Living Wage vs Minimum Wage: What Are the Differences?

Roughly 1.6 million workers make wages that are below the federal minimum wage. With the minimum wage staying such a hot topic, many people find themselves curious about the factors around it. Among these conversations, the living wage vs minimum wage topic is common.

But what’s the difference between the two, and how are they related? Read on to learn more about the minimum wage and how it affects the living wage.

Minimum Wage

It’s difficult to find an exact minimum wage guide due to the differences between federal and state. Here are the primary differences between the two.


The federal minimum wage is set by the federal government of the United States. Simplified, the federal minimum wage is the lowest that a state can set the minimum wage.

For example, the current minimum wage is $7.25. That means that no state can legally set its minimum wage below this. Additionally, no place of employment can legally pay an employee less than this federal minimum wage.


The state minimum wage varies from state to state. As the name suggests, the state minimum wage is set at the level of the individual state governments.

Because of this, state minimum wages can vary drastically across state lines. Others will set their minimum wage at the federal minimum wage.

For example, states like Texas, Tennessee, and Oklahoma have a $7.25 minimum wage. Other states like Oregon, New Jersey, and California have minimum wages higher than $13.

Living Wage

Now that we know what the minimum wage means, what is a living wage?

As the name suggests, the living wage is the wage at which the basic standard of living is fulfilled. It is meant to show what someone would need to make to pay their bills and live their life normally. Since the cost of living varies from place to place, the living wage also varies.

However, some minimum wages are below this living wage, which means the worker is worse off. In some cases, a worker can find themselves earning below the living wage because their salary is being garnished due to things like tax defaults. Because of this, many workers seek wage garnishment release to help keep them above the living wage.

Living Wage vs Minimum Wage

With the two defined, it’s easy to see how they correlate. The living wage is meant to be higher than the minimum wage.

If the minimum wage is lower than the living wage, then minimum wage workers can’t earn enough to meet the living wage. Such situations lead to people needing multiple jobs, which has negative health effects and a variety of other cons.

Keeping the minimum wage above the living wage keeps earners at a better standard of living.

Counting Up

The conversation of living wage vs minimum wage is a hot topic in economics. Many feel that the minimum wage should increase so that the living wage is met. Though they’re different wages, the two are tied together.

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