Alexandria Ocasio Cortez has insisted that the majority of Americans don’t make a living wage. The vast majority even. Which is nonsense, as the vast majority of Americans are not keeling over from the diseases and starvations of absolute poverty nor destitution. By very definition, given the fact that Americans are living upon their wages, they are gaining a living wage.
But then that’s logic and the subject under discussion is demagogic politics.
— Waleed Shahid (@_waleedshahid) 22 January 2019
The Washington Post has a go at this and they manage to miss the important point here.
We are going to break down her statement into parts. “I think it’s wrong that a vast majority of the country doesn’t make a living wage.” The question is whether a “vast majority” of American workers do not make a living wage, as Ocasio-Cortez claims. The answer is not easily found. The living wage is not really a measure of income but of living costs, before taxes, such as food, child care, housing, transportation and other basic necessities; it does not include meals in restaurants, entertainment or vacations. It is often misreported as an income figure, but it cannot be easily compared to income such as a minimum wage — even though it is. There are several versions of the Living Wage calculator, which all focus on the costs in a particular locality. There are wide variations, and so a nationwide average does not really capture that. The MIT Living Wage calculator, run by Amy Glasmeier, a professor of economic geography and regional planning, says the living wage in the United States was $16.07 per hour in 2017, before taxes, for a family of four (two working adults, two children). That means both adults together would need to make at least $32.14 before taxes to cover basic necessities. “We do not say that a majority of Americans don’t make enough income to cover basic costs,” Glasmeier said.
No, there’s a deeper point here. It’s Adam Smith’s linen shirt all over again. Not being able to afford a linen shirt does not make you poor. But if you live in a society where not being able to afford a linen shirt means you are regarded as poor then in that society, if you can’t afford a linen shirt, you are going to be regarded as poor.
That is, at least one useful definition of poverty is about the expectations of the society around you.
So, what’s the living wage? It’s a measure of what a certain number of liberal, even progressive, academics think would be a nice standard of living for all to have. Nothing wrong with that. Except, obviously enough, that living wage is now anchored in the expectations of the society about which it is set. The American living wage is very much higher than the Greek one, as an example, many multiples of the Bangladeshi one (we actually know what that one is, some $450 a month by one calculation).
And what is it that anchors that expectation? The average living standard of the people in that country. So, our living wage is set with some reference to the average wage. The observation that there are people below the living wage is just the acknowledgement that some people have below average incomes. Which, given what an average is, isn’t all that much of a surprise. You know, Lake Wobegon and all that?
Shrug. Quite why averages are a scandal is unknown but I guess it keeps us all talking about AOC for a little longer.