With the COVID-19 pandemic hitting low-wage earners the hardest, it’s become even more apparent that the current national minimum wage is nowhere near enough in order to save for emergencies and survive. There has been a growing demand, both from workers and consumers, for businesses to pay their workers higher wages.
Regardless of their job, everyone deserves to live. Every job requires training and skill. The myth that “unskilled” labor exists is what perpetuates businesses' ability to justify paying poverty-level wages, and this must change. Many businesses are guilty of this, from corporate to independently owned, and the coffee space is no exception.
There are many in the coffee industry who continue to earn low wages, but the time for change is afoot. From producers to consumers, people are seeking out a more conscientious cup.
Minimum wage is the reality for most in the service industry
The service industry has the highest sector (1) of people earning minimum or just above minimum wage. A lot of people don’t realize that the last time that the federal minimum wage (2) of $7.25 per hour was raised was in 2009. The fact that the minimum wage hasn’t kept pace with a changing economy has made life precarious for low wage earners, and kept many at or just above the poverty line (3).
In addition to facing poverty, those who are paid a minimum wage often have to work multiple jobs or excessive hours and are having a hard time meeting their basic needs, even working more than full-time. Their ability to cover the cost of health insurance along with other bills is near impossible. Some are in a position of having to choose whether to pay bills or feed themselves. This is simply unacceptable.
This hard truth has been edging its way into current political discussions, and more people are demanding the legal minimum wage be raised to a living wage.
What is a living wage?
Very briefly, a living wage can be defined as a wage that is high enough for a person working full time to meet their basic needs. It doesn’t cover debt repayment, long term savings, or retirement investments.
Dr. Amy K. Glasmeier,professor of Economic Geography at MIT,has been collecting data since 2004 to create a living wage calculator (4) to estimate the cost of living in specific geographical regions. It’s widely used by those seeking to earn or pay a living wage in their region.
The calculator assumes that one is working 40 hour weeks, for 52 weeks. Or, in other words, full time with no sick or vacation time. These calculations don’t account for anything that could be considered “excessive”, like meals out or vacation.
For example, according to the MIT living wage calculation for our locality of Greensboro, North Carolina, a single adult with no children would require a $14.19 hourly wage to meet their basic needs. That same adult with no dependents living in the Denver, Colorado metropolitan area would need $17.40 hourly to meet their basic needs. Living wage calculations take into account state and local tax rates, rent and real estate data, average costs of consumer goods and other factors particular to each geographic region.
When it comes to basic needs, calculations differ
There are other organizations with their own living wage calculators, as well.
The Economic Policy Institute (5) is a nonpartisan and nonprofit think tank devoted to including the needs of low and middle wage workers in economic policy discussions. They have developed their own living wage calculator, which also makes its calculations according to basic needs. Included in basic needs are housing, food, transportation, health care, taxes, and optional child care. It also factors in “other necessities”, such as clothing, household items like furniture or cleaning supplies, reading materials and phone service.
While both the MIT and EPI calculate a living wage, there is a difference in the two, and the EPI amount is generally a few thousand dollars more than the MIT results. Both amounts hover around $30,000 annual take-home pay. However, if a single person with no kids working 40 hour weeks for 52 weeks that’s making a minimum wage of $7.25 per hour, their annual take-home, pre tax, is $15,080. That’s half of the lower living wage calculation for any region, and just above the poverty line of $12,880.
Regardless of what you take into consideration as necessary when it comes to income and spending, it’s clear that working for minimum wage is not sustainable.
The case for a living wage
The benefits of a living wage can be far-reaching.
For an employee, it can mean more security, and a better quality of life. There are health benefits, from a reduction in stress and anxiety, to having access to food. It can mean not having to choose between what essential items money is spent on. Earning a living wage can mean being raised out of poverty. It can also present opportunities to pursue education, or invest in further job training. Additionally, when low-wage workers have an increase in pay, they are able to spend more, investing in local economies.
For business owners, it can mean improved morale and decreased turnover rates. A decrease in turnover rates is especially beneficial in the coffee industry- one that leans heavily on quality, consistency, and good employee customer relationships. With a decrease in turnover rates, there is less investment in the cost of training employees.
Being recognized as a responsible business goes a long way, too. With more consumer demand for ethical consumption, conscientious customers vote with their dollars by choosing to spend with businesses which align with their values.
There is still progress to be made
Even though some businesses are making the switch to living wage, shift workers are still struggling to keep up with rising costs, especially in bigger cities.
“No worker is 'living' right now. We all have to work 40 hours a week just to keep a roof over our head and food on our table, when food and shelter are necessary for survival and should be guaranteed rights, not for-profit enterprises.”
Though she notes that with a living wage, there is a bit more flexibility in work schedule and less guesswork about income, it’s not enough to have a sense of stability in an insecure housing market. “Commercial and residential rents are absurdly high and people all over... are still getting priced out of their neighborhoods” says Taylor.
As standards and cost of living rise, it’s going to be important to keep the conversation about living wage going. However, if real estate markets remain largely unregulated, Taylor suggests progress may stall, and at the expense of those already in precarious positions. “The conversation cannot continue unless we address the rent and landlord crisis. For-profit housing is cruel and oppressive- every person deserves to be housed.”
Wealth inequality creates a multitude of issues for those at the bottom, and multiple systemic changes must happen in order to make real progress.
The future of Living Wage
While a raise from the current minimum wage to a living wage in the future has promise, it’s important not to settle on that alone as the only permanent solution for low wage earners.
When asked about the future of living wage, Taylor states: “If we had an economic system that was not run for-profit and actually served the needs of the people, we wouldn't need to think about a 'living wage' because we wouldn't need to sell our bodies and labor power in exchange for basic human rights.”
Although a living wage is not an end-all solution, it’s a good start. And, at the very least, it is worth a shot. As the conversation about living wage moves forward, we must continue to challenge ourselves to think about how to best support those that need it most.
Special thanks to Elle Taylor of Amethyst Coffee Company