ON MAY 19th the Los Angeles city council voted to raise its minimum wage, from $9 an hour to $15 an hour. The full increase will be enacted by 2020. The pay rise will be especially powerful in Los Angeles, where nearly half of all workers now earn less than $15 an hour. But LA is just one of many American cities using a rise in the minimum wage to try to address the cost-of-living crunch affecting poorer residents. Washington and New York have also proposed increases to $15 an hour. Seattle has already approved a plan to get there and enacted an initial bump, from $9.47 to $11, on April 1st. These raises will take minimum-wage rates well above the federal minimum, currently $7.25 per hour. That is intentional; the architects of Seattle's minimum intend it to be what is commonly called a "living wage". But what, precisely, is that?
Advocacy for living wages has emerged as concern has grown that legal minimum wages (a policy fixture in many rich economies for much of the last century) are too low. Minimum wages are flat rates in most of the nations and jurisdictions that have them. In America, at the federal level, the minimum wage allowed is $7.25 an hour (£4.90) for adults. States may set higher rates (and quite a few do). Britain's minimum for those 21 and older is £6.50 an hour ($9.60). In China, the minimum varies by district or city from about 9 to 17 yuan ($1.50 to $2.75). America's national minimum wage can only be increased by an act of Congress, and the current rate remains well below its inflation-adjusted peak of nearly $11 an hour in 1968. The British minimum wage is raised regularly, by contrast, based on recommendations from the Low Pay Commission, an independent body made up of representatives from business, unions and academia. British wage rises nonetheless tend to fall short of cost-of-living increases. Few would dispute that America's federal minimum wage is inadequate to cover necessities in much of the country, grossly so in households with multiple dependents. In Britain, according to the Living Wage Foundation, the minimum wage is estimated to be about 20% too low, or 30% short in London. Economists are divided over whether minimum wages have benign effects on employment. Yet, there is broad (though occasionally grudging) agreement that moderate increases lift the working poor out of poverty and can reduce dependence on the government.