Real Living Wage Much Higher Than $15 per Hour, Says Data Center

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The Data Center, a New Orleans based non-profit research organization which provides independent analysis for informed decisions in Southeast Louisiana, is spreading the word about the latest estimates of what comprises a living wage versus a minimum wage. A living wage is the hourly rate that an individual in a household must earn to support themselves and their family, explained Lamar M. Gardere, executive director of the Data Center. The wage should take into account the costs of such items as food, child care, health insurance, housing, transportation and other necessities such as clothing and personal care items. 

The City Council recently passed a living wage ordinance that requires city contractors to pay their employees who are working on city projects at least $15 per hour. The baseline salary paid to City of New Orleans employees is also rising. Yet, according to Gardere and researchers at the Massachusetts Institute of Technology (MIT), the $15 hourly wage falls woefully short of being a living wage.    

Through its living wage calculator (LWC), MIT has become one of the country’s foremost forecasters of baseline wages employees need to support their families. Created by Dr. Amy Glasmeier and launched in 2003, MIT’s LWC produces fresh information annually for cities like New Orleans. Changes in the living wage tracks the inflation rate at the national level, said MIT’s Carey Ann Nadeau. The inflation rate in 2019 was 1.76 percent and was higher compared to the average inflation rate of 0.90 percent per year between 2019 and 2020. Inflation figures for 2021 are not yet available. 

For a family of 1 adult and 1 child, the living wage for New Orleans was $22.89 per hour in 2016 but by 2020 had increased to $32.05 per hour, Gardere said. One parent with two children needed to earn $39.01 per hour. For a single parent with three children, the figure rose to $49.39 per hour. Because of the city’s poor educational system and the preponderance of low paying jobs, few single parents in Orleans Parish have the capability to earn $50 per hour – which translates to $8,000 per month or about $100,000 annually. 

The living wage “magic” number gets easier to achieve when there are two working adults in the household. With one child, two adults each need to earn $17.43 per hour. Two children in the household brings the basic salary requirement up to $21.40 per hour per adult. Two adults living in a household with three children must each bring in $24.78 per hour.  

 “The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to work nearly four full-time minimum wage jobs (a 75 hour work week per working adult) to earn a living wage, said Nadeau. Single parent families need to work almost twice as hard as families with two working adults to earn the living wage.  A single month with two children rearing the federal minimum wage of $7.25 per hour needs to work 158 hours per week, nearly the equivalent of working 24 hours per day for six days, to earn a living wage, explained Nadeau.

For families with children, child care and housing exceed all other expenses. The cost of living is higher in metropolitan areas like New Orleans than in the Bayou or River Parishes as well as in many communities north of Lake Pontchartrain. Pandemic-related supply chain issues coupled with Hurricane Ida have driven up the costs for basics such as food and gasoline as well as furniture, electronics, clothing and automobiles. Many New Orleanians are struggling just to survive. Experts like Gardere agree that low-wage earners are currently having a harder time making ends meet.   

Along with the rest of America, New Orleans is in the throes of a labor shortage. While many employers large and small have increased their wages and oftentimes benefits, most employees are no longer willing to have to work multiple jobs to keep food on the table. Dr. Glasmeier and Alison Omens of JUST Capital co-authored an essay published in Fortune Magazine which explained that while recent wage hikes are “necessary and a step in the right direction,” corporate leaders must also set the bar higher.       

In a recent poll by JUST Capital and The Harris Poll, a majority of Americans indicated they would prefer that companies prioritize a living wage long term rather than just as a strategy during the current tight labor market. When corporate hiring departments set pay too low, workers struggle financially, hurting their businesses and undervaluing workers’ skills, said the authors. Paying a living wage also helps advance racial equity. 

In his 1933 speech on the National Industrial Recovery Act, President Franklin Delano Roosevelt said it best. “It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By business I mean the whole of commerce as well as the whole of industry; by workers I mean all the workers, the white-collar class as well as the men in overalls; and by living wages, I mean more than a bare subsistence level, I mean the wages of decent living.” 

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