“You should buy the big pack of diapers at Costco. They’re way cheaper.”
I got advice like that a lot when I was a single mom living well under the low-income cut off. I would smile and say thank you, because I knew someone who’d had $50 to spare for a Costco membership in the past year wouldn’t be able to fathom that the big box of diapers would eat up half of my spending budget for the week I bought it. Not everyone has taken Cashflow 101 at the School of Life.
Being poor is expensive. Having a little more money to move around means you can get a little bit ahead and make more economical decisions in the long run. That’s why I’m generally a fan of a living wage program that encourages employers who think $11.25 is good enough to think again.
The London Living Wage website says $15.53/hour “reflects what earners need to make in order that their household can meet its basic needs. It ensures families are not under severe financial stress, promotes social inclusion, and helps families achieve a basic level of economic security.” It sounds pretty great.
But what does life at the Living Wage really look like? For the report’s hypothetical young family of four, it probably wouldn’t be quite as described. They’d almost certainly not get the child care subsidy, since the waiting list is long and their living wage incomes are too high for them to be a top priority for receiving it.
The tax rebates, refunds, and credits that were included in the calculations aren’t received until the end of the year, so our little nuclear family doesn’t actually have enough cash on hand to buy the transit passes and pay for the YMCA membership.
They probably opt to work opposite shifts to save on child care. They forego continued education since they can’t schedule for it anyway. Or if their work shifts are inflexible, they give up the YMCA, family outings, and vacations. They don’t even think about tenant, health, and life insurance. They get by, but not like their Living Wage employer thought they would.
A living wage to realistically allow for the life and lifestyle in the report would be more like $17.50 an hour with each parent working full time. And what happens for the 28 percent of London families with children that have only one parent?
A single parent would need more like $20 – $27 an hour (depending on custody and child support arrangements) to provide a similar life for their family. At $15.53, a single parent sharing custody will probably forego things like the YMCA membership, their own education, and personal care items. On top of that, a single parent with no support will likely have no car, no insurance, no vacations, and no contingency funds for things like prescriptions, birthdays, or library fines.
Even a single person with no kids would require an extra dollar an hour to enjoy roughly the same kind of conservative, but more-or-less socially equitable life. (Not for nothing: $15.53 is more than adequate for a single person using public transit.)
I’m really not knocking a living wage. Struggling at $15.53/hour is leaps and bounds better than struggling at $11.25/hour. It’s just more of a poverty placebo than the panacea some employers expected.