Wages necessary for minimum standard of living
Economic policy debates have long focused on the unemployment rate and poverty rate as indicators of economic well-being. While these measures are certainly not irrelevant, they are insufficient in that the picture of economic hardship they create is incomplete. The unemployment rate looks solely at those who are working versus those who are both without jobs and searching for a job. The poverty rate, on the other hand, only considers income in relation to a basic food budget determined by the United States Department of Agriculture (USDA) in 1962 and is adjusted annually for inflation. The working poor—a group of people who are employed but do not earn a wage adequate for sustaining good health and quality of life—are overlooked by both measures and subsequently neglected by policy makers who fail to consider additional indicators incorporating measures of basic needs being met.
In order to consider a more comprehensive view of economic hardship and not overlook subsets of the population, such as the working poor that face true struggles in their daily life pertaining to sustaining good health and quality of life, we propose using a new indicator. Living wage is an indicator that takes into account not only employment status and ability to purchase food, but also the ability to acquire basic needs: housing, food, transportation, health insurance, and child care. It is a useful indicator for measuring income above or below a specific threshold that considers basic needs, which are essential not only for subsistence but for healthy living and maintaining quality of life.
Research has demonstrated extensively that income level is associated with health. Adverse health outcomes are more likely to occur throughout the entire lifetime of low-income individuals including infant mortality, all-cause mortality, various diseases, self-reported health status, and mental health with relative risks inversely proportional to income.
Housing fundamentally protects us from the elements of nature and functions as a space for activities of daily living. However, inadequate housing has a variety of pathogeneses through which it contributes to disease morbidity and mortality. The contribution of housing to health is detailed in the chapter on Housing Cost Burden. Here, we will focus on food, transportation, health insurance, and child care.
Transportation is a means to access jobs or job interviews, education, and other everyday activities but it can also be instrumental for gaining access to healthy foods and medical attention. The USDA estimates that 23.5 million people in the United States live in food deserts—neighborhoods or towns without “ready access to fresh, healthy, and affordable food.” Many people in these neighborhoods are forced to subsist on food from fast food restaurants and convenience stores that lack essential nutrients or are saturated with sodium, sugar, saturated fats, and chemical preservatives and contribute to diet-related diseases such as diabetes and heart disease. For these people, 13.5 million of which are low income, reliable transportation may be the pivotal factor for gaining access to nutritious food and good health.
Health insurance directly affects health by contributing to the timeliness, appropriateness, and financial accessibility of clinical preventive services and treatment for illness and injury. Individuals with health insurance are more likely to foster ongoing relationships with a medical professional. They are more likely to receive screenings that enable early diagnosis and drastically decrease mortality of diseases such as breast cancer, cervical cancer, prostate cancer, or melanoma. They are more likely to have regular checkups and obtain medications to help control chronic medical conditions such as heart disease, diabetes, HIV, or mental illness. Subsequently they are more likely to have positive health outcomes. One national study in the United States found that over a 17-year follow-up period the risk of mortality was 25% greater among adults who did not have health insurance at the beginning of the study than those who had private health insurance.
The availability of safe and reliable child care is imperative for working parents to gain or maintain employment, but also has considerable implications for the livelihood of children themselves. Several studies have found that children who attended quality preschool programs earned up to $2,000 more per month than those who did not, were more likely to graduate from high school, more likely to own homes, and more likely to have longer marriages. Furthermore, they were less likely to repeat grades in school, need special attention, or get into future trouble with the law. Children with the opportunity to attend a quality childcare institution make developmental gains that confer a substantial benefit throughout their life. Additionally, safe and sanitary childcare institutions also play a role in preventing the transmission of communicable diseases such as hepatitis A or influenza as well as preventing accidental injuries and death.
The living wage is a no-frills, minimum standard of living that should be considered a step above the poverty rate and not a lifestyle most middle-class Americans would desire. It does not include income set aside for children’s post-secondary education, pension, retirement, or savings for wealth accumulation (investments, home ownership). The budget also does not include money for restaurant meals or entertainment, leisure activities, or vacations. Regional cost adjustments were available for some of the cost categories. However, local variation in costs within regions was not accounted for. Family income for married couples can reflect two earners. Standard errors for percentage of families below the living wage were not calculable from American Community Survey data.
Using the Poverty in America Living Wage Calculator
Note to LHDs in California: The California Department of Public Health’s Healthy Communities Data and Indicators Project (HCI) project has already collected, cleaned, and compiled the data for this indicator for California, which can be found at http://www.cdph.ca.gov/programs/Pages/HealthyCommunityIndicators.aspx. Further, the HCI project has estimated the percentage of California families who earn less than this living wage using data from the American Community Survey. For instructions on how to download and filter data from the HCI, see Appendix D. For LHDs outside of California, it is necessary to download the data from the Poverty in America Living Wage Calculator and compare that with population estimates from the American Community Survey.
The Poverty in America Living Wage Calculator can be used to determine the living wage required for families of different compositions, geographies, and ethnicities. This calculator was created by Dr. Amy K. Glasmeier in the Department of Urban Studies at the Massachusetts Institute of Technology in conjunction with Poverty in America, an accelerated research, data development and distribution research program that began at Penn State. These researchers have compiled nationwide economic data and developed user-friendly tools in order to provoke research into the causes, effects, and existence of economic inequity in the United States.
The data represent a synthesis of multiple data sources including USDA’s 2010 low-cost food plan (food costs); Parents and the High Cost of Child Care—2011 Update, National Association of Child Care Resource and Referral Agencies (child care); 2010 Consumer Expenditure Survey and the 2010 wave of the Medical Expenditure Panel Survey (health care); 2010 Fair Market Rents produced by U.S. Department of Housing and Urban Development (housing); 2010 Consumer Expenditure Survey (transportation); and federal payroll taxes as well as federal and state income taxes for the 2011 tax year (taxes). Income data were tabulated from sequence tables (B19139) of the ACS, 2006-2010, and stratified by race/ethnicity (county, region, state). Prevailing (median) wages for selected occupations in 2010 were downloaded from the Employment Development Department, Labor Market Information website (http://www.labormarketinfo.edd.ca.gov) based on the first quarter of the Occupational and Employment Statistics (OES) Survey, 2009.
How to Identify the Living Wage for a Place or County from the Poverty in America Living Wage Calculator
STEP 01. Go to http://livingwage.mit.edu. Select the state for which you would like to investigate the living wage.
STEP 02. Choose the county or place for which you would like to investigate the living wage (e.g., Marin County).
The following wages chart will be returned with the living wage, poverty wage, and minimum wage required for different family compositions.
Example 1: Analysis by County for all of California
The HCI project has estimated the number of families in California—stratified by family composition, race, and ethnicity—who earn less than a living wage using data using the living wage calculator. These data are found at http://www.cdph.ca.gov/programs/Pages/HealthyCommunity Indicators.aspx. Population estimates for two family compositions are available: married coupled families with two children and single mother families with two children.
After downloading and filtering the data from the HCI project as explained in Appendix D, figure 21 shows the percentage of married couple, two children and single mother, two children families in California who live below a living wage by California county.
Figure 21: Percentage of Families Living Below the Living Wage, California Counties
Figure 22 shows estimates the percentage of families—stratified by race/ethnicity—in Marin county California who earn less than a living wage. These data were downloaded from the same dataset in example one and filtered to display Marin County.
Figure 22: Percentage of Families Living Below the Living Wage, Marin County, By Race/Ethnicity
III. BAY AREA LOCAL HEALTH DEPARTMENT EXAMPLES
Through participatory research projects, the San Francisco Department of Public Health (SFDPH) has learned that wage theft, or non-payment of wages earned, and employer negligence for work-related injuries are common in certain service industries. These work conditions negatively affect health. For example, 50% of Chinatown restaurant workers reported not receiving minimum wage, 90% of domestic workers reported a lack of overtime pay, and many day laborers have no access to workers’ compensation.
Working to translate knowledge into policy, SFDPH has begun to explore how to leverage its regulatory authority over restaurants and other businesses to protect worker health. Recognizing that labor agencies have limited staffing or capacity to monitor all businesses, SFDPH seeks to complement, not duplicate, labor enforcement activities by supporting monitoring efforts and targeting of chronic violators.
Using legal authority established by local and state health code, SFDPH suspended health permits of restaurants and other health-permitted businesses found to be noncompliant with San Francisco’s minimum wage law. In multiple cases, health permit suspension led to payment of tens of thousands of dollars in back wages owed to workers within in a couple weeks or months, after one to four years of employer noncompliance with the labor agency ruling.
According to California Health and Safety Code (Part 7 §113715), all food facilities must be in compliance “with all applicable local, state, and federal statutes, regulations, and ordinances” in order to operate in California. To receive a new health permit for operation, SFDPH has begun to require proof of workers compensation (WC) coverage, which is required under state law. Among permitted facilities, SFDPH also randomly selects 10% of facilities to request proof of WC compliance annually. Failure to provide proof of insurance results in suspension of the health permit and reporting to state labor enforcement agency. SFDPH has also piloted projects to observe labor law postings and identify sentinel worker health and safety hazards as part of routine inspections.
To date, SFDPH has conducted this pilot work with minimal staffing and no outside funds. However, additional funds and staff could increase the scale and scope of labor compliance work. For more information, visit http://www.sfhealthequity.org/elements/work.
In 1999, the city of San Francisco proposed a living wage ordinance that would create a wage minimum of $11 per hour for firms that provided services to, or lease land from, local government. Support for the law was based on the idea that employees who provide services for local government should be paid wages that sufficiently meet the local cost of living.
The first living wage ordinance was adopted in Baltimore, Maryland in 1994. Since that time approximately 30 other cities in the United States have taken on such laws including three in California—Los Angeles (1997), San Jose (1998), and Oakland (1998).
San Francisco Department of Public Health (SFDPH) decided to conduct an analysis of a proposed living wage ordinance for San Francisco with respect to its impact on health. The analysis documented the benefits to adult health and children’s education achievement attributable to the adoption of a living wage of $11.00 per hour. The findings were significant. SFDPH predicted adoption of the increased would result in decreases in the risk of premature death by 5% for adults 24 to 44 years in households whose current income was around $20,000. For the offspring of these workers, a living wage would result in an increase of a quarter of a year of completed education, a 34% increased odds of high school completion, and a 22% decrease in the risk of early childbirth. The American Journal of Public Health published this analysis in 2001.
In 2002, city legislators invited SFDPH to participate in city policy discussions on augmenting local minimum wage standard for all San Francisco residents. In 2003, San Francisco residents passed a minimum wage ordinance, increasing the minimum wage from $6.75 to $8.50 for over 50,000 workers in San Francisco. As of 2014, the new minimum wage is $12.66/hour and it is expected that a proposal to raise the minimum wage to $15/hour will appear on the November 2014 ballot.
For more information, visit http://www.sfhealthequity.org/elements/work/22-elements/work/83-living-wage-and-health.
Institute of Medicine. 2002. Care Without Coverage: Too Little Too Late. http://www.iom.edu/Reports/2002/Care-Without-Coverage-Too-Little-Too-Late.aspx. Accessed February 2014.
National Education Association. 2014. Early Childhood Education. http://www.nea.org/home/18163.htm. Accessed February 2014.
US Department of Agriculture. 2014. Agricultural Marketing Service—Creating Access to Healthy Affordable Food. http://apps.ams.usda.gov/fooddeserts/Default.aspx. Accessed February 2014.
US Department of Health and Human Services. 2014. Frequently Asked Questions Related to the Poverty Guidelines and Poverty. http://aspe.hhs.gov/poverty/faq.cfm#developed. Accessed February 2014.
World Health Organization. 2011. Environmental Burden of Disease Associated with Inadequate Housing. Geneva, Switzerland: World Health Organization Regional Office for Europe.