What Is a Living Wage?

By Jeremy Bowman – Updated Dec 28, 2024 at 6:31 PM

Key Points

A living wage allows workers to afford essentials without subsidies.
Living wages vary locally; NYC needs $33.31/hour for a single adult.
Costco pays above-average wages, reducing turnover and boosting growth.

In a high-functioning, market-based economy, there's no shortage of debate over the definition of an optimum wage.

Some sides of the political aisle argue that the free market should set wages, with some even opposing a minimum wage. Others believe a living wage is the ideal base wage for most workers. However, the definition of a living wage can change significantly from place to place, so the concept is best applied on a local level.

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A close-up of a pay stub with a pen lying on top of it. — Image source: Getty Images.

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After a wave of high inflation, we're likely to see wages increase. Whether we'll see a living wage implemented in more places will depend on political willpower to do so and the decisions of companies like Costco.

Another bull market, as well as pushback from labor advocates, could make living wages more common. However, despite decades of discussion, the concept has generally been slow to be adopted.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.