I’ve been thinking a lot recently about whether employees are receiving a living wage these days.

AND from an employer’s perspective, can you provide a living wage to all your employees and make a reasonable profit?

A living wage is enough to provide for all an employee’s basic needs, and some discretionary income for emergencies. A living wage is often higher than the minimum wage that a government mandates.

A living wage in the U.S. is different from a living wage in Argentina. And it is different in every country because the cost of living varies.

Then there is the number of workers that vary in a household. How much should each person proportionally contribute to the payment of total household expenses?

Some business leaders will say that labor cost is already too high and maintaining the bottom-line is already difficult. Where will we find the revenue to cover the additional cost if we pay our employees more?

And yet employees will say that wages haven’t kept up with the cost of living. Workers are struggling to make ends meet. Do I pay for electricity or food this week? My rent just went up again and I am trying to find a more affordable place to live.

So, what is the business case for paying your team members a living wage?

1 – Living wages = a competitive advantage. Your competitors for talent aren’t doing it.
2 - Customers want to buy from ethical companies. Your reputation as an employer will improve.
3 – Getting workers out of poverty grows consumer markets. Consumer spending increases. Demand may improve. There is more economic opportunity.
4 – Living wages increase employee engagement and productivity. Worker turnover is reduced. Associated costs of recruiting and training new employees is reduced.
5 – Your sales may improve. A Canadian study found that a 1% increase in minimum wages translated into a 0.5% increase in retail sales.
6 – Implementing living wages may reduce business disruption due to better worker relations. Have you noticed the number of businesses trying to stop unions from forming? Striking workers cause major disruptions to a business and their customers.

How could governments impact the delivery of a living wage. There could be policy reforms and market incentives to ensure a legal minimum wage reflects at least a living wage.

Look beyond employees to contractors and contingent workers. Employers could require proof that you pay living wages before hiring contactors and contingent workers.

So, you can think of living wages as a cost to the business. Or you can think of living wages as a contributor to business and community success.

I’ll write about the employer perspective in more detail another day.

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