Just half of U.S. workers making living wage as costs rise

• Key Insight: Discover how living-wage gaps are re-entrenching workforce inequities across occupations and regions.
• What's at Stake: Rising turnover, absenteeism, healthcare costs, and recruitment risk for employers and benefit leaders.
• Forward Look: Prepare for pressure to integrate living-wage benchmarks into equitable pay and benefits strategies.
  Source: Bullets generated by AI with editorial review

As healthcare and housing costs continue to soar, a growing share of full-time U.S. workers are no longer earning a living wage, according to a new Dayforce study. 

Just 51% of full-time workers make enough to meet their families' basic needs — a 5 percentage point drop since 2021. The findings of the survey also reveal a widening gender gap and major disparities by race. 

The implications for benefit leaders and the broader workforce are significant, said Kavya Vaghul, co-founder and chief product officer at the Living Wage Institute, which collaborated with  workforce management platform Dayforce on the study.

"Workers who can't cover their basic needs show up in every metric that benefit leaders track whether that's high turnover, high absenteeism, high healthcare utilization from stress-related conditions, or even low engagement scores," Vaghul said. 

The race and gender gaps

Disparities across demographic groups and regions remain significant, and in many cases are widening. Men are significantly more likely than women to earn a living wage, with 59% meeting that threshold compared to 44% of women. Since 2021, the gender gap in access to living wages has widened by 1.1 percentage points. 

"This is a trend we've seen for a long time," Vaghul said. "One of the core drivers of this is … women tend to be in hourly roles in lower paying industries like retail, hospitality, restaurants, leisure, education and care sectors."

Read more: How benefits can impact gender pay disparity

Disparities by race and ethnicity are even more pronounced than those by gender. Just 31% of Black workers and 33% of Latino workers earn a living wage, versus 60% of white workers. The share of Black and Latino workers earning a living wage has declined by nearly 7 and 6 percentage points, respectively, since 2021. 

"This again comes down to occupational concentration," Vaghul said, adding that Black and Latino workers are more likely to hold lower-paying jobs than white workers. 

The disparities highlighted in the report reflect a longer-term structural dynamic in the labor market, where workers in retail, caregiving, food service and hospitality are least likely to earn a living wage, said Jason Rahlan, global head of sustainability and impact at Dayforce. 

"Those are all jobs that are disproportionately held by women, Black and Latino workers," Rahlan said. "That structural dynamic of the labor force is cause for concern and where we're seeing some of that gap. What we know is that paying a living wage isn't separate from building an equitable pay strategy — it has to be fundamental to it." 

The living wage data used in this analysis comes from the Living Wage Institute. It provides county-level estimates of what a full-time worker needs to earn to cover basic household needs. Those costs include things like childcare, food, housing, health care, transportation, broadband, personal care and household goods, civic participation and payroll taxes.

For this analysis, the benchmark used is a family with two full-time working adults and two children.

Regional differences

Where people live also plays a significant role in access to a living wage. Since 2021, nine of the 10 largest states have seen declines in the share of workers earning a living wage. Texas has the highest share of workers earning a living wage (59%), while Pennsylvania has the lowest (44%).

Several major metro areas have also seen declines, including Chicago, Dallas, New York and Philadelphia.

Read more: Rising costs turn financial strain into a way of life for workers

That trend is being driven by rising costs for major expenses such as healthcare, childcare and housing, Vaghul said. "At the same time, you're also seeing a slight deceleration in wage growth, so you're both starting from a lower place that's not near that cost of living benchmark," she added. 

All of this data should be top of mind for benefit leaders because financial wellness is closely tied to both overall well-being and worker productivity, Rahlan said. 

"No worker can live up to their potential in the workplace if they're struggling to meet the basic needs of their families," he said. "They all deserve the opportunity to thrive economically and not just survive."

Paying workers a living wage isn't a matter of altruism, Rahlan emphasized. "Investment in identifying and closing living wage gaps is both the right thing to do for employees and the smart thing to do for employers," he said.