What, exactly, defines a Living Wage? How much the employer is spending? How much the employee gets before taxes? after taxes? after work related expenses? If a Living Wage is meant to signify the absence of poverty, and poverty is defined as an inability to meet mandatory household expenses, then a Living Wage can also be defined as the presence of Discretionary Income.

In the labor / management dynamic, the employer sees "Payroll Expense" while the employee sees "Discretionary Income". Picking a number like Regular Pay to negotiate is a zero sum game: one side has to lose.

There are, however, many variables that can be adjusted to reduce Payroll Expense and increase Discretionary Income at the same time to produce a win-win negotiation.

If we deconstruct the labor / management pay equation, you can see more clearly what I'm talking about:

Value Added Payroll Expense
plus: Non Value Added Payroll Expense
less: Tax Incentives

equals: Total Employer Payroll Expense

less: Health Care Benefits
less: Retirement Benefits
less: Workers Compensation
less: Employer Taxes
less: Unworked Pay

equals: Regular Pay

plus: Incentive Pay
plus: Overtime Pay
plus: Bonuses

equals: Gross Pay

less: Payroll Taxes

equals: Net Pay

less: Union Dues
less: Health Care Contributions
less: Pension Contributions

equals: Net Paycheck

less: Commuting Costs
less: Check Cashing / Bank Fees
less: Incremental Lunch Costs
less: Incremental Child / Elder Care Costs
less: Coworker Vig (Birthday parties, etc)

equals: Household Income

less: Mandatory Household Expenses

equals: Discretionary Income

When management and labor work together to increase this number: (discretionary income)/(payroll expense) everybody wins. I will be providing specific examples over the next several weeks.