New Challenges - The Living Wage

In recent years there have been more fundamental challenges to the poverty measure. Concerned that the poverty rate is far too low, community-based organizations around the country have advocated for "living wages." These groups have argued that instead of using "poverty" as the standard to measure people's economic well-being, we should develop a measure of "living wages."


Policy and research institutes around the country have developed living wage budgets that take into account the full range of costs required for families of different sizes to maintain a decent standard of living.The bottom line is that the current system of measurement is out-dated and seriously underestimates the count of the number of poor people in this country. If the government were to acknowledge the true extent of poverty.


It would need to dedicate a greater share of its resources to pay the costs of programs to help the poor. It is unfortunately cheaper to use an outdated system of measurement so that fewer people will be in poverty by government standards.
The 2007 World Bank report "Global Economic Prospects" predicts that in 2030 the number living on less than the equivalent of $1 a day will fall by half, to about 550 million. An average resident of what we used to call the Third World will live about as well as do residents of the Czech or Slovak republics today.


Much of Africa will have difficulty keeping pace with the rest of the developing world and even if conditions there improve in absolute terms, the report warns, Africa in 2030 will be home to a larger proportion of the world's poorest people than it is today.


Since the world's population is increasing, a constant number living in poverty would be associated with a diminshing proportion. Looking at the percentage living on less than $1/day, and if excluding China and India, then this percentage has decreased from 31.35% to 20.70% between 1981 and 2004.