References: Low Wage Nation 2015
Given limitations in the available data and continuity of data sets, this study updates the previous Job Gap Study as closely as possible using 2013 data. Where 2013 data were not available, data for the closest year available were adjusted for inflation to reflect 2013 dollars.
Family Living Wage Budgets
A living wage is a wage that provides a household with financial stability, allowing it to meet its basic needs without government subsidy, with a little left over to plan for emergencies. For this study, a modified market basket approach was used. Household budgets, upon which living wages are based, include:
- Housing and utilities;
- Health care;
- Child care;
- Household, clothing, and personal items;
- Savings; and
- State and federal taxes
Household types are selected to reflect the range of budget requirements for four household types:
- Single adult
- Single adult with one child between the ages of 6 and 8
- Single adult with two children, one between the ages of 6 and 8 and the other between the ages of 1 and 2
- Two adults including one wage earner, with two children, one between the ages of 6 and 8 and the other between the ages of 1 and 2
2013 Living wage findings and methodology were reported on in the Alliance’s August 2014 study, “Families Out of Balance.”
- The unemployed — people who are not employed but are looking for work. Included are those who have been laid off, quit their jobs, are entering the workforce for the first time, or are re-entering it. Not included are those who are unemployed due to temporary layoff or those looking only for part-time work.
- Involuntary part-time workers — people who work less than full-time, but want to work full-time.
It is important to note that the unemployment rate reflects only the unemployed and, therefore, misses many job-seekers — including discouraged and marginally attached workers. This suggests that there are many more job-seekers for each living wage job opening than conventionally assumed.
The job-seeker figures used are likely an underestimate of the actual number of job-seekers. Ideally, the count of job-seekers would capture everyone, working or not, who needs a living wage job. The figures used here do not count those who are working full-time at less than a living wage but would prefer a living wage job, because data on this group do not exist. They overstate the number in that all the unemployed are counted, even though some may not be looking for a living wage job.
Also, people who left the labor market and then re-entered the same occupation are counted among the job-seekers, whereas those who moved directly from one job to another in the same occupation are not. However, assuming even a fraction of the people working at less than a living wage job for a single adult want a living wage job, the count is, on balance, an underestimate.
Job openings include the following:
- Job openings due to growth — the result of new jobs being created by new or existing firms.
- Job openings due to replacement — the result of people retiring, entering school or the military, moving across state boundaries, changing occupations, or otherwise leaving the occupation in which they currently work.
The analysis does not include job openings that result from people changing employers but remaining in the same occupation, since these are largely invisible to the average job seeker. Also not included, for similar reasons, are job openings for unpaid family workers and self-employment.
Job openings data comes from Occupational Employment Projections, estimated at the state and national level. For calculations based off of a living wage, the most recent available data for each state was used — either 2012-2022 or 2013-2023. This data was collected from individual states.
In order to compare state and national data for the $15 per hour analysis, projections for 2012-2022 were used for all states and nationally. This data was collected from Projectionscentral.com, as suggested by the Bureau of Labor Statistics.16
In determining which job openings paid a living wage (or $15 in the national and 49-state analysis), the state median wage for an occupation was used where available; this means that half the people in the occupation earn less and half earn more than that amount. Not everyone will start at the median wage, but many should progress to that wage over time. For occupations where median wage numbers were shown as a range, mean wages were used instead.
Defining Low-Wage Jobs at $15 an Hour
The Alliance’s Job Gap Economic Prosperity Series methodology calculates living wages in several states, and uses those thresholds to calculate the number of projected job openings that pay those living wages. Further, we calculate the “job gap,” or the ratio of job-seekers to jobs that pay living wages.
In this study, we apply that methodology to Bureau of Labor Statistics’ national wages and employment projection data to calculate the National Job Gap. We set $15 an hour in the year of our study, 2013, as the cut-off between low-wage and higher-wage jobs, where anything below $15 per hour was considered low-wage.
There were several considerations in choosing $15. First, this figure is a conservative threshold, generally short of what it takes to actually make ends meet. Living wages measure the most basic costs of living. For instance, when calculating phone costs, we assume the most basic landline plan available, without any type of cell phone. And this, despite 91 percent of adults in America owning more-expensive cellular phones and 56 percent owning an even more-expensive smartphone.17
Fifteen dollars an hour is below living wages for single individuals for nearly all states we’ve studied (except Idaho and Montana, which have a living wage just under $15 per hour for a single adult), and does not include child care or student debt (or debt of any kind). Of the 10 states in our study and New York City, the weighted average of all living wages for households comprised of a single adult was $17.83 an hour.
And it is important to note that households with children need significantly higher living wages. For households with a single adult, a school-age child and a toddler, the weighted average living wage was $33.56.
So, while the $15 threshold falls short of providing enough for even a single individual — let alone one with children — we erred on the side of choosing a conservative threshold, knowing that there are some states for which $15 is comparable to a living wage for a single adult (though well under in others).
Additionally, fast-food workers have gone on strike nationwide, demanding a $15 minimum wage. Due in part to this and related campaigns, there has been growing momentum around a $15 minimum wage. In SeaTac, Wash., a ballot initiative in 2013 passed a $15 minimum wage for airport and hotel workers.18 In Seattle, after deliberation by a task force appointed by the mayor, the mayor and city council approved a $15 minimum wage in June 2014 that will increase wages incrementally over the next several years.19 Even more recently, in November 2014 San Francisco voters approved an incremental $15 minimum wage similar to that in Seattle. 20
There is momentum around the $15 wage. However, it is also important to put a $15 per hour wage in context:
- The current federal minimum wage is $7.25. It has not increased since 2009, while the Consumer Price Index (CPI) has increased 9.4 percent between 2009 and the first half of 2013.21 In real dollars, the federal minimum wage is actually lower today than it was in 1968.22
- A threshold often used to define low-wage jobs is the poverty line for a family of four. In 2012, an individual would have to earn $23,050 annually, or an $11.08 wage working 40 hours a week, to meet that threshold. This wage is inadequate and outdated and does not constitute a decent wage. (See “Living Wage vs. the Minimum Wage and Federal Poverty Measures” in “Families Out of Balance,”)
Ultimately, we see the $15 threshold as a conservative threshold for a basic needs wage, which makes our job gap findings even more stark.
- The U.S. Bureau of Labor Statistics defines the working poor as those who spent at least 27 weeks in the labor force (working or looking for work) but whose incomes fell below official federal poverty levels.
- Our August 2014 study of living wages — or how much workers actually need to earn to make basic ends meet — found that all living wage levels in the 10 states studied were significantly higher than poverty standards.
- Michigan was the only state without 2012-2022 projected openings information, so the ratio could not be calculated in that state.
- These findings indicate that the economy is not creating enough living wage jobs for those who need them. However, a job gap ratio of seven to one does not necessarily imply there are seven people competing for each job opening at that wage level. It indicates that, over the course of a year, there were seven times as many job-seekers as there were living wage jobs at or above the $15 wage level. Available data do not provide details on what sorts of jobs workers from households of different sizes actually pursue, so no precise conclusions can be reached about the applicant pool for jobs at different wage levels. The applicant pool also depends on the skills, education, and training of job-seekers, as well as other factors. Large ratios suggest greater competition among job-seekers for available job openings.
- Because wage data is only available statewide, New York State (not including New York City) and New York City do not have this job gap ratio.
- The industry is the fastest-growing in the country, with employment levels increasing 8 percent since before the recession (between 2006 and 2013), more than any other BLS industry.
- This number of states that have not expanded Medicaid
- Alliance analysis of BLS CPI data.
- http://aspe.hhs.gov/poverty/12poverty.shtml eligibility was 24 states as of July 2014, and is down to 23 states as of December 2014.
- Alliance analysis of BLS CPI data.