How is The Living Wage Worked Out?
The Living Wage is calculated and set annually by the Centre for Research in Social Policy (CRSP) at Loughborough University.
The calculation is based on the Minimum Income Standard for the United Kingdom, the product of research by CRSP and funded by the Joseph Rowntree Foundation.
CRSP's research looks in detail at what households need in order to have a minimum acceptable standard of living and includes things such as food, clothing, rent, council tax, fuel for heating your home and childcare (if applicable).
What is included in this minimum standard is decided upon by groups of members of the public. The costs of these items are then sourced from national providers and chains. Therefore, the LW is rooted in social consensus about what people need to makes ends meet.
The research recognises that different types of households require different levels of minimum income and a specific figure is worked out for each household type (single people or couples, living with or without children).
A type of average is then calculated from the different figures to give us the minimum that each adult in the household needs to earn per hour to cover the basic standard of living.
JRF have produced a video about the Minimum Income Standard and low-pay, which clearly shows the problems that arise when wages to do not increase with inflation. When we see that wages have only increased on average by 8% over the past 6 years, but rent has increased by 32% and energy by 45%, no one needs to get the calculator out to see that something isn't going to add up.
The Living Wage is uprated every November taking into account rises in the cost of living. The new rate is announced during Livng Wage Week which takes place in the first week of November.