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What’s an Adequate Living Wage?

Just what does it take for a family or household in the Virgin Islands to provide for adequate housing, food, child care, health care, transportation and employment-related expenses and pay taxes?    

Well, in 2008 the Virgin Islands Legislature and Governor John DeJongh wanted that question answered and crafted legislation which directed the Bureau of Economic Research to conduct a Living Wage Study and develop a Living Wage Standard.

While drafting the bill, the Legislature learned that the Virgin Islands had a median household income that was less than half of that on the mainland while the cost of living was estimated to be as much as 50 percent higher. They also learned that the 2004 Kids Count study revealed that 28.7 percent of VI families were officially counted as living in poverty, yet the cost of living throughout the territory indicated an even higher percentage of families had trouble providing the basic necessities for their household. These are precisely the types of gaps which the Legislature felt needed further study.

Until this study, the Virgin Islands, like other states, utilized guidelines provided by the federal government as the indicator for wage and poverty criteria. However, many jurisdictions discovered a gap between the federal guidelines and what actually exists in their community. A “living wage” is the wage or earnings a full-time worker would need to make to support a family above the poverty line. These gaps create an array of social and economic issues. Individuals not “officially” declared as meeting the federal poverty guidelines are not eligible for programs such as Medical Assistance (MAP) or Temporary Assistance for Needy Families (TANF).

When working families have difficulties sustaining themselves in an area, they frequently relocate to where the price of food, and basic necessities, rents and other factors allow them to live comfortably. This practice causes extreme challenges for employers seeking to recruit and retain skilled workforces. A community’s inability to attract and keep a skilled labor pool is one that rapidly becomes stifled and its economy becomes less diverse and fails to grow. To encourage a community to flourish economically, residents must be able to provide for the basic necessities of their households and be able to contribute to the community via taxes.

It is anticipated that data from this study will more adequately reflect the VI’s true cost of living and lead to the adoption of the Living Wage Standard. In the coming months, the data and methodology used to conduct the various audits will be shared with policy makers and the public. Additionally, information on the fiscal and economic impacts of implementing a living wage standard will also be revealed.

Those who worked on the study will also make recommendations about using the Living Wage Standard as: a mandated minimum wage for Government employees; determining eligibility for locally-funded social programs such as medical assistance and affordable housing programs; as well as how the living wage standard can be used to close the gap between the populations that are eligible for federal assistance programs and those similarly in need but classified as ineligible.