Stabile points out that wages enabling the workers to sustain themselves are about more than food: they are also about those necessities that enable a worker to participate in society (Stabile 2008, p. 55 citing Seligman 1968). This approach has been discussed by the US-based Economic Policy Institute (Bernstein et al. Bennett 2014; Grover 2008), political scientists (Waltman 2004) and public health scholars (Flint et al. (2014). 17, 10831092. Grover 2008, Bennett 2012, 2014). There is one rate for the whole country with no allowance for the higher costs of living in the capital. Those academics who calculate the UK LW rate outside London defend their approach, however, by pointing out that, under certain conditionsnamely, if both adults work full time in a household of a couple with two childrentheir calculated rate covers nearly 90% of all households, and that their approach enjoys legitimacy among stakeholders (Hirsch 2010). 45, 35). The Minimum Wage is the lowest wage that employers can legally pay workers. From an organizational perspective, an obvious question to address in greater detail would relate to the impact(s) of adopting the LW upon corporate strategy and the business model for accredited LW employers. Even if in the long-term it may be desirable to have the LW as a mandatory minimum wage (Waltman 2004), something that would also make economic sense from a post-Keynesian perspective (Onaran and Galanis 2012), there are transitional costs to the economy and society to consider, and the ethical issue arises whether this will be a price worth paying. ), Living wage movements: Global perspectives (pp. SSE states that the company became a LW employer because it believes it is a matter of basic fairness that people should get a wage that is enough to cover their living expenses and SSE believes in being a fair employer. Some observers have also drawn a link between the criticisms SSE faced over the over-generous pay of their senior executives a few months before their accreditation and its decision to become an accredited LW employer (Williams 2013). ), Living wage movements: Global perspectives (pp. So the LW tips the balance of responsibility for basic living standards further away from state support and towards wages but it does not completely free people from dependence on the state (Lawton and Pennycook 2013). Basing a living wage on a minimum income standard. Figart, D. (2001). Hourly rate. An important distinction is to be made between the national minimum wage (NMW) and the LW. What Is a Living Wage? Definition, History, and How to Calculate He thus refers to a more instrumental view of capabilities, beyond their relevance to the well-being and freedom of individuals (see Sen 1999, p. 296). Global labor justice and the limits of economic analysis. London: Routledge. All three writers touch on this argument in their writings. Corporate Social Responsibility refers broadly to the notion that businesses either need or desire to do social good whilst carrying out their usual (profit-oriented) activities. A living wage: Its ethical and economic aspects. Pollin, R. (2005). There are also difficulties involved in rewarding employees at the higher end of the pay scale if employers have to spend more money on those at the bottom end. These relate to sustainability, capability and externality. Community unions and the revival of the American labour market. The living wage refers to the income level required to sustain a decent standard of living based on the family size and the location. 73) distinguishes between functionings, capabilities and commodities. Waltman, in particular, criticizes the exaggerated protection of property rights in liberal individualist thought (p. 12), in comparison to other rights that all citizens should enjoy. 87, 189197. International Social Work, What is the purpose of FLSA quizlet? - KamilTaylan.blog Lawton, K., & Pennycook, M. (2013). London Living Wage Increase Effective Immediately at Penrose Care. Nunn, A. Thus, low wages mean low productivity, and if more were paid to these workers, that means, that income is transferred from someone else. Living wage effects: New and improved evidence. London: Institute of Business Ethics. an automatic indexation of the minimum wage) or a high level of collective bargaining power or a combination of both (Grimshaw 2004, p. 101). Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including . These requirements may change over time and are subject to cultural norms and macroeconomic circumstances (Stabile 2008, p. 54; Waltman 2004, p. 21; Ryan 1912, pp. London: Resolution Foundation. It also means that the LW rate is susceptible to change if government policies on welfare change. These employees talk about how the LW helps them to meet the cost of the essentials of life such as bills, food, rent and transport; to prevent them from being in debt and to enjoy a better social life. Institute of Economic Affairs. Living Wage vs Minimum Wage - Top Differences - WallStreetMojo New York: NYU Press. 36, 187193. As stated earlier, this is made even more complicated by the debate, whether the LW should be based on the needs of an individual or a family (Stabile 2008, p. 144), and whether welfare payments to which certain households are entitled should be considered in determining a LW rate (Grover 2008; Bennett 2014, see also footnote 14). In the literature we find three approaches of calculating the LW, all of which have their own challenges. Open Access This article is distributed under the terms of the Creative Commons Attribution License which permits any use, distribution, and reproduction in any medium, provided the original author(s) and the source are credited. The primary difference is the calculation criteria used to determine living and minimum wages. The reluctance on the part of some companies to use their LW accreditation as a marketing tool may be explained by the fact that it may make them vulnerable to criticism, for example, if the LW has not been consistently implemented in the firm or if they have been criticized by the public for certain practices and conduct in other areas of their business. Arguing for basic income: Ethical foundations for a radical reform. It should be noted that hourly LW rates usually presume that the worker is in full-time employment. Keynes, J. M. (1936). It is about the costs that being a LW employer brings to an organization. 5166). different ownership patterns, size, sectors) with regards to these questions (see Pennycook 2012)? Social Indicators Research, He argues that income is an important means to capabilities, though not the only one (ibid., p. 90). Journal of Business Ethics, Beyond the bottom line: The challenges and opportunities of a living wage. Back in the nineteenth century, Sidney and Beatrice Webb called employers who paid below-subsistence wages to their workers social parasites. These employers would impose costs on society, as, by exploiting and exhausting their workforce, they would deplete the nations capital stock of character, intelligence and energy and also negatively affect reproductive abilities. Looking at externalities in the economic system, Ryan (1912, p. 311) considers that below-subsistence wages would allow incompetent employers to continue to exist rather than favour competent employers. Economic Policy Institute | Family Budget Calculator London: Routledge. Perel, M. (2003). BBC (2013). There are differences in how the LW is framed and implemented in different national contexts. Stabile, D. (2008). what determines living wage? The living wage: Building a fair economy. The Guardian, 26 October 2014. Minimum wage and inflation: These two charts show how much - CNN This means that employers (owners) have the responsibility to pay their workers a LW, as wages are their only means through which the workers right to a decent livelihood can be realized (ibid., pp. Some of these costs would include the overall pay for employees (see Pennycook 2012; Wills and Linneker 2012) and additional costs in time and labour associated with adapting recruitment policies, negotiation with contractors, employee and strategic communications, public relations and so on. With regards to the use of absolute standards, the challenges are as follows. London: IPPR & Resolution Foundation. Luce (2004) states that in early campaigns the more traditional model of one adult full-time worker supporting another adult and two children was used, as this model is also used to determine poverty thresholds in the US, whilst in more recent campaigns the model of a single adult supporting two children featured more heavily (Ciscel 2004). As an idea, the LW has, in fact, been presented in the works of ancient Greek philosophers and medieval scholars. It should be noted that the current LW rate in the UK falls somewhat short of the ideal of making people independent of supplementary welfare payments. Thus, the right to ownership comes must be exercised in a way which is consistent with the rights of others (ibid., p. 104). In this way the entire nation would, generation by generation, steadily degrade in character and industrial efficiency (Webb and Webb 1897/1965, pp. As a result, workers had no incentive to work hard or to bargain for higher pay, as income was the same whatever the level of pay (given that most employers paid less than the scale). Perhaps because of this, both the US and the UK have some of the largest proportions of low wage workers in developed economies.Footnote 2. Grimshaw, D. (2004). What is a 'living wage'? Characteristics of minimum wage workers, 2021 Economic Development Quarterly, Accountancy Live, 12 September 2014. Under the Fair Labor Standards Act (FLSA), the federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. How to use living wage in a sentence. Waltman (2004, p. 19) and Stabile (2008, p. 5) explicitly refer to Amartya Sens work on capabilities. Some famous treatises about the LW, such as papal encyclicals, have also conceptualized the living wage as a family living wage, and thus emphasized the role of men as breadwinners for their families (see Figart 2001, Ryan 1912). Minimum Wage: $15.20. 51, 509518. Beyond the anecdotal, and thus limited, insights provided in the previous section, LW research from an ethics, CSR and management perspective requires systematic investigation of pressing issues such as why might business organizations want to gain accreditation as LW-friendly employers? What is the definition of minimum wage quizlet? Google Scholar. However, a number of practical and philosophical challenges remain, if one seeks to make the LW a concept that will be effective in the real world. Clark, K. (2014). Countering the argument that higher wages pose additional costs to businesses they cannot bear, Waltman (2004, p. 133) and Pollin (2005) refer to efficiency and productivity gains that businesses may enjoy, for example, through reduced absenteeism and turnover and a subsequent reduction in recruitment, training and supervision costs, as well as a better motivated, and thus more productive, workforce. Both of them post videos on the web,Footnote 21 in which employees speak about how their quality of life has improved since they have been paid the LW. London: IPPR & Resolution Foundation. 2014), but the capability perspective, looking at the effects for individuals as well as for their families, organizations, communities and the economy, may provide a fruitful lens for further investigations. Currently, LW-accredited companies do not have to roll out the LW in their supply chains. A living wage is a socially acceptable level of income that provides adequate coverage for basic necessities such as food, shelter, child services, and healthcare. For Ryan, the obligation to pay a LW is primarily a matter of distributive justice (ibid., p. 122) and not of production, as it is about enabling one group of individuals to secure a portion of the national product that is now regularly obtained by other groups (ibid., p. 321). It should pay for cost of living in any location, and should be adjusted to compensate for inflation. 68, 10631084. The aim of this article, therefore, is to conceptualize the living wage (LW) in its philosophical as well as practical dimensions in order to open up the ethical implications of its introduction and implementation by companies. 42, 3346. Stabile (2008, p. 7) adds that because business organizations do not pay the full cost of the resource they are using, they will produce too much of their product due to their lower costs and thus resources are being used inefficiently. 30, 194203. Much of the contemporary literature on the LW is focused upon campaigns in the US (e.g. van Parijs 1992; Caputo 2008).Footnote 11 More commonly, however, the discussion focuses on the responsibility of governments to supplement wages if they are not high enough for people to care for themselves and their families (Grover 2008, Bennett 2012, 2014; Ciscel 2000). Our living wage guidance. This endeavour remains controversial, however, particularly if the LW concept is tied not just to the workers individual needs but the needs of his or her family (Bennett 2014). (2005). For Penrose Care, financial implications may be more significant as it affects a larger proportion of their staff, particularly in view of the fact that the vast majority of its competitors do not pay LW rates to their care workers. Retrieved October 10, 2014, from http://www.marketplace.org/topics/business/meet-woman-behind-ikeas-living-wage-calculator. Investigating the effect of the London living wage on the psychological wellbeing of low-wage service sector employees: A feasibility study. a subsistence wage; a wage sufficient to provide the necessities and comforts essential to an acceptable standard of living See the full definition From an international perspective, more research is required into how companies engage with the LW in relation to their foreign subsidiaries and global supply chains, particularly in developing economies. Retrieved July 10, 2014, from http://www.ft.com/cms/s/0/b1df4dc2-2771-11e2-8c4f-00144feabdc0.html?siteedition=uk#axzz36yTE3x7H. All you that labor: Religion and ethics in the living wage movement. 2014). Provided by the Springer Nature SharedIt content-sharing initiative, The Ethics of the Living Wage: A Review and Research Agenda, https://doi.org/10.1007/s10551-015-2562-z, http://www.youtube.com/watch?v=jIM_ptAhFQw, http://sse.com/newsandviews/allarticles/2013/11/making-a-difference-to-sse-employees/, https://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/living-wage.aspx, http://www.theguardian.com/business/2014/oct/26/lowest-paid-rise-productivity-puzzle-low-wage-growth-uk, http://www.marketplace.org/topics/business/meet-woman-behind-ikeas-living-wage-calculator, http://www.theguardian.com/society/2013/dec/15/top-football-clubs-attacked-for-low-pay-of-ground-staff, http://www.huffingtonpost.com/rj-eskow/democrats-meet-the-minimu_b_5772426.html, http://www.ethicaltrade.org/resources/key-eti-resources/living-wage-resource-roundup, http://www.ethicaltrade.org/sites/default/files/resources/ETI%20living%20wage%20guidance_0.pdf, http://www.ethicaltrade.org/sites/default/files/resources/ETI%20Living%20Wage%20Expectations_2.pdf, http://www.ft.com/cms/s/0/b1df4dc2-2771-11e2-8c4f-00144feabdc0.html?siteedition=uk#axzz36yTE3x7H, http://www.homecare.co.uk/news/article.cfm/id/1561473/london-living-wage-increases-effective-immediately-penrose-care, http://www.theguardian.com/social-care-network/2013/dec/04/pressure-mounts-better-pay-homecare-workers, http://www.iea.org.uk/blog/living-wage-likely-to-destroy-jobs-and-increase-poverty, https://www.accountancylive.com/lords-urge-government-oppose-quotas-women, http://www.bbc.co.uk/news/health-21430956, https://www.gov.uk/national-minimum-wage/what-is-the-minimum-wage, http://www.heraldscotland.com/news/home-news/pay-row-energy-firm-gives-staff-living-wage-deal.22280481, http://databank.worldbank.org/data/download/GDP.pdf. 5, 161171. The contributions of religious traditions to business ethics. The article also recommends avenues for a research agenda into the LW for business ethicists, CSR and management researchers in contexts such as the UK, where a voluntary, rather than mandatory, approach to the implementation of the LW is adopted. Penrose Care is a small private care company based in London.Footnote 19 Care providers as a whole do not enjoy a good reputation in the UK, including the treatment of their staff (Triggle 2013; Learner 2013). accreditation.) For example, Unity Trust Bank, a LW-accredited community bank, has been offering discounts on lending rates for other LW employers.Footnote 17 And some LW-accredited companies have begun to make the LW a requirement for their suppliers (e.g. Translated by Benjamin Jowett. The arguments made in this article apply also to developing economies. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is based on the expenditures of households included in the CPI-U definition that also meet two additional requirements: more than one-half of the household's income must come from clerical or wage occupations, and at least one of the household's earners must have been . ETI (2013). Living wage and low pay campaigns in Britain. Living Wage, Family of 4: $27.06. What is the difference between minimum wage and living wage? Journal of Business Ethics, It should be noted that there are some companies operating in the US that have made a public commitment to paying a LW to their workers (see footnote 10). ETI Base Code clause 5 describes a living wage as "enough to meet basic needs and to provide some discretionary income." Other standards highlight that wages should be enough to support a worker and his or her family. It is inarguable that higher incomes enable people to have better access to higher quality goods (e.g. Adams, S., & Neumark, D. (2005a). It is certainly an idea that is gaining traction and that employers increasingly engage with. Ciscel 2000; Muilenburg and Singh 2007). Ithaca, NY: Cornell University Press. Income a single person needs to get by in every US state - CNBC After some initial LW campaign successes in East London in the early 2000s, Citizens of UK established the Living Wage Foundation in 2011, which offers accreditation to all UK employers who are committed to paying at least the LW to their employees and require their subcontractors to do the same for their employees. Wages. A few centuries later, Adam Smithalthough considered the first proponent of the free market economybelieved in paying all workers at least what we would call today a LW because it would ultimately benefit society in the form of increased productivity, wealth distribution and economic growth (Clary 2009). Why has the British national minimum wage had little or no impact on employment? CEP Discussion Paper No. Homecare (2013). Work itself may be considered as aiding the development of peoples capabilities. Working Paper. Finally, to what extent are customers willing to reward LW employers with their custom? At the same time, there is an expectation that companies that have signed up to the Ethical Trading Initiative Base Code ensure that workers in their supply chains are paid a LW, even though this is considered a complex and difficult undertaking (ETI 2014a, b). Religion at work: The role of faith-based organizations in the London living wage campaign. In his book, A Case for the Living Wage (2004), he seeks to defend the LW in contrast to liberal individualism. Second, both companies are aware of the benefits the LW makes to their employees lives. Specifically, we examine in some detail how the concepts of sustainability, capability and externality are crucially important in developing a better understanding of what is at stake in the debates. Furthermore, a tangle of issues related to who, how and why the LW ought to be paid to workers has to be considered in such debates. According to their calculationswhich presume a worst case scenarioa mandatory implementation of the LW in the UK would reduce aggregate labour demand by 160,000, and a fall in demand for young employees with intermediate or no qualifications by 300,000. WHAT IS THE LIVING WAGE CALCULATOR? In this section we will consider these challenges in turn. The LW is not an easy concept to define. This approach can be found, for example, in the guidance provided by the Ethical Trading Initiative for supply chains in developing economies (ETI 2013). Waltman (2004) provides a review of basic income guarantee and similar approaches in his book. This approach has a number of critics, who argue that this average rate may not be sufficient for each circumstances individuals or families find themselves in (e.g. This was shown, for example, in the 2011 England riots, when thousands, mostly young, people from disadvantaged communities in London and other English towns and cities took to the streets and looted, and set fire to, local retail parks and shops. By contrast, the UK campaign favours a voluntary, accreditation-based approach, although this approach may be actively promoted by government (Living Wage Commission 2014).Footnote 16 A voluntary approach may avoid a number of above listed unintended consequences, as the LW will be implemented more gradually. Article Freeman, R. (2005). A change in business ethics: The impact on employeremployee relations. Ethical foundations of the contemporary living wage movement. Critical Social Policy, Accessed 10 October 2014. https://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/living-wage.aspx. Metcalf D (2007). The costs and benefits of the London living wage. The unconditional basic income guarantee: Attempts to eclipse the welfare state. A living wage for workers | Ethical Trading Initiative Definition: The living wage is the amount of income needed to provide a decent standard of living. Minimum wages should be understood as a wage floor for unorganized labour (Figart 2004, p. 2), which are, in contexts such as the UK and the US, rather cautiously set so as to ensure affordability for businesses and not to undermine economic competitiveness (Low Pay Commission 2014; Grover 2005). Ryan, J. The inflation rate in 2019 was 1.76%. These necessities may include having enough money for decent accommodation, transport, clothing and personal care (Ciscel 2000). Only a few articles in business ethics journals make passing references to the LW (Karnes 2009; Bowie 1998; McMahon 1985), particularly in the context of sweatshop labour and supply chains (Arnold and Bowie 2003, 2007; Preiss 2014). 2000, cited in Ciscel 2004) and by Waltman (2004). 13, 221242. London: Macmillan. London: Routledge. Figart, D. (2004). New York: Kelly. McMahon, T. (1985). Ciscel (2004) states that, in the early 2000s, even though the calculated LW rates for a family of a single earner and two children were somewhere between $1516 per hour, the actual obtained rates were between $712 per hour (which was still higher than the NMW). 33, 153199. In D. Figart (Ed. At a fundamental level, the concept of the LW has direct implications for business organizations, clearly, as it concerns how much they pay their workers at the bottom of the pay scale. Capability refers to the alternative combinations of functionings that are reasonable for a person to achieve. Nominal Wage vs. Real Wage: What's the Difference? - Indeed The budgets estimate community-specific costs for 10 family types (one or two adults with zero to four children) in all counties and metro areas in the United States. In fact, in the view of very weak or absent welfare systems and labour regulations, the adoption of a voluntary LW wage, by indigenous businesses and, importantly, multinational corporations in their operations in these countries and in their supply chains, will be of even more significance, although the challenges of implementing a LW will also be greater (see ETI 2014a). To date, business ethicists, corporate social responsibility scholars as well as management theorists have been slow to provide a comprehensive and critical scrutiny of the Living Wage concept. Accessed 10 October 2014. 19, 80102. (2006). Some observers, however, are critical ofcalls demanding that governments address the problem of low pay and in-work poverty solely through the payment of benefits, rather than through seeking to increase incomes through higher wages, particularly in view of past experiences of negative effects on the economy and society.Footnote 12 Grimshaw (2004, p. 116) argues that todays wage subsidies such as tax credits, housing benefit and others reject the duty of employers to pay for the social costs of maintaining their workforce and thereby intensify pressures towards commodification of work. Ryan lived during a decisive moment in the development of Catholic social teaching within the United States. This argument carries particularly strong force in contexts where public sector organizations contract services out to private businesses, as these businesses should not benefit twice from tax payers money (first, by winning a contract that is paid for by tax money, and second, by the tax payer subsidizing labour costs) (Figart 2004, p. 3). Retrieved October 20, 2014, from http://www.ethicaltrade.org/sites/default/files/resources/ETI%20living%20wage%20guidance_0.pdf. Retrieved March 18, 2014, from https://www.gov.uk/national-minimum-wage/what-is-the-minimum-wage. equilibrium wage rate. Living wage research for KPMG: Structural analysis of hourly wages and current trends in household finances. Consumer Price Index Frequently Asked Questions 7576; Robeyns 2005). The Guardian, 4 December 2013. This concept of unlimited bargaining, with the presumption of equal power between the two parties as the basis for wage justice, has also been fiercely criticized by Ryan (1912, pp. It thus appears that both in the UK and the US, there is a trade-off between a pragmatic approach for making a difference in the lives of working people (for example, the UK LW rates of are significantly higher than the current NMW rate of 6.50 an hour), and the quest for, or implementation of, an ideal LW. Medieval scholars already recognized unequal bargaining positions as a moral problem, especially where wages were involved. Living wage campaigns as social movements: Experiences from nine cities. The living wage, low pay and in work poverty: Rethinking the relationships. So far, we have set out the range of theoretical arguments to be made both for, and against, the LW. London: Centre for Economic Performance, London School of Economics. Retrieved October 20, 2014, from http://www.homecare.co.uk/news/article.cfm/id/1561473/london-living-wage-increases-effective-immediately-penrose-care. Marketplace, 5 August 2014. The final argument that Stabile puts forward relates to externality. Davis, A., Hirsch, D., & Padley, M. (2014). A 60 percent supermajority vote was required for the approval of Amendment 2. 2742). In his review of moral economic thought, Stabile highlights three themessustainability, capability, externalityaround which he constructs his arguments for the LW. Whilst Ryan emphasizes the right to a Living Wage as derived from an individuals intrinsic worth and sacredness (ibid., p. 56), Waltman (2004, p. 13) provides a rather different argument, based on civic republicanism, in his early twenty first century work on the LW. This problem is exacerbated by rising living costs, stagnant wages (Whittaker and Hurrell 2013) and the growing retreat of the welfare state, which makes it more difficult for those on low wages to receive supplementary welfare payments from the government (Davis et al. or the free market (as opposed to mercantilist systems that protected the interests of employers) (Stabile 2008, p. 18). Bennett, F. (2014). Clary (2009, p. 1065), for instance, has defined the LW as a wage equivalent to the poverty line for a family of four, or the amount of income generated by such a wage that would allow such a family to secure the food, shelter, clothing, health care, transportation, and other necessities of living in modern society..
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what is a living wage quizlet