Penn StatePoverty
Povertyin America: One Nation, Pulling Apart

Living Wage Project

Living wage estimates are relevant to a range of issues in a number of arenas. For instance, they can be used as an industry guideline for wage setting and by work force groups for advocacy for higher wages. They can also be used as a policy tool by serving as a standard with which to better target labor market resources (e.g. matching job-seekers to markets paying sufficient wages) or in determining investments in education and job training programs (e.g. by serving as a measure of pay-off for investment). Living wage estimates can also be used as an evaluation tool for economic development and other proposed policies or policy changes by aiding in the estimation of effect, that is, to include not only effects to the local economy but also to the potential well-being of workers and their families.

Additionally, living wage estimates can serve as a guideline for determining program eligibility or they can be used as a benchmark for program improvement. They can also be used as an educational or counseling tool to help people make better choices about education, occupations, and jobs and to understand the relationship between those factors and self-sufficiency. Lastly, living wage estimates can provide an accurate, geographically specific measure of income adequacy that can be applied to poverty research.

The Economic Policy Institute developed a Living Wage Calculator for selected metropolitan areas in 2000. This work was extended to metropolitan areas in 2001. We have advanced this effort by developing it as a tool that can be used by communities for local analysis and we have extended it to the place level thus providing finer geographic detail.

With respect to the research arena, we are currently engaging in analysis that uses living wage estimates as a means for capturing the true level of poverty, how it differs from place to place, and among different family types. We use this information in conjunction with occupational wage and employment data as well as income inequality and residential segregation measures in order to determine the income adequacy of various occupations relative to employment opportunity, place of residence, and socio-economic composition. Eventually, spatial analysis will be possible.

We also are adding place-based characteristics available from the US Census at the place level. With this data, we will be able to examine the conditions or attributes of a location in context with key information on the local labor market. This data layer can then be woven into data we have developed based on schools, school districts, census tracts and higher levels of aggregation.

Living Wage and Job Gap Study of Beaufort County, South Carolina
Tracey L. Farrigan and Amy K. Glasmeier
 Download Paper (PDF format, 104.5 KB)

Living Wage Calculator