Living Wage Research Is Alive and Kicking—and not Just About Subsistence: A Rejoinder to Reburn et al.

Stuart C. Carr, Mary O’Neill Berry, John C. Scott, & Darrin Hodgetts Project GLOW (Global Living Organizational Wage)

The purpose of this article is to provide an alternate perspective to the state of living wage research found in Reburn, Moyer, Knebel, and Bowler (2018).   These authors (cl)aimed to “hope to inspire research into the motivational impact associated with Living wage” (2018, p. 1).  However, that research is already well under way, in applied psychology (Smith, 2015), across SIOP (Scott, 2017), in SIOP publications (e.g., Gloss, Carr, Reichman, & Abdul-Nasiru, 2016), and by SIOP at the United Nations (e.g., SIOP, 2016; UNDP, 2014).  Our purpose in this collegial rebuttal is not simply to repeat the information already available in these publications and SIOP initiatives that span work and well-being, including occupational health psychology.  Rather, in the spirit of constructive dialogue, we review and propose revisions to Reburn et al.’s (2018) conceptualization, contextualization, and methodology. Closer inspection of extant research on living wages and well-being exposes a range of new ways to contribute nationally within the US, and also internationally toward the humanitarian goal of “Decent Work for All” (https://www.ilo.org/global/topics/sdg-2030/goal-8/lang--en/index.htm).

Conceptualization

In the opening definition of Living wage for their study, Reburn et al. state, “living wage refers to the minimum income necessary for an employee to meet the minimum standards of subsisting in their specific community or region” (2018, p. 1).  This definition conflates living with minimum wages, at a conceptual level.  The conceptual definition of a living wage extends far beyond purely pecuniary costs of living, and bare subsistence. As a humanitarian construct, in most definitions, living wages are supposed to enable quality of work life and an overall acceptable standard of living. This broader definition covers a sense of inclusion, participation in decision making, equal opportunity, access to healthy and safe work environments, and a range of other, nonmonetary, nonsubsistence humanitarian and societal elements (for some examples, UNDP, 2014; Werner & Lim, 2016).

Conceptually too, minimum wages are invariably a legal obligation for an employer, whereas paying a Living wage can be either voluntary or legally obligated.  For example, an employer’s voluntary decision to pay a state or national living wage may be part of an organization’s Corporate Social Responsibility (CSR) policy, or it may be legally obliged through a city ordinance, as it is in more than 100 US cities (Smith, 2015). These municipalities may pay all city employees at least the city or state Living wage, plus oblige contractors to budget for paying their employees living wages when tendering their own estimates (which will include wage bills). 

Either way, it is minimum wages that are designed to cover subsistence costs, whereas living wages often aspire to go further, extending from work life into quality of life and rising above mere subsistence. In addition, living wages are meant to cover the millions of workers nationally and internationally who labor in vulnerable, precarious, informal and illegal jobs, and who are thereby not covered by the State or national minimum wage requirements (ILO, 2018). None of these informal and illegal workers (e.g., people engaged in unconventional “radical livelihoods”) would be covered under Reburn et al.’s’ (ibid.) conceptualization (Groot & Hodgetts, 2016). 

Contextualization

Everyday work elements like participation are of course familiar to most industrial and organizational (I-O) psychologists. Yet by defining living wages in a relatively narrow, econometric and subsistence sense, the inference is that there is little or no extant research from which I-O psychology can usefully draw to investigate living wages: “Much of the research on Living wage falls outside of the realm of I-O psychology… we hope to inspire research into the motivational impact associated with Living wage” (ibid., p. 1). 

This perspective overlooks and excludes decades of I-O research on decent work.  Much of this research presages and resonates with the International Labour Organization’s Decent Work Agenda (ILO, 2018). Decent work, for example, would enable and foster job satisfaction, work engagement, empowerment, commitment plus a range of other job attitudes—and motivators. Each of these constructs has a well-known history in and across the various domains of work psychology (above).  As such, the I-O and occupational health psychology literature which includes and spans job attitudes, their job design antecedents and their social and organizational consequences, is already replete with research that has fed into and informed I-O research globally on living wages (Berry et al., 2017), as well as connected with the Decent Work Agenda (e.g., SIOP, 2016; UNDP, 2014).

Since the last review in Berry et al. (ibid.), a concerted living wage program of national and international research has identified a cusp in the relationships between wages and well-being (Carr et al., 2018; Haar et al., 2018; Maleka et al., 2018; Yao et al., 2017).  Well-being only ticks up significantly and crosses into positive terrain at and beyond a critical wage threshold.  By crossing that cusp, a Living wage threshold may be a precursor not only of worker motivation, health, and well-being, it may also enable positive spillover into household units, and enable organizations to prosper and thrive. Again, this would be consistent with wider work policy frameworks, for instance under the United Nations Sustainable Development Goal 8 – Decent work and economic growth (e.g., Carr et al., 2015; 2016, 2017).

Methodology

Collectively, this I-O research on living wages highlights a gap in the wider debate about wages, work and well-being. Living wages are typically set macro-economically, and largely by fiat, using an estimated cost of Living, to arrive at a single dollar (or equivalent) rate of pay, by assuming a particular household configuration, and which may or may not be typical of any given country or state. This fixed pay rate is set even though any given single number may be adrift of any actual rate of pay required to escape from a working poverty trap, and that would, psychologically, allow for transformations in the quality of life, work life, and well-being (Yao et al., 2016).  In fairness, Reburn et al. (2018) appear to partly agree with this particular point by writing, “Future research can examine…different types of family units” (ibid., p. 7).

Rather than fixating on a single dollar datum, and only then contending its validity, sustainability, and viability, a logical next step would be to determine whether and how pay and well-being are linked in any relationship, for example, along a wage (and as a function of that, motivation and well-being) spectrum (Carr et al., 2018).  If people’s motivation and well-being tick up only beyond a certain wage threshold, then that would be a valid living wage, for any given context. If so, by tracking how well-being may or may not transform along the wage spectrum, concurrently and over time, pay setters would be able to discern empirically where, and how (gradually or suddenly) wages become “living.” By contrast, relying on any particular, single data points as the indicator of a Living wage value, based on pecuniary shopping basket data, would be at best risky, and at worse, invalid (from a psychometric and psychological point of view).

Unfortunately, this is precisely what Reburn et al. appear to do in their methodology. They take the single living wage dollar figure, derived from an economic algorithm for any given state, as their first point of reference. This figure is then compared against the (generally higher) median wage for the relevant state (again, pecuniary).  Using arithmetic difference between the two sums as a yardstick, in states where employees were paid a higher median wage differential (over the living wage for that state), there were fewer mentally and physically unhealthy days (ibid, p. 3).  Thus, states with higher incomes tended to have somewhat healthier workers (effect sizes ranged from 9-24% for physical and mental health indicators, respectively).  As the median wage rose further above state-wide cost of living, some occupational health statistics (these are not specified) tended to improve. 

Arguably, correlations like this tell us nothing particularly new or reliable, either about the precise role of a living wage in occupational health, or about the role of a living wage in worker well-being and poverty reduction. All they do in fact is suggest that the more a state’s median wage sits above the everyday cost of living (for that particular State), the healthier on average its working population may tend to be.

Future Directions

In their vision for future research, Reburn et al. (ibid.) advise that research be expanded to include diverse household units, different occupations, locations, time periods, nonlinear dynamics, and levels of analysis. We certainly agree and in fact, all of these ideas have been, or are already being studied, in the United States, and across the United Nations; and across Project GLOW (Berry et al., ibid.; Scott, ibid.) in I-O psychology, and across a raft of work-related disciplines and professions (for example, in management, economics and sociology).

With respect to advancing I-O and occupational health psychology, we would urge all authors researching Living wages to incorporate and reflect these ongoing (and in some cases highly developed and advanced) research activities into their own future research and writings. The should also redesign their approach to focus conceptually, methodologically, empirically, psychologically, organizationally, and sustainably, on living rather than minimum wages.  “Why Is the Living Wage Not the Minimum Wage?” is still a good and valid question. Answering it requires quality evidence from the field of health at work, in collaboration with others in the field, and policy arenas.

Acknowledgement

                We appreciate the helpful and constructive input from our peer reviewers.

References

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