Although wages have increased significantly in recent years, many workers in the United States still struggle to make ends meet.
About 44 percent of full-time employed Americans don’t earn enough to meet their family’s basic needs, assuming a two-income household with two children, according to a new report from Dayforce, a human capital management software company working in partnership with the Living Wage Institute, a nonprofit organization dedicated to making a living wage a part of corporate strategy. (Dayforce is the current sponsor of the CHRO Daily newsletter.)
The report used data from 600,000 full-time American workers and analyzed it using MIT’s living wage calculator. The average living wage in the U.S. is about $23 an hour, according to the institute, but varies widely in different regions. For example, a couple living in Sacramento County, California, who both work full-time and have two children would both need to earn $31.43 an hour to make ends meet, according to MIT’s calculator. But for a household in Marshall County, Kansas, that amount drops to $22.46.
“This report should be a wake-up call,” says Kavya Vaghul, co-founder and chief product officer of the Living Wage Institute. Assets. “It’s very consistent with what the American public is experiencing in terms of the inflationary environment. Prices for basic goods and services are skyrocketing, and as a result, many people are unable to meet their basic needs.”
Of course, the brunt of the economic problems falls on people in low-paying jobs, who are often women and people of color. Only half of full-time female workers earn a living wage, compared to 62% of male workers, the report found. Working women earn an average of $4.20 less per hour than men doing the same work. According to Vaghul, systematic underpayment of women, the devaluation of domestic work and the exclusion of marginalized groups from higher-paying industries all contribute to the problem.
“For women, there are several factors underlying the report’s findings. They are all linked to a damaging history of societal prejudice and discriminatory and unequal labour market policies that continue to contribute to the gender inequalities we see,” she says.
The report also found that only 40% of black and Latino full-time workers earn a living wage and are nearly twice as likely to be financially underpaid as their white counterparts. The groups earn $8.20 and $7.70 less per hour, respectively, than white workers.
“This is again about occupational segregation and systemic prejudices that exist both in our personal attitudes and in the labor market,” says Vaghul.
Jason Rahlan, Vice President of Corporate Responsibility and Sustainability at Dayforce, tells Assets that employers can combat this problem in a simple way: by increasing wages. Otherwise, they risk losing talent to other companies
“People who do not earn enough to make a living are more likely to report difficulty paying their housing, overdrawing their checking and savings accounts, forgoing health care and purchasing medications,” he says. “When workers are at higher risk of these negative outcomes, they are also at higher risk of leaving their jobs and seeking other employment opportunities because they need the opportunity to live a life of health, fulfillment and dignity.”
While financial support can help, the most direct way to address this problem is for business leaders to identify and address the compensation inconsistencies within their own companies. He says this is not only an ethical move, but also a smart strategy for bosses to avoid negative health effects for their workforce, such as the stress and depression that come with the inability to meet basic needs.
“Companies that choose to invest in their people and close the living wage gaps in their workforce are not only doing the right thing for their employees, they are also doing the smartest thing for their business,” he says.
Emma Burleigh
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