How Is the Living Wage Different From Minimum Wage?
If you work for a company that competes for government contracts, your employer or contractor may pay you a wage that is higher than the federal minimum wage, according to Vanderbilt University. From 1968 to 2009, the value of the minimum wage, and the amount of goods and services it will purchase, has reduced by 35%. More than 150 municipalities and counties in the United States have living wage, and in some locations there is a significant difference between the minimum and living wages.
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Living Wage
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Towns, counties and cities set the living wage. Municipalities determine the amount of money earned in a 40-hour week that will pay for the bare essentials. Necessities include housing, food and clothing. The purpose is to prevent individuals from working second and third jobs to afford basic necessities and prevent the local government from having to supplement individual incomes to raise them out of poverty. Living wages combat low subcontractor pay for contractors who low-ball public contracts.
Minimum Wage
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Minimum wage requirements list the very minimum amount a company can pay an employee per hour. The federal government sets a federal minimum wage for nonexempt employees. According to the Department of Labor, the federal minimum wage is set at $7.25 per hour, as of July 2009. Some states have minimum wage rates that are higher than federal rates, including Montana, Colorado, California, Nevada and Maine. Other states, such as Louisiana and Tennessee, don't have minimum wage rates. Employees get the larger of the two minimum wage rates.
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History
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The first minimum wage in the United States was set in 1938 at $0.25 per hour, according to Oregon State University. Today, more than 100 nations have minimum wage statutes. In the United States, more than 291 million Americans cannot afford to pay their bills, according to Ithaca College. In the 1990s, economic justice activists in Baltimore argued that companies that pay wages that keep their employees in poverty should not receive tax dollars for government contracts. Municipalities created the living wage to respond. Living wages averted the reduction in union control over industry. Faith, labor, environmental and community organizations support the coalition.
Exemptions
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Contracts under $100,000 or contracts under $500,000 where the contractor has 10 or less employees are exempt from living wage requirements. Short term contracts, less than 13 weeks, are also exempt. Public service companies and nonprofit organizations do not have to meet living wage standards. Finally, any contract that eliminates an imminent threat to the public is exempt. Government offices do not consider companies that do not pay living wages for some state and public contracts, but these companies can bid on municipal contracts, including maintenance. Unfortunately, companies that do pay living wages have higher costs and therefore rarely get public contracts, because they cannot outbid companies that only pay their contractors minimum wages.
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References
- Oregon State University: Minimum Wage History
- Ithaca College: Economics in U.S. History
- USA Today: Living-wage Movement Takes Root Across Nation
- United States Department of Labor: Wages
- Maryland Department of Labor: Maryland's Living Wage
- Vanderbilt University: Living Income for Vanderbilt Employees
Resources
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