_livingwagefaq. Retrieved 2008-06-29.
- ↑ ""The National Movement." The Living Wage Resource Center.". http://livingwagecampaign.org. Retrieved 2008-06-29.
- ↑ "Living Wage Wins" (news release). http://www.acorn.org. Retrieved 2008-06-29.
- ↑ "Living Wage Campaign". http://www.livingwage.org.uk/index.html. Retrieved 2008-06-29.
- ↑ "Church Action on Poverty". http://www.church-poverty.org.uk/campaigns/LivingWage/. Retrieved 2008-06-29.
- Ryan, John A. Living Wage Macmillan, New York 1906 OCLC 39046728
- Gertner, Jon, "What is a Living Wage?", The New York Times, January 15, 2006
- Sklar, Holly; Mykyta, Laryssa; Wefald, Susan, "Raise The Floor: Wages and Policies That Work For All Of Us", 2002, South End Press.  ISBN 0-89608-683-6
- Rerum Novarum, Official Text
- Living wage at DMOZ
- Measuring the Full Impact of Minimum and Living Wage Laws from Dollars & Sense magazine
- LaborFair Resources - Link to Fair Labor Practices
- The Economic Policy Institute - Living Wage
- (London) Living Wage Unit page
- Living Wage Calculator
- ACORN Living Wage campaign
- Universal Living Wage Campaign