What is a fair wage?

In the wage debate, you’ll hear different descriptors of wages: fair wage, minimum wage, living wage, poverty wage. Each of these has different meanings and connotations.

Poverty wage is pretty easy to figure out. If you make a poverty wage, you are working full time and still fall below the poverty line. 

Minimum wage is the minimum amount that an employer can pay you. Minimum wage is set by the federal government. Currently, the federal minimum wage is $7.25/hour. Some state governments also set a minimum wage, and if the state government’s minimum wage is higher than the federal government’s, employers must pay the state wage as minimum. Ohio’s minimum wage as of Jan. 1, 2024, is $10.45/hour for non-tipped employees and $5.25/hour for tipped employees.

Adding it up

So, let’s do some math. Is someone who makes minimum wage in Ohio also receiving a poverty wage? An untipped minimum wage worker in Ohio makes $21,736/year, assuming they take no days off. The 2023 poverty line for an individual is set at $14,580, for two people at $19,720, three at $24,860, and four at $30,000.

Let’s say a single mother has two children and works a full-time minimum wage job. In that case, minimum wage is also poverty wage. 

Living fairly

Some sources define a fair wage as compensation being aligned with value while others conflate the meaning with a living wage. A living wage is defined as earning enough to pay for all expenses associated with a normal standard of living. That includes housing, nutritious food, healthcare, education, and other necessities, such as clothing and transportation.

According to the MIT living wage calculator, “[s]tate minimum wages provide for only a portion of the living wage. For two adult, two children families, the minimum wage covers 58.5% at best in Washington and 28.6% at worst in New Hampshire.” 

In Ohio, a living wage is defined as $33.89/hour for a household that contains one adult and one child. That translates to about $70,000 per year.

That’s a stark difference between minimum wage/poverty wage and a living wage. 

Making ends meet

It’s also important to keep in mind that a living wage does not allow for disposable income, but instead considers the necessities: food, child care, medical expenses, housing, transportation, civic needs, with a catch-all fund for “other” needs, which could include items like cleaning supplies, personal care, and clothing.

People whose wages reside in the gray area between poverty wages and living wages often don’t qualify for assistance programs; for example, the Supplemental Nutrition Assistance Program (SNAP) is only available to those whose income is at or below 130% of the poverty line. 

When you’re not able to meet your family’s basic needs with the wages you’re being paid, it affects both your mental and your physical health. Not having enough money to address all of your needs means making impossible choices—and all too often, people pay the price with their health.