Living Wage 101
Calculating a living wage
benefits | Examples
of living wage policies
» Calculating your Living Wage
» What does "indexing to
inflation" mean, and how do I do it?
Own your numbers. Know them inside and out. You wish
a living wage campaign could be about the real issues
of poverty and worker power, but at points it will inevitably
come down to the numbers. Talk to workers on your campus;
what do they need to live comfortably? Discuss a wage
rate with them and be on the same page about it. You
should both know where it came from and why it is the
living wage for your locality. Remember to be on top
of how each component is calculated in the living
wage breakdown. If you have friends in the econ
world, enlist their help for the calculations and in
literature you produce to explain them.
Do avoid getting into arguments over the minutia of
the wage. There are larger issues at hand. And never
forget the non-wage
benefits here and communicated by workers on your
Calculating your Living
The Economic Policy Institute (EPI) has a convenient
Basic Family Budget calculator to help you figure out
a living wage for the areas covered in the study. In
order to use it, follow these steps:
• Check out EPI’s website, www.epinet.org
• On the left sidebar, under “Web Features”,
click on “online calculators”
• Click on “Basic family budget calculator”
• Living wages generally assume two working adults
and 2 children. This calculator lets you change the
make-up of the family, but it’s generally best
to stick to what the national movement uses as its average.
• Select your location and submit info
• The breakdown EPI gives you is helpful for
different parts of your campaigning. For a solid wage
though, all you need is the “annual total”.
• Because this number assumes two working adults,
divide it by 2.
• Then divide it by the number of hours worked
per year, which for full-time is 2080 hours.
• Voila. The EPI does it best to keep these numbers
up to date, so you shouldn't need to adjust it for inflation.
If find out that the numbers are outdated, you can figure
out the math to adjust your number in the “Inflation
Wider Opportunities for Women (WOW) has developed the
Self-Sufficiency Standard, which is as phenomenal and
thorough as EPI’s Basic Family Budget. Differences
are nominal. While WOW does not have a calculator on
their website, you can download their studies and calculate
an hourly wage fairly easily. These, too, will have
to be adjusted for inflation. Note the date of publication
of your state’s Self Sufficiency Standard and
adjust by following the steps outlined in the “Inflation
• Find WOW’s studies at:
• Click on “Standard for your State”
• Download the supporting file
• You’ll find the wage for your area within
the document. You’ll also need to index it for
inflation, so note the publication date and adjust.
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What does "indexing
to inflation" mean, and how do I do it?
In negotiating a living wage, one of the most crucial
elements is to ensure that it is indexed to inflation.
Inflation is an increase in the general level of prices.
When the economy experiences inflation (which does not
always happen, but usually does), the purchasing power
of your money decreases as goods get more expensive.
By indexing wages to inflation, wages remain the same
on real terms.
Note that indexing a wage to inflation is not the same
as indexing to the Consumer Price Index (CPI). The CPI
is calculated monthly by the Bureau of Labor Statistics
(BLS) based on a basket of goods and services. As its
name implies, it is an index of change, with the 1984
price set as the base level. The 1984 level bears no
special significance. While the inflation rate and the
CPI are different entities they are related and calculated
in a similar manner. The difference with the inflation
rate is that it allows you to choose your own base level,
such as the the difference in price levels since two
years ago when your university signed a contract.
This helpful website will help you calculate inflation
Visit the Bureau of Labor Statistics to find out the
current CPI (it is under the current news releases section):
a. Field Guide to the Bureau of Labor Statistics website
– finding the inflation numbers
Studies with conveniently recent numbers and data can
be difficult to find. Most likely you’ll be working
with studies from a few or several years back. No problem.
Adjust for inflation. For this you’ll be using
the national inflation rate or the Consumer Price Index
(CPI). There are two ways to do this: the simple, national
average calculation, or more area specific calculation.
Calculating for inflation in your specific city or region
may be more advantageous if you live in a urban or more
expensive area, while rural areas may benefit from the
simple, national average calculation. The first, easy
option is a perfectly decent way of calculating for
inflation, according to EPI, but the second is more
The U.S. Department of Labor has a bunch of economic
information available to us through the Bureau of Labor
Statistics. The BLS makes the national average inflation
calculation incredibly simple.
• Hop onto http://www.bls.gov/ , or http://inflationdata.com/Inflation/Inflation_Rate/InflationCalculator.asp
Both are reliable calculators. Inflation data is self
• At the BLS site, click on the “Inflation
Calculator” under the first heading, “Inflation
and Consumer Spending”.
• Voila! Enter data as appropriate.
Regional specific CPI inflation rates are a little more
complicated. But these steps are easy enough.
• From the BLS website, click on “Consumer
Price Index” under the first heading, “Inflation
and Consumer Spending”
• Halfway down the page, under heading “Get
Detailed CPI statistics”, click on “Consumer
Price Index- All Urban Consumers (current series)”
• The 2nd half of the list presented to you is
a series of regions and major urban centers. Click on
the region/city most appropriate. Retrieve data.
• OK. The numbers might be scary. And they might
not go back as far as you need. But the calculation
• Take your new, up-to-date number and kick ass!
- Divide the most current “annual” number
(for Washington-Baltimore, for example, this number
is 119.5 for 2004) by the “annual” for the
year from which you want to calculate inflation (Washington-Baltimore
1998 annual is 102.1). So, for Washington Baltimore,
this would be 119.5/102.1 = 1.17.
Multiply this number by the number you’re trying
to calculate inflation for. If you had a living wage
of $12.48 for 1998, for example, you would multiply
$12.48 by 1.17, and get $14.60 in 2004 dollars.
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