The global case for a living wage

The dominant political economy focuses on efficiency, profit, and markets, depending on supply and demand in a deregulated setting to achieve prosperity. Workers, as independent agents, sell their labor at alleged market rates. These compensation rates often do not meet their basic survival needs. This creates an imbalance of power in favor of employers who can exploit workers under threat of starvation and homelessness in sweatshop conditions. A minimum wage is not necessarily a living wage. Establishing a minimum global living wage concept with regional considerations as a basic human right is essential, ensuring that economic systems serve humanity instead of humanity serving economic systems.

Here, I will define a living wage and describe the social problems it can help solve. Next, I will explain the ethical, moral, and theoretical views on the topic. Finally, I will propose a rough framework on how institutions and global governance can drive consensus, calculate, implement, and enforce a living wage concept through global trade mechanisms and coordinated regulation with regional and local considerations.

What is a living wage?

There are many institutional definitions of the living wage concept to draw from to form a consensus on what it means.

The Organization for Economic Cooperation and Development (OECD) suggests¹ it is: “A wage sufficiently high to permit a worker to keep a given standard of living”. In turn, the OECD cites the definition in the glossary as originating with the Glossary of Compensation Terms, United States Bureau of Labor Statistics, August 1998. Here, we must also define a given standard of living.

The United Nations Global Compact (UNGC) says²; it is “…a wage that enables workers and their families to meet their basic needs….” With this, we can consider the needs of housing, food, education, and healthcare.

The World Fair Trade Organization (WFTO) explains the idea as; “…sufficient to afford a decent standard of living for the Worker and her or his family. Elements […] include food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events…”. This definition is more expansive and includes savings for emergencies.

The Fair Labor Association (FLA) clarifies³ it as; “…sufficient to meet the worker’s basic needs and provide some discretionary income…” This explanation implies savings that might include a level of leisure.

The Global Living Wage Coalition (GLWC) defines the concept as; ’’..sufficient to afford a decent standard of living including food, water, housing, education, healthcare, transport, clothing, and other essential needs including provision for unexpected events…” This is like the WFTO description.

Solving social issues with a living wage concept

Globalization has increased development and cultural exchanges. However, multinational businesses continue to abuse workers and the environment to maximize profits. There are negative outcomes that remain unresolved. Below are four globalization challenges the universal living wage concept for workers can mitigate.

Human rights

Wealth disparities between the Global North and South are growing, shifting from colonial labor exploitation to modern free market exploitation. This includes the exploitation of women, children, and human trafficking. The 1948 United Nations Universal Declaration of Human Rights asserts the right to fair wages, human dignity, and a well-being standard of living. Yet, decades later, many corporations still exploit workers in sweatshop conditions.⁴

Transnational corporations like Nike and others identified by The Clean Clothes Campaign, such as Amazon and Puma, do not pay living wages. However, ensuring labor human rights and reducing poverty aligns with the UN Sustainable Development Goals for 2030. With integrated trade markets, it is time to implement a living wage concept worldwide.

Growing wealth inequality

Wealth inequality rises with globalization. In the U.S., Canada, Russia, China, India, and Europe, the richest members of society receive a disproportionate share of wealth from our economic system. While the world struggles post-COVID, the affluent continue to accumulate more. The wealth created by workers does exist for it to be shared more equitably with the workers themselves. We must decide if our economic system serves most of society at large or the minority at the top. Fair labor demands and a living wage can narrow the rich-poor gap.⁵

Present geo-political unrest

Globalization is contributing to political discontent around the world. There are challenges related to migration due to market changes. Workers face issues such as lower wages, outsourced jobs, and changes in national economic sectors during economic integration. This unrest is associated with a rise in far-right populist movements worldwide in countries like Argentina, India, Hungary, the UK, and the United States.

There is an increase in nationalism, authoritarianism, and protectionism, notably illustrated by the policies of US President Donald Trump. Far-right movements often employ rhetoric that addresses the emotions of public anger without solving disparity. This situation leads to changes in the global order, including closing borders, tariff disputes, unilateral actions, and events like Brexit. Providing a living wage can address political extremism by allowing workers to meet their basic needs without experiencing economic resentment or reliance on government-funded social safety nets.

Ongoing climate catastrophe

Policymakers must address economic and political stability during the climate crisis. Capitalism is destroying the planet. Catastrophic changes are beginning, leading to a mass extinction event. Sea level rise may erase major cities by 2100, affecting urban areas and staple crop regions in countries like Vietnam and Thailand, displacing up to 410 million people. Without a shift to a plant-based diet, we will lack sufficient land and water to feed the world by 2050, with a 90% chance of civilizational collapse by 2100. These issues will heighten global competition for resources. Ensuring a living wage today can mitigate migration pressures by allowing workers to survive where they live, as coordinated plans to relocate workers out of danger can be orchestrated in future partnerships with business moves and government planning.

Ethical and moral justifications for a living wage concept

Morals guide behavior based on religious beliefs, while ethics applied to business models provide secular principles for social structures. In the context of a global economy, considering both reveals broad social support for a global living wage.

Humanist views: the Humanist Manifesto guides society for the common good and personal self-actualization, promoting social well-being. The Unitarian Universalist Association sees economic justice as crucial for humanists and supports the concept of a living wage, advocating for the dignity of the human condition without requiring adherence to any higher commandment.
Institutional support : the concept of a living wage was introduced by the League of Nations and featured in the creation of the International Labor Organization (ILO) in 1919. The United Nations Global Compact (UNGC) promotes adopting a living wage, emphasizing that the lack of a universal definition is not an excuse for inaction. NGOs and civil society institutions recognize the need for wage reform to improve the human condition, with trade unions being strong proponents. The World Economic Forum supports integrating environmental and worker considerations into capitalism through a "Great Reset" that includes wage reform. The Institute for Policy Studies asserts that governments and corporations should ensure the right to a living wage.

Corporate social responsibility

Unilever commits to implementing living wages across its global supply chain by 2030. The CEO of Unilever 2019-2023, Alan Jope, highlighted in 2021 that raising incomes for the lowest-paid can improve health, education, gender equality, and quality of life. Patagonia, L’Oréal, and Nestle support this initiative. Around 140 CEOs have endorsed sustainable value creation metrics, including the living wage, backing the UN's Sustainable Development Goals. The report⁶ Environmentally Sustainable Governance: Metrics for Investors also features these parameters. Other companies are pursuing "Fair Trade" certification, which includes the living wage. Responsible businesses create social value beyond profit. A living wage enhances a firm's positive image.

Western cultural perspectives

Judeo-Christian teachings support a living wage. Islamic thought emphasizes human dignity and social justice for workers, viewing inadequate wages as non-compliant with Shari'ah. Catholicism, through Pope Leo XIII's 1891 proclamation, advocates for wages that cover basic living expenses. The Torah in Judaica requires aiding those in need to achieve self-sufficiency and condemns labor abuse. Lutheranism considers insufficient wages as wage theft. These Western religious traditions offer guidance on fair labor practices.

Eastern traditional views

Confucian economics emphasizes fairness and acknowledges that inequality can lead to corruption and pose a significant issue. It suggests measures should be taken to prevent inequality. In Buddhism, the Sigālovāda Sutta outlines that employers should meet workers’ needs and show respect to them. The differences between Western and Eastern labor economies diminish when common ground is found in traditional philosophies.

Theoretical perspectives and criticisms of the living wage

Classical understanding vs. new economics

Liberalism typically supports a business environment with minimal regulations and government intervention. Classical economic thinking generally opposes wage regulation, favoring market forces to determine wage equilibrium through Adam Smith’s concept of the ‘invisible hand.’ In this context, a minimum wage below the living standard is seen as preferable to imposing a living wage, as a wage floor can conflict with market theories and profit maximization. Here, the interest of worker basic survival is sacrificed for theory on efficiency.

One argument against raising wages is the potential for inflation; however, modern studies indicate that the impact of increasing minimum wages on inflation is minimal. Post-COVID inflation has been attributed more to corporate profit strategies than wage pressures. Another concern from classical economics is that higher wages might lead to unemployment, but several studies have shown this fear to be largely unfounded, with one such study earning a Nobel Prize. Research by Belman and Wolfson⁷ also challenges the concern about regulated wage floors.

While conservatism tends to resist changes in wage policy, growing evidence suggests that wage increases can be integrated within liberal capitalism without leading to significant unemployment or inflation. This insight allows us to advocate for a more equitable distribution of wealth among workers, CEOs, and stockholders.

Left critical thought

Marx's theory advocates for workers to gain ownership of production means and manage workplaces democratically to determine wages. In 1931, the Socialist Party of Great Britain regarded the living wage concept as a temporary measure that sustains capitalism, leading them to oppose it. Marx's 1875 statement, “From each according to his ability, to each according to his needs,” can be used to justify a living wage based on need. The modern left advocates for living wages within contemporary frameworks.

Kshama Sawant of the Socialist Alternative Party has promoted the living wage movement in Seattle, Washington, beginning with her 2014 election victory over a Democrat party opponent who disagreed with the concept. This sparked ongoing debate in the United States, supported by figures such as Senator Bernie Sanders. During the Joe Biden administration, Democrats themselves obstructed increasing the minimum wage. In 2025, Sawant will continue her efforts through the Workers Strike Back movement, aiming to unionize Amazon workers and advocate for a living wage across the United States.

Worker-owned cooperatives⁸ offer a form of worker-inspired socialism within modern frameworks. In these enterprises, workers collectively own and democratically operate the business themselves, avoiding exploitation. MONDRAGON in Spain, with 81,000 employees across 53 countries, exemplifies this model. Similarly, small family businesses can operate as collective units which set their own compensation. Thus, wage mandates need not apply to these collaborative structures but should target capitalist employers involved in transnational labor exploitation.

Feminist justification for fairness and gender equality

Feminism highlights women's subordinate role in society and how male hierarchy undervalues women as laborers. Women, particularly in India and Vietnam, often protest global textile employers like H&M or sub-contractors for better pay and working conditions. A living wage is crucial for gender equality and dignity. The so-called liberal values of the Global North must ensure transnational corporations also value women workers in the Global South.

Constructivist transmission and acceptance of ideas

Constructivism posits that universal norms and standards guide global society, with nation-states operating within it. Transnational networks of non-governmental organizations (NGOs), corporations, think tanks, and governing bodies drive normative changes. The living wage, a universal minimum standard, is spreading through these networks, reflecting changing labor norms due to global connectivity and social contact. The World Economic Forum (WEF) is one of the many nodes of social transformation in globalized business.

Implementing a living wage worldwide

Global governance

The OECD can draw from various proposals worldwide to integrate human rights and the living wage into worker compensation. The OECD recently united the international community to agree on a 15% minimum corporate income tax, addressing the "race to the bottom" for low tax havens. Due to this success, the OECD can be used as a model to generate consensus for implementing a living wage for workers in global supply chains. This would level wages and shift national comparative advantage from labor costs to factors like technology, and skills.

Calculation, carve-outs, regulations and qualifiers

Making a single global wage impractical. The international community would need to determine living wage values based on regional and local costs of living. Organizations such as the Wage Indicator Foundation and the Global Living Wage Coalition help establish these benchmarks. The International Labor Organization (ILO) has a method⁹ for calculating these wages and recommends regular reviews to adapt to changing economies. Collaborating with the ILO, World Bank, United Nations, BRICS, and International Monetary Fund would be essential. The OECD is a proposed central point to guide coordination and consensus-making.

Worker-owned cooperatives and small family businesses should collectively decide their wages. This proposal primarily focuses on workers in import-export supply chains employed by large and exploitative multinational corporations.

This is a collaborative effort. Some governments would enact living wage mandates and noncompliance penalties based on OECD consensus, like the initiative on the global 15% minimum corporate tax rate. The OECD can provide guidance on corporate process adaptation and implementation to facilitate a smooth transition. The OECD may consider a phased and monitored approach over time for gradual implementation. For nations unwilling to collaborate, transnational bodies may become involved. Models exist to emulate. For instance, the International Labor Organization (ILO) has a mechanism for addressing labor practice complaints. This could be integrated into the process of reporting living wage violations.

We now live in a world of President Trump’s disruption to the institutional order. This era may come and go. With a return to global governance, the World Trade Organization could be involved in arbitration and judgments. There is an incentive model to follow. U.S. President Biden and the European Union attempted to include carbon emission footprints in market access rules for "dirty steel" production and punitive tariffs for noncompliance. Market access rules can aim to create a worker-centered trade policy such as living wages for workers. The WTO could allow nations to impose ‘social dumping tariffs’ on products not produced with a living wage, like the border adjustment model proposed by Biden and the EU for steel tariffs.

Effective enforcement mechanisms for living wages are necessary since past voluntary commitments by firms like Adidas, GAP, and others have failed. Social dumping tariffs can pressure entities to adopt living wage standards by threatening market share reductions.

Conclusion

The concept of a living wage as a human right has been recognized for a century. Full-time workers should afford basic needs like food, housing, education, and healthcare. Some companies now support living wages for positive consumer branding. However, globalized capitalism and profit maximization continue to hinder social justice in developed economies while maintaining wealth imbalances between the Global North and South.

Ending labor exploitation is crucial for reducing poverty, and inequality while ensuring geopolitical stability amid climate change. NGOs and global institutions like the OECD and ILO play a key role in forming policies on living wages, aiming to meet the UN Sustainable Development Goals by 2030. The OECD's recent success in creating consensus with the 15% minimum global tax on corporations shows its potential to drive policy change through governments. Continued cooperation within the OECD on living wage issues will result in clear policies, implementation plans, enforcement mechanisms through institutions like the WTO, and periodic reviews. Global action on a living wage policy for workers tailored to the needs of the cost of each country is required now to create a better world for all.