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What exactly is a “living wage,” and how is it connected to our health? In a recent webinar, Living Wage 101: Exploring the Connection Between Wage and Well-Being, Living Wage Institute Co-Founder and CEO Sara Horowitz, Co-Founder and CPO Kavya Vaghul, and Engagement Manager Emily Abramson took a deep dive into the concept of living wage, helping us understand why it’s such a critical factor in overall well-being. According to the Living Wage Institute, a living wage shapes health and well-being at every level. It’s not only vital for individuals and communities—It also benefits employers. By making a living wage a core part of the organizational strategy, employers can drive improvements in both business outcomes and the lives of their workers and families.

What is a living wage?

A living wage enables workers to meet the cost of their family’s minimum basic needs, such as housing, food, transportation, and health care, while remaining self-sufficient. It represents the hourly rate a typical full-time worker must earn to cover these essential costs. It does not budget for items such as meals at a restaurant, holidays or vacations, unpaid vacation time, savings, retirement, long-term financial investments, or paying down student debt. The Living Wage Institute has developed a calculator to help estimate the local wage, and this can be used as a tool to reflect the cost of living, household size, and regional differences for employers, communities, and individuals.

Two other terms are commonly confused with living wage: poverty wage and minimum wage. Poverty wage refers to the earnings level that determines a family’s eligibility for federal assistance, while minimum wage is the lowest hourly wage level that a worker can legally earn, as mandated by the government.

How does a living wage impact health and well-being?

Better wages lead to better health and well-being outcomes. The Living Wage Institute highlights that when individuals earn a living wage, their overall health improves across multiple dimensions. Yet, the Living Wage Institute estimates that just 56% of U.S. workers currently earn a living wage. According to the American Institute of Stress, 66% of U.S. adults report that personal finances are a significant source of stress, contributing to anxiety, sleep disruption, and delayed health care. When financial needs are not met, this stress can create a ripple effect that impacts every area of well-being. However, the Live Wage Institute highlights research that shows several positive health outcomes when workers are paid a living wage, including:

• Physical health
  • Reduced chronic disease
  • Better maternal and infant health outcomes
  • Improved health care access and preventive care utilization
  • Enhanced nutrition and food security
• Mental health
  • Improved mental health measures
  • Reduced anxiety and depression
  • Enhanced sense of control and security
• Social health
  • Improved relationships and family stability
  • Reduced social isolation and shame associated with poverty
  • Increased community engagement and social cohesion
• Financial health
  • Improved financial stability.

How does a living wage impact business outcomes?

As the Living Wage Institute explained, earning a living wage helps workers maintain the mental and emotional bandwidth needed to perform at their best. This, in turn, leads to improved organizational outcomes driven by happier, healthier employees. For the organization, this translates into:

• Reduced absenteeism and presenteeism (being at work but not fully engaged)
• Lower turnover and costs associated with it
• Increased engagement and productivity
• Greater ability to attract and retain top talent.

How can living wage fit into a workplace wellness strategy?

Ensuring fair pay is a critical part of supporting overall worker well-being. Mental Health Mental Health America underscores this by including the question, “Are you providing a livable wage?” among its ten key questions for evaluating if a workplace is on the path to wellness. Providing a livable wage begins with understanding what it means in a specific geographic region—a determination that can be made using the Living Wage Calculator. The Living Wage Institute encourages wellness professionals to work with organizational leaders to make fair pay foundational to their wellness strategy.

By prioritizing a living wage, employers not only support employee's health and well-being, but they also strengthen their own long-term organizational success.

Resources:

Living Wage 101: Exploring the Connection Between Wage and Well-Being

Living Wage Institute

Living Wage Calculator