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Title page
Contents
Acknowledgements 4
Abstract 5
Resume 6
1. Introduction 9
2. Origins of the living wage and recent initiatives 14
Wage inequality and the argument for wage floors 14
The meaning of a living wage 15
Living wage initiatives 16
3. Estimating the living wage: A methodological review 19
What is the decent standard of living that a living wage should meet? 20
What kind of family does a living wage support? 28
What working patterns are assumed for other family members? 29
What is the geographic focus of living wages? 29
How do living wages change over time? 30
4. A comparison between living wage estimates based on different assumptions 31
The impact of different methodological assumptions on the living wage estimate 31
5. A comparative analysis of living wage estimates 35
Benchmarking FWN living wages against individual-level earnings metrics 36
Benchmarking FWN living wages against household-levels poverty lines 42
Living wages at the sub-national level 51
Main takeaways 52
6. Conclusions and ways forward 54
A common living wage framework? 54
Data providers 55
National Statistical Offices 56
Businesses 57
Social partners 57
References 59
Notes 63
Table 3.1. Overview of main spending categories considered when setting living wage rates 21
Table 3.2. Overview of the main approaches used by different living wage initiatives to set the levels of different basket items 23
Table 3.3. Overview of main pricing strategies and data sources used by the living wage initiatives assessed in this paper 25
Table 3.4. Overview of assumptions on family size and working patterns used by different living wage initiatives 28
Figure 1.1. In-work poverty in OECD countries 10
Figure 4.1. Variation of FWN living wages related to the size of households 32
Figure 4.2. Variation of FWN living wage rates depending on the number of income earners 34
Figure 5.1. FWN living wages and minimum wages 37
Figure 5.2. Relationship between FWN living wages, minimum wages, prevailing wages and collective bargaining 38
Figure 5.3. FWN living wages and the OECD low pay threshold 39
Figure 5.4. FWN living wages in the distribution of earnings of full-time workers 40
Figure 5.5. Household income level of workers by work and pay status 47
Figure 5.6. FWN living wages and JRC absolute poverty lines 50
Figure 5.7. FWN living wages and OECD relative poverty lines 51
Figure 5.8. US state-level living wages and official measures of Regional Price Levels, 2020 52
Boxes
Box 1.1. Possible flow-on effects of a wide adoption of living wages 12
Box 2.1. Living wage and minimum wage 15
Box 2.2. Different objectives of living wage initiatives 17
Box 2.3. IDH's Recognition Process 18
Box 3.1. How are different spending categories priced? 27
Box 5.1. Measuring the distribution of earnings 41
Box 5.2. Measuring poverty 43
Box 5.3. The OECD Tax-Benefit calculator 45
Box 5.4. Defining absolute poverty lines in the European Union 48
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