In August, Florence and I set out to determine how much our average worker needed per month in order to accurately provide for her family.
I can ballpark payment for a skilled worker – someone living in Kampala, with a college degree, who lives in a one or two bedroom apartment with her boyfriend and eats Irish potatoes, posho, Matoke and chicken and chips most nights. Throw in a beer or two, some nights out with friends, boda rides for when she doesn’t feel like cramming into a Matatu, and I can get it almost, exactly, just right. I’ve lived that life. I know what it looks like, and the late night squeeze between going home to cook up some rice and beans, and splurging on a cocktail and Chicken Biryani in Kabalagala.
The difference between that kind of life and that of the “unskilled workers” I was working with, is akin to comparing an upper east sider with a nanny and a driver and…let’s not get into it, to my life in Bedstuy, Brooklyn, where Taxis are reserved for the greatest of emergencies, and you pretend you’re a beer girl even when you want a cocktail because $15.00 just isn’t going to cut it for a drink this month.
All that to say, I realized I had no clue. When we sat our partners down to find out their average monthly expenses we realized, neither did they. How much did they spend on transport? On food? On housing? I got blank stares.
So, we decided to calculate it together.
This is called a living wage, and it exists as the relevant insight behind a minimum wage. It determines the ground floor for what a person needs to thrive within their cultural and geographic context – make bills, provide for education and participate in local cultural and family activities. The importance of a living wage was emphasized by Plato and Aristotle in ancient Greece, St. Thomas Aquinas in the 13th century, Adam Smith in the 18th century, and Popes since 1890. But it’s just barely being calculated in the developing world.
Here’s the thing: calculating a living wage gets sticky in the developing world, so most companies working just don’t do it.
Here’s what hurts if you calculate too high:
1. You don’t want to price yourself out of the cheap labor market.
2. You don’t want to pay so much more than everyone around you that you create artificial wealth, and unreasonable expectation.
Here’s why it’s a detrimental mistake to pay too little:
1. You can get your worker’s full dedication because they’re forced to consistently look for side work elsewhere to meet their bills.2. You’re keep the very foundation of your company – the workers that make it up – in perpetual poverty. Unable to catch up, let alone ‘get ahead,’ you’re running your facility on stress, discouragement, depression and chronically bad health.
You’ve got to hit that sweet spot – somewhere in between paying 10x what someone needs because you’re a white girl that’s all ‘BOUT THAT POSITIVE CHANGE, and screwing people over because you didn’t think enough about what it was they needed to be getting before you parceled out hourly wages.
The International Labor Organization (ILO) explained in a 2011 report that, “Companies proffer various reasons why they do not pay a living wage in practice. A common reason, and perhaps excuse, for not paying a living wage relates to difficulties in measuring a living wage such as lack of a universally accepted definition, lack of an accepted formula and subjectivity.”
Florence didn’t want that, and neither did I. We set out do a monthly survey, with several columns with pictures at the top explaining each item for our workers who don’t read – transportation (a photo of a bus), food (a full plate), oil (you get the gist…).
Each day, Florence worked to write down reported expenses their prospective column, at the end of 30 days we added up corresponding daily and monthly averages.
From a month long survey of 11 women living in the slums outside Kampala with an average of 2-5 children:
TRANSPORT: 1800 UGX/day ($.75) – 54,000/mo ($21)
HOUSING: 6000 UGX/day ($2.37) – 180,000/mo ($71)
FOOD: 10,000 UGX/day($3.96) – 30,000/mo ($11.88)
COOKING OIL: 700 UGX/day ($.27) – 21,000/mo ($8.31)
WATER: 1,000 UGX/day ($.39) – 30,000/mo ($11.88)
Afterward, we checked our research against the ILO’s formula for living wages, and found that it includes the following cost of basic necessities:
- Nutritious low-cost diet that is appropriate for the country in terms of the types of food items included
- Basic housing in the location with an acceptable standard generally defined in terms of size, number of rooms, structure‘s materials, and availability of amenities such as indoor toilet and electricity.
- Adequate clothing and footwear (sometimes with specific numbers of shirts, pants, shoes, etc., indicated)
- Cost of other needs, such as transportation, children‘s education, health care, child care, household furnishings and equipment, recreation and cultural activities, communications, and personal care and services.
- Sometimes a small margin above the total cost already estimated for a frugal and basic life style is added to help provide for unforeseen events, such as illnesses and accidents, so that common unforeseen events do not easily throw workers into a poverty trap that they may never be able to get out of.
- The total estimated cost per capita of a basic living standard is then scaled up to arrive at cost for a household using an assumption on the household size that needs to be supported.
- Finally, total cost for a household is defrayed over the number of full-time equivalent workers assumed to be working in a household.
Visual Chart:
What we had left out:
- Recreation and cultural activities
- Communications
- Personal care and services
- Education
- Clothing
- Annual costs of furnishings
Without these added costs, the basic needs of our average worker added up to around $125 a month.
Next in this series, I’ll provide research on average payments and their corresponding payment riots in Kampala to put this number in context. Keep in mind that it’s just the survival basics, without calculating education, clothing or communication.
I’ll be breaking down our adjusted number after giving relevant context surrounding this one I listed here.
