A Psychological Approach to Living Wages (WP-24-02)
Jun Won Park, Megan Burns, and Michael Kraus
Judgments about how much is enough to live on shape many basic life decisions. This study examines these living wage estimates, the role of income in shaping these estimates, and associations with redistributive policy. In a sample of 1,000 US residents, the researchers find that people tend to suggest that a living wage is higher relative to the federal poverty line, the state and federal minimum wage standard, a popular cost of living calculator (the MIT living wage calculator), and the proposed minimum wage standard of $15 USD per hour. Cross-sectional and longitudinal analyses reveal that changes in income predict these estimates, such that, as income rises, estimates of a living wage also rise—a finding consistent with both social sampling and habituation processes. Exploratory analyses reveal the importance of these estimates to equity-enhancing policy support—higher living wage estimates predicted increased support for redistributive economic policies (e.g., progressive taxation). Together, these findings suggest that people’s beliefs about economic conditions are grounded in their socioeconomic experiences and provide important psychological insights to the fundamental question of how much is enough to live on?