What is the difference between the living wage and the national minimum wage?
Newcomers to the employment market will often hear references about the minimum wage and also the living wage without necessarily understanding what exactly these terms are referring to. Both of these are describing a specific set of rules which has the basic objective to ensure that employees are properly compensated. It may be necessary to provide a proper description in order to make it possible to better understand the concept behind the minimum wage and living wage and how they will apply to individual citizens. In most cases minimum wage is understood to be a specific compensation per hour which legislation demand that an employee should be paid by their employer. In order for the employee to qualify for such a specific minimum wage they will be required to meet with very specific guidelines and other qualifications in order to be counted as worthy so to speak to receive such compensation. The living wage however will be a wage that is determined based on what the employee may need in order to enjoy a reasonable standard of living with in a specific demographic area. Such a living wage is mostly significantly better and could provide an employee with substantially more benefits.
Understanding the main differences
Since government determines the minimum wage such a wage is a rigid calculation which will stay in force for a specific period of time. This will not apply in the case of a living wage and this kind of wage may vary based on certain factors within the economy and industry. The minimum wage is something which is set in place by the government and it will be applicable to all employees and will be covered by strict wage legislation and this will require an employer anywhere with in such a country to compensate all employees according to those minimum wage regulations. This is not the case when it comes to determining a living wage. In determining a living wage the employer will take many aspects into account such as the demands which may be placed on an employee living with in a specific metropolitan area and the cost of living in order to live a reasonable standard of living with in that specific area. This may result in a living wage which could be significantly higher than the minimum wage that has been determined by government.
Minimum wage is coupled to a specific government policy
The easiest way to understand minimum wage is to realize that minimum wage is something which results because of policies which has been put in place by the ruling government. The minimum wage is calculated based on a comprehensive analysis of the current economic conditions in such a country and therefore what such a country could reasonably afford and still continue effectively with in the global economy. The living wage however looks at the wider picture and it takes into consideration what the typical household will have to pay in order to afford basic needs as they may apply to a specific demographic area. This is something which is arranged between the employer and employee and mostly goes beyond the government minimum wage. Governments will mostly not interfere with living wage calculations by they will often engage in data gathering operations which looks at the living wage calculations as they apply to specific areas and these can to some measure have a minimal impact on the determination of minimum wage.