Living wages have emerged as one of the most transformative – and challenging – aspects of B Lab’s new standards. As companies prepare for these changes, many are wondering: what exactly will be required, and how can we get there?
To help answer these questions, I recently hosted a webinar with two experts at the forefront of this evolution: Bernard Gouw from B Lab’s Standards Management Team and Michelle Murray, CEO and founder of Living Wage for US. Their insights reveal both the complexity of implementing living wage standards globally and practical pathways for companies to move forward.
Understanding Living Wages: A Foundation for Worker Well-being
A living wage represents the minimum income necessary for a worker to meet their family’s basic needs – including food, housing, healthcare, transportation, and other essentials – plus a small margin for unexpected events. This goes well beyond minimum wage requirements, which have lost 42% of their value since 1968 and often leave workers struggling to make ends meet.
“What we really have is people right now making really difficult choices between basics like proper nutrition and heating their homes in the winter,” Michelle explained. “At this point, 20 in every 10,000 people experience homelessness, that rate has been growing year over year, and 40 to 60% of those are employed. They’re just not earning enough money to pay their bills.”
Michelle cited data showing that 27% of workers are leaving their jobs because they don’t earn enough to support a decent livelihood. This turnover directly impacts business performance through increased recruitment costs and decreased productivity.
Conversely, companies that commit to living wages often see decreased turnover, improved ability to recruit quality candidates, enhanced corporate reputation, and increased overall productivity.
The importance of addressing living wages extends far beyond B Corp certification requirements. As Michelle emphasized, understanding and working to close wage gaps is “one of the most important things that you can do for your workers in terms of sustainability right now to make sure that they can pay for basic decency.”
The Evolution of Fair Work Standards
Building on this understanding of living wages’ fundamental importance to worker well-being, B Lab is evolving its approach to Fair Work requirements in significant ways. After extensive consultation with stakeholders worldwide, they’ve developed a more nuanced framework that acknowledges both the transformative power of living wages and the complex realities businesses face in implementing them.
Central to these changes is the shift from individual to family living wage benchmarks, reflecting a deeper understanding of what workers need to support themselves and their families. This represents an important evolution in how we think about fair compensation, recognizing that a truly sustainable wage must support not just individual workers, but their households as well.
Importantly, paying a living wage won’t be mandatory for certification, but companies will need to demonstrate meaningful engagement with either living wage calculations or collective bargaining frameworks. This flexibility acknowledges the diverse circumstances businesses face while maintaining a clear focus on progress toward fair compensation.
“We do absolutely believe in living wage as a transformative tool to lift people out of poverty,” explains Bernard Gouw from B Lab’s Standards Management Team. “It’s about respecting human rights and tackling economic inequality.”
As part of this evolution, B Lab is considering making companies’ approaches to wages visible on their B Corp profiles. This step toward transparency could create new opportunities for companies to demonstrate their commitment to fair compensation practices.
Using the new standards, companies will have an opportunity to begin thinking strategically about these changes. These shifts represent more than just a change in requirements—they reflect an evolution in how the B Corp movement understands and promotes fair compensation as a cornerstone of stakeholder-driven business.
How to Implement Fair Wages
The path to implementing living wages doesn’t have to be overwhelming.
Michelle emphasized that companies should start by understanding their total remuneration, including benefits, before getting discouraged by raw wage numbers. “Don’t get scared if you see a number that is much higher than you pay,” she advised. “Total remuneration matters. Benefits matter. There are cost-effective ways to close gaps.”
Well-Paid Maids offers an inspiring example of how companies can successfully build their business model around living wages, even in traditionally low-wage industries. They made fair wage payment central to their value proposition, calling it our clearly in their marketing and operations.
“They decided to put that living wage payment for the workers front and center for their business model,” Michelle explained. “People were willing to pay more for this service when they put the concept of this is going to our workers who are all going to earn a living wage front and center.”
Their experience also revealed important lessons about benefit structures. Sometimes well-intentioned choices – like offering only premium health insurance plans – can actually work against worker well-being if the employee contributions are too high for workers to afford. Instead, companies might consider more cost-effective approaches like offering both standard and premium health insurance options, implementing childcare FSA contributions, or exploring Health Reimbursement Arrangements (HRAs) for small businesses.
For benefits to count toward living wage calculations, they must meet specific criteria: they should vest within one year, reduce costs included in living wage calculations, be reliable and dependable for workers, and be accessible at living wage income levels. One particularly effective option is childcare FSA contributions. As Michelle pointed out, “Child care is one of the largest costs of living in the US in almost every single county across the US. But not 100% of your employees have this expense at one period in time.”
Fair Wages & Your B Corp Journey
While B Lab isn’t mandating living wages immediately, they’re creating a framework that encourages progress while acknowledging real-world complexity. For companies starting this journey, the key is to begin assessing your current position and developing strategic approaches to close gaps over time.
The path forward isn’t about overnight transformation – it’s about meaningful engagement with living wage frameworks and steady progress toward fair compensation. As Michelle reminded us, “This is really an essential thing for anyone working with this to start understanding and working on, even if it means you’re ready a few years down the road.”
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