Introducing the JobsEQ Living Wage Analytic: What is a Living Wage?

JobsEQ will soon be introducing a new Living Wage analytic to help firms and organizations determine wages that help workers in their regions afford their basic necessities. As the affordability crisis continues to weigh on lower-income workers, it is becoming increasingly necessary to make sure that workers receive an income that can support themselves and families.

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• What is the Living Wage?

The living wage is simply the wage or salary that can support a household’s basic needs. While it may be tempting to confuse the living wage with the cost of living, they are separated by the term “basic needs.” The cost of living measures the prices of a basket of everyday goods and services, while the living wage measures only the necessities. This means that many of the simple pleasures of life: dining outside of the home, streaming subscription services, family vacations, etc, would not be covered by a living wage. The living wage is also different from the minimum wage. The minimum wage is the lowest wage that an employer may offer as set by policymakers. The living wage is often higher than the minimum wage, indicating that families that rely on minimum wage positions may not be able to afford basic necessities.

What goes into the Living Wage?

In general, a living wage covers the following seven categories of basic needs of a household:

- Food,

• - Housing,
• - Childcare,
• - Transportation,
• - Healthcare,
• - Other necessities (housekeeping, apparel, personal care products, telephone services, etc), and
• - Taxes. 

To compile the costs for each category, Chmura includes data from the U.S. Department of Agriculture, the U.S. Department of Housing and Urban Development, Childcare Aware of America, the U.S. Bureau of Labor Statistics, the Department of Health and Human Services, and the National Bureau of Economic Research.

A few living wage models currently exist. The MIT Living Wage Calculator and EPI Family Budget Calculator are both widely used and well regarded as indicators of basic necessity costs for lower-income Americans. Chmura, however, has found that these models may not accurately present the living wage for rural nonmetropolitan areas which often display unique characteristics which are overshadowed by state level data that is often skewed by cites and suburbs.

Chmura provides a more accurate living wage by utilizing internal cost of living data that includes estimates for nonmetropolitan areas. Doing so allows us to scale the data more appropriately for rural areas, even when costs data are only available at the state level.

The ALICE (Asset Limited, Income Constrained, Employed) Household Survival Budget is a model developed by United Way[1] that also adjusts for differences between rural and urban areas; however, there are a couple of major differences between the ALICE approach and Chmura approach. First, ALICE, uses a technology category to account for cell phones, internet, and related costs; and it uses a miscellaneous category, which is 10% of the budget total, to account for additional costs and cost increases. Chmura instead does not use a 10% buffer and uses an other necessities category to account for those items not included in the food, childcare, housing, transportation, healthcare, and tax categories. Second, ALICE tracks five household compositions whereas the JobsEQ Living Wage analytic estimates the living wage for twelve core family types: 1 adult families, two adult families where only one adult works, and two adult families where both adults work; each with zero to three children. We also recognize that families with more than one child will likely have children of different ages with different needs, which is reflected in the living wage.

The JobsEQ Living Wage analytic will be available in April 2026. Stay tuned for a blog post showing an overview of this tool and see how it can help you understand the needs of your employees and local economy.

[1] https://www.unitedforalice.org/wage-tool