Living Wage data for North Alabama

INTRODUCTION

Analysts and policy makers often compare income to the federal poverty threshold in order to determine an individual’s ability to live within a certain standard of living. However, poverty thresholds do not account for living costs beyond a very basic food budget. The federal poverty measure does not take into consideration costs like childcare and health care that not only draw from one’s income, but also are determining factors in one’s ability to work and to endure the potential hardships associated with balancing employment and other aspects of everyday life. Further, poverty thresholds do not account for geographic variation in the cost of essential household expenses.

The living wage model is an alternative measure of basic needs. It is a market-based approach that draws upon geographically specific expenditure data related to a family’s likely minimum food, childcare, health insurance, housing, transportation, and other basic necessities (e.g. clothing, personal care items, etc.) costs. The living wage draws on these cost elements and the rough effects of income and payroll taxes to determine the minimum employment earnings necessary to meet a family’s basic needs while also maintaining self-sufficiency.

The living wage model generates a cost of living estimate that exceeds the federal poverty thresholds. As calculated, the living wage estimate accounts for the basic needs of a family. The living wage model does not include funds that cover what many may consider as necessities enjoyed by many Americans. The tool does not include funds for pre-prepared meals or those eaten in restaurants. We do not add funds for entertainment, nor do we incorporate leisure time for unpaid vacations or holidays. Lastly, the calculated living wage does not provide a financial means to enable savings and investment or for the purchase of capital assets (e.g., provisions for retirement or home purchases). The living wage is the minimum income standard that, if met, draws a very fine line between the financial independence of the working poor and the need to seek out public assistance or suffer consistent and severe housing and food insecurity. In light of this fact, the living wage is perhaps better defined as a minimum subsistence wage for persons living in the United States.

FAMILY COMPOSITIONS

The living wage calculator estimates the living wage needed to support families of twelve different compositions: one adult families with 0, 1, 2, or 3 dependent children, two adult families where both adults are in the work force with 0, 1, 2, or 3 dependent children, and two adult families where one adult is not in the work force with 0, 1, 2, or 3 dependent children.

For single adult families, the adult is assumed to be employed full-time. For two adult families where both adults are in the labor force, both adults are assumed to be employed full-time. For two adult families where one adult is not in the labor force, one of the adults is assumed to be employed full-time while the other non-wage-earning adult provides full-time childcare for the family’s children. Full-time work is assumed to be year-round, 40 hours per week for 52 weeks, per adult.

Families with one child are assumed to have a ‘young child’ (4 years old). Families with two children are assumed to have a ‘young child’ and a ‘child’ (9 years old). Families with three children are assumed to have a ‘young child’, a ‘child’, and a ‘teenager’ (15 years old).

TECHNICAL DOCUMENTATION

For a more detailed description of the methodology used, please see the technical documentation here. Portions of the original article are published here from MIT’s Living Wage site. Data from this site was used to create the 13 county North Alabama Region 1 infographic.

Glasmeier, Amy K. Living Wage Calculator. 2020. Massachusetts Institute of Technology. livingwage.mit.edu.