Wage Policy is an Essential Ingredient in a Democratic Society. Oren M. Levin-Waldman

Transcription

1 Wage Policy is an Essential Ingredient in a Democratic Society Oren M. Levin-Waldman Discussions of wage policy, especially as it assumes the form of a minimum wage, often revolves around whether it really benefits the poor sufficiently to justify adverse employment consequences. Those arguing for it claim that it is an essential ingredient to raise the poor out of poverty. Those arguing against typically argue that raising the minimum wage leads to greater unemployment. Moreover, not only are most minimum wage earners not poor, but they are not even primary earners. Rather they are secondary earners. Therefore a wage policy along these lines cannot be justified because it violates the basic premise of Pareto optimality. And yet, as I (with Whalen 2007; 2009a; 2009b; 2010; 2011) have argued elsewhere, a wage policy along these lines does have positive welfare benefits, because, through wage contours, it boosts the incomes of the middle class. The standard debate over wage policy, however, is really a distraction that has had the effect of obscuring the real issues, which is that wage policy is an essential ingredient in a democratic society. In this paper, I argue that wage policy is an essential ingredient in the maintenance of democratic society for the following reasons: First, it raises the wages of those at the bottom, and thereby gives workers more independence and power as they are placed on a more equal footing with managers. This is not just a matter of affording low-wage workers greater monopoly power, as James Galbraith (1998) suggested, but it is a matter of enabling these workers to develop their capabilities and thus enhance their freedom as suggested by Amartya Sen (1999). Second, because wage policy through wage contour effects will increase median wages for the middle class, it has the potential to arrest wage stagnation, thereby forming the foundation of a jobs 1

2 policy. This alone forms an essential ingredient in the maintenance of democratic society: economic development. And third, by adding to personal autonomy and benefitting the middle class, wage policy can also result in reduced income inequality. This is important because I present data from the Current Population Survey (CPS) that shows that individuals with higher incomes (more autonomy) are more likely to be engaged in the civic affairs of their communities. Wage Policy A wage policy could be broadly defined as a set of institutions designed to bolster the wages of the middle class. Historically these institutions assumed the form of labor policies that allowed for unionization and collective bargaining, and specific wage floors. Traditionally, wage floors assumed the form of federal and state minimum wage legislation. More recently, they have assumed the form of Living Wage ordinances at the local level, and also broader proposals for basic and/or minimum incomes (Van Parijs 1992; White 2003)). Many European countries have wage policies in the form of centralized wage setting institutions. In those countries, income inequality also tends to be less than the U.S. Aside from the welfare effects that a wage policy might have for the middle class, and its potential to reduce income inequality, it is also part and parcel of economic development. Because individuals earning higher wages will have increased purchasing power, they will be able to demand more goods and services, which in time may fuel investment and economic expansion. Economic development is central because it is the basis of a broad middle class, which, in and of itself, militates against a dual distribution comprised of those at the very top and those at the very bottom. Wage policy is about maintaining the middle class. 2

3 A wage policy assists the middle class through its wage contour effects. Wage contours, initially developed by John Dunlop in the 1950s, can be defined as a group of workers with similar characteristics working in similar industries and earning similar wages. For each group there would be a group of rates surrounding a key rate such as the statutory minimum wage and these group rates would be affected by changes in the key rate (Dunlop 1957). The key rate within an industry is essentially any rate serving as the reference point for that industry. As key rates are specific to industries, there would also be variation from industry to industry. Elsewhere, I looked at census data from 1962 to 2008 where I divided the income distribution into ten contours. Starting from the statutory minimum wage to 25 percent above as the first contour, I constructed nine additional contours (Levin-Waldman 2011). As Table 1 suggests, between 1962 and 2008, median wages in each contour increased in years when there was an increase in the federal minimum wage. In years when there was no increase, median wages remained unchanged for the most part. During periods when there had been no increases in the minimum wage, such as from 1981 to 1989, for instance, there had been no increases in median wages. This would suggest that the minimum wage has broader effects than commonly supposed. Contrary to the neoclassical model that holds the minimum wage to have adverse employment consequences, the minimum wage also has positive welfare benefits for the middle class. Arguably there may be other factors to explain increases in median wages, especially in the upper contours. And yet, those other factors do not appear to be present in those years when there was no increase in the minimum wage. That there were no increases in median wages during those years when there were no minimum wage increases, suggests that wage stagnation may well be attributable to the absence of a wage policy. Susan Hansen (2006), for instance, notes that the 3

4 federal structure of the U.S. has had the effect of driving down wages through the competition between the states for investment. Not only has this contributed to declining state labor costs, but it has also been a source of wage stagnation. And yet, it might also be reasonable to infer that a serious wage policy might have blunted the competitive struggle between the states, thereby preventing the decline in wages. 4

5 Table 1 Individual Income in the U.S. by Contour* st nd rd th th th th th th th MW Year 1962 $1.15 $1.25 $1.59 $2.00 $2.45 $3.13 $3.85 $4.81 $5.77 $7.21 $ $1.25 $1.44 $1.78 $2.27 $2.74 $3.37 $4.09 $4.95 $6.73 $8.17 $ $1.25 $1.44 $1.78 $2.26 $2.76 $3.37 $4.09 $5.05 $6.73 $8.17 $ $1.25 $1.44 $1.78 $2.26 $2.79 $3.37 $4.09 $5.05 $6.73 $8.17 $ $1.25 $1.44 $1.78 $2.28 $2.79 $3.37 $4.09 $5.05 $6.73 $8.17 $ $1.40 $1.54 $1.92 $2.40 $3.08 $3.85 $4.81 $5.77 $7.21 $9.13 $ $1.60 $1.85 $2.36 $2.88 $3.46 $4.33 $5.43 $6.73 $8.17 $9.62 $ $1.60 $1.83 $2.36 $2.88 $3.46 $4.37 $5.39 $6.73 $8.17 $9.88 $ $1.60 $1.83 $2.31 $2.88 $3.50 $4.36 $5.39 $6.73 $8.20 $10.10 $ $1.60 $1.83 $2.31 $2.88 $3.51 $4.38 $5.38 $6.73 $8.22 $10.10 $ $1.60 $1.83 $2.31 $2.88 $3.50 $4.41 $5.38 $6.73 $8.37 $10.10 $ $1.60 $1.83 $2.31 $2.88 $3.49 $4.42 $5.48 $6.73 $8.37 $10.10 $ $2.00 $2.31 $2.88 $3.51 $4.42 $5.48 $6.73 $8.32 $10.10 $12.69 $ $2.10 $2.40 $2.88 $3.72 $4.64 $5.77 $7.21 $8.75 $11.06 $14.28 $ $2.30 $2.50 $3.17 $3.96 $4.92 $6.25 $7.69 $9.62 $12.02 $14.90 $ $2.30 $2.50 $3.16 $4.00 $4.94 $6.25 $7.69 $9.62 $12.02 $14.90 $ $2.65 $2.88 $3.75 $4.71 $5.77 $7.21 $8.99 $11.30 $14.07 $17.26 $ $2.90 $3.37 $4.04 $5.00 $6.25 $7.79 $9.62 $12.02 $14.90 $19.23 $ $3.10 $3.51 $4.42 $5.50 $6.73 $8.41 $10.34 $12.93 $16.35 $19.71 $ $3.35 $3.76 $4.81 $5.77 $7.21 $9.15 $11.54 $14.30 $17.55 $ $3.35 $3.76 $4.81 $5.77 $7.21 $9.25 $11.54 $14.38 $17.40 $22.12 $ $3.35 $3.77 $4.81 $5.77 $7.21 $9.21 $11.54 $14.42 $17.50 $22.12 $ $3.35 $3.75 $4.81 $5.77 $7.21 $9.14 $11.54 $14.42 $17.60 $22.12 $ $3.35 $3.76 $4.81 $5.77 $7.21 $9.23 $11.54 $14.42 $17.60 $22.12 $ $3.35 $3.75 $4.81 $5.77 $7.21 $9.33 $11.54 $14.42 $17.55 $21.92 $ $3.35 $3.75 $4.81 $5.77 $7.26 $9.31 $11.54 $14.42 $17.79 $22.12 $ $3.35 $3.80 $4.81 $5.77 $7.21 $9.25 $11.54 $14.42 $17.79 $22.12 $ $3.35 $3.81 $4.81 $5.77 $7.21 $9.23 $11.54 $14.42 $17.72 $21.95 $ $3.85 $4.50 $5.64 $6.73 $8.50 $10.56 $12.98 $16.59 $20.19 $24.39 $ $4.25 $4.81 $5.91 $7.21 $9.43 $11.54 $14.42 $17.79 $22.60 $28.06 $ $4.25 $4.81 $5.86 $7.27 $9.45 $11.54 $14.42 $17.98 $22.74 $28.37 $ $4.25 $4.81 $5.84 $7.21 $9.38 $11.54 $14.42 $18.27 $22.66 $28.37 $

6 MW st 1 nd 2 rd 3 th 4 th 5 th 6 th 7 th 8 th 9 th $4.25 $4.81 $5.85 $7.29 $9.61 $11.54 $14.42 $18.27 $22.75 $28.37 $ $4.25 $4.81 $5.92 $7.39 $9.49 $11.54 $14.42 $18.27 $22.98 $28.37 $ $4.70 $5.29 $6.73 $8.17 $10.10 $12.50 $15.87 $19.71 $24.04 $30.77 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.31 $22.10 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.40 $21.83 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.31 $22.03 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.40 $22.12 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.43 $22.12 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.31 $22.12 $27.41 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.61 $22.12 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.79 $22.12 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.60 $22.12 $27.40 $33.65 $ $5.15 $5.77 $7.21 $9.13 $11.54 $14.42 $17.60 $22.12 $27.64 $33.65 $ $5.85 $6.92 $8.41 $10.00 $12.39 $15.87 $19.71 $24.04 $31.25 $38.46 $ $6.55 $7.21 $9.62 $11.90 $14.42 $17.79 $22.50 $27.88 $34.62 $44.23 $55.29 Source: Author s calculations based on Miriam King, Steven Ruggles, Trent Alexander, Donna Leicach, and Matthew Sobek. Integrated Public Use Microdata Series, Current Population Survey: Version 2.0. [Machine-readable database]. Minneapolis, MN: Minnesota Population Center [producer and distributor], Downloaded from cps.ipums.org/cps * Table reproduced from Oren Levin-Waldman Wage Policy, Income Distribution, and Democratic Theory (London and New York, Routledge, 2011), p

7 Beginning in 1964, more than 57 percent of the labor market was earning through these ten contours, and in 2008 more than 70 percent was earning through the ten contours. This too might attest to the broad-based welfare benefits of a wage policy, which in this case assumes the form of a minimum wage. A logistical regression analysis also showed there to be no adverse employment consequences due to minimum wage increases in each contour. In most cases the minimum wage variable was not statistically significant. Both in the 1960s and the 1970s the minimum wage was not statistically significant, but in the 1980s where it was statistically significant, there was a very strong negative effect that those earning a wage higher than the median wage in the first contour were more likely to be unemployed. In the 1990s where it again was statistically significant, the effect, although positive, was small relative to other variables, and in the 2000s, the positive effect of the minimum wage variable was even smaller than during the 1990s. Even though there were positive effects, it would be difficult to establish that wage policy was such a critical factor in the rise of unemployment. On the contrary, the analysis suggests that a wage policy actually achieves a measure of Pareto optimality. Wage inequality appeared to be reduced and unemployment did not really appear to be increased following minimum wage increases. Moreover, minimum wage increases appeared to have contour effects (Levin-Waldman 2011, pp ). Benefits for Democracy Democratic theory assumes a society of free, equal, and autonomous individuals. These individuals enjoy the same rights of citizenship as others and must enjoy their autonomy so that they can participate as full fledged citizens in the democratic process. The greater their 7

8 autonomy, the more likely they are to participate in the democratic process. Also, core to democratic theory is a conception of equality, but questions remain over just what it means to be equal. Equality could be defined in substantive terms, i.e. as individuals who are equal to one another will all have the same things. Equality under the law, as Stuart White (2007) points out, does not necessarily entail equality in the process of making the law. At issue is the extent to which inequality in resources affects one s ability to stand on an equal footing with others. Equality in the United States and other liberal market economies, however, has generally tended to be conceived of in procedural terms, which are also the defining characteristics of American democracy. Individuals born with equal rights are all equal before the law. Each individual enjoys the same right to cast an equal vote for those in government who will represent them. Each individual has a right to speak freely and openly against the actions of the government. Each individual enjoys an equal right to pursue his or her interests. Procedural equality is critical to democratic society because it serves to secure another essential condition: personal freedom, which is also a necessary condition for individuals to function autonomously. In order for there to be freedom, certain political conditions must be met, and equality, particularly equality of opportunity or procedural equality, is one of them. Individuals are free to pursue their goals and objectives i.e. self-interests so long as their pursuit does not interfere with others ability to pursue their own goals and objectives. In a very basic sense, and certainly within the context of classical political thought, this is what it means to talk about personal independence or autonomy. Equality, then, is not conceived of in terms of how resources, wealth and income are distributed that everybody have the same amount but in terms of standing that each and every individual enjoys the same standing. No individual, in other 8

9 words, enjoys greater access or privilege, or treatment on the part of the state than do others. A more substantive democratic theory would posit that equality in terms of standing, rights, access, and resources is the fundamental essence of democracy. This is the notion that unless resources in terms of wealth and income are equal in distribution, democracy is at best partial it is incomplete (Bowles and Gintis 1986; Dolbeare 1986). Full democracy requires that individuals enjoy the same rights in the economic realm that they do in the political. This is a very different concept from the procedural democracy found in most western liberal democracies. By this conception, a society is democratic if it affords political equality and equality of opportunity. Economic equality, however, is not essential to democracy. But as Tocqueville observed there cannot be real political equality without some measure of economic equality as well. Why, then, is there such a concern with inequality in liberal democracies? After all, procedural equality, which also stresses equal opportunity would suggest that unequal outcomes arising from the choices that individuals had an equal opportunity to make unfettered are not really a problem. That is, it assumes that there were no obstacles to participation. Of course, if low-wage workers aren t able to effectively participate because they lack resources, compared to higher wage workers who may have a wide range of options open to them, the outcomes are not likely to be fair. And yet, while procedural equality does not require equal outcomes for all, it does assume that there will be equal outcomes for a sufficiently large population in order to maintain stability, this sufficiently large population being defined as the middle class. So while procedural democracy does not explicitly require economic equality, it assumes a measure of it, as reflected in the presence of a broad middle class. 9

10 Why Income Inequality is a Problem Unequal distribution of wealth and income, however, may adversely affect individuals ability to participate in the democratic process on the same footing as equals. It may result in procedural inequality to the extent that those lacking in wealth and income may not enjoy the same access to political and policy officials as those who possess wealth and income may enjoy. With greater concentration of wealth at the top, those at the top are in a better position to use their wealth toward the attainment of their political and other ideological objectives (Bachrach and Botwinick 1992, pp. 4-5). To the extent that this is true, the democratic state cannot possibly be treating its citizens as though they were on an equal footing. Consequently, inequality affects our ability to be free if it effectively results in some being able to make choices that others cannot. Inequality, especially in its extreme form of poverty does in the end deprive us of our capabilities, which are only requisite for autonomy. Those with more resources may be better positioned to pursue their goals and objectives, while those with fewer resources may find that their ability to pursue their goals and objectives are limited as a result. The ability to pursue goals and objectives is important to democracy for yet another reason. A democracy, especially as its legitimacy and power are derived from popular consent, assumes that individuals have the capacity to reason for themselves, i.e to deliberate in the public square, and to act on that capacity in a responsible manner. They cannot effectively participate, whether it be in full policy discussions or selecting their own representatives, if they cannot deliberate in a rational manner. As democracy requires that individuals act on their agency, human agency must be protected. But this human agency also presupposes that basic material needs will have been met, which may be less likely with lower wages. 10

11 But there would also appear to be a relationship between income inequality, participation, and responsiveness. According to Larry Bartels (2008), members of Congress tend to be more responsive to those who are affluent than those in lower and middle classes. This is essentially the question of access. Analyzing the voting patterns on the minimum wage that took effect in 2007 and subsequently in 2009 senators were found to have attached no weight at all to the views of constituents at the bottom end of the income distribution. The views of those in the middle class appeared to have only been slightly more influential. On the contrary, senators were more responsive to the opinions of affluent constituents than of the middle class. Republican senators were about twice as responsive as Democrats to the views of higher income constituents. Democrats and Republicans were about equally responsive to the views of middle income constituents. But there is no evidence of any responsiveness to the views of constituents in the bottom third of the distribution. While senators are consistently responsive to the views of affluent constituents, they are entirely unresponsive to the views of low income constituents. All of this, of course, might imply that a more equitable distribution could conceivably result in more responsiveness, because members of Congress would no longer have incentives to favor the affluent over the less affluent. Impact of Inequality on Civic Participation Income inequality does not only distort democracy in terms of how institutions and political actors respond to different levels of income, but it may have a profound effect on the development of social capital. Democracy requires the active participation of citizens in the affairs of their communities, which extends beyond mere voting. Citizens need to be civically 11

12 engaged, and Robert Putnam (2000), for instance, has couched civic engagement in terms of social capital. Underlying social capital is the notion that civic virtue is most powerful when it is embedded in a dense network of social relations. American civil society has been defined by its associative life, in which Americans belong to voluntary organizations. And through these organizations, they participate in the affairs of their communities. And yet, there is reason to believe that income inequality may lead to political anomie. As family income inequality increases, those families below the median are further from the social norm than before. Similarly, those at the top of the distribution see a larger gap between themselves and the rest of the population. Many fear that the growth in income disparities among families has had a variety of adverse consequences for both families and communities. Families at the bottom of the distribution may end up drifting further from the mainstream, and thus may also experience greater alienation as those with greater resources may come to see them as both more distinct and undeserving. This may also have consequences for how citizens in turn view the potential role and functions of government (Haveman, Sandefeur, Wolfe, and Voyer 2004). Poor people tend to experience greater social alienation because their tendency to participate less means that they be out of touch with common interests. But participation is also less likely because the alienation coming from social isolation will lead many to the conclusion that there really is no benefit from participation in the common project which they are part of. Therefore, the less inclination to participate isn t only a function of the absence of personal autonomy, but the social alienation as well. Of course, these two may not be mutually exclusive, as one lacking in personal autonomy is likely to feel socially isolated because of the stigma attached. The alienation may also have something to do with trust. Eric Uslaner and Mitchell Brown (2005), for 12

13 instance, argue that greater equality and higher levels of trust are two pathways to participation. Inequality may actually depress participation, either directly or indirectly, through its effect on trust. Where inequality is higher, the poor may also feel powerless. Trust, in other words, rests on foundations of economic equality. When resources are unequally distributed, those at the top and the bottom might not see themselves as sharing the same fait. Consequently, they have less reason to trust people of different backgrounds. Where inequality is high, people may be less optimistic about being masters of their own fait. But it would also suggest that measures are necessary to strengthen institutions that have served to give people voice in the past like labor unions. Similarly, it would imply that other types of wage policy that give other workers a type of voice are also needed. We would then postulate that the isolation resulting from inequality leads to political anomie the absolute alienation of the individual from the political process. The most important individual and contextual factors influencing the extent to which one participates in the political system is the socioeconomic (SES) model of participation, which stresses a strong association between political activities and an individual s income, participation, and especially education. In this section I look at data from the Current Population Survey s Civic Participation Files for to assess engagement according to income levels, indirectly testing whether income inequality may be leading to anomie with regards to civic participation. Data from the CPS s Annual March Supplement for those years already shows income inequality to have increased during this period. On the basis of Uslaner and Mitchell s (2005) argument, increasing inequality should have resulted in less participation because of declining trust. At issue is whether this increase in income inequality had an impact on civic participation. In this paper I 13

14 am specifically looking at earners in households; so the measure of income inequality in both Tables 1 and 2 is household income, according to several different measures of income inequality. Although I am principally concerned with the years 2008 to 2010, I provide figures for 2000 as a basis of comparison. On one level, it is the ten year period that we should be concerned with, but on another level it is what happens at the onset of the recession in 2008 following the 2007 financial meltdown that provides a stark contrast with the years that preceded it. Table 1 Ratio of Top Fifth (Mean) of Household Income to Bottom Fifth Year Bottom Top Ratio 2000 $19,626 $159, $24,332 $200, $23,708 $202, $23,828 $201, Source: Current Population Survey s March Annual Supplements for 2001, 2009, 2010, and Table 2 Percentile Distribution Year th 10 th 50 th 90 50/10 90/50 90/ $20,719 $57,944 $128, $25,300 $73,547 $163, $25,000 $72474 $164, $25,000 $73,300 $166, Source: Current Population Survey s March Annual Supplements for 2001, 2009, 2010, and Table 1 shows that between 2008 and 2009, income inequality rose by 2.4 percent, not so much because incomes of those at the top rose, but because those in the bottom quintile fell. Moreover, those at the top may not have risen because the recession did affect a significant number of those at the top of the distribution. Overall, however, income inequality rose 5.0 percent between 2000 and percent of that increase occurred between 2008 and 2009 alone. The mean income of those in the top quintile increased by 26.7 percent while the mean income of those in the 14

15 bottom quintile increased by only 21.4 percent. Between 2008 and 2009, however, mean incomes of those at the bottom actually decreased by 2.6 percent while mean incomes of those at the top increased by.8 percent. Were income inequality to be reduced overall, the mean incomes of those at the bottom would have to increase at a higher relative percentage rate than the mean incomes of those at the top (Gottschalk 1997). And yet, there was no further increase from 2009 to Table 2, however, might suggest a slightly different story. Between 2000 and 2010, income inequality increased 8.1 percent between the very top and very bottom, but 38.3 percent of that increase occurred between 2008 and 2010, when the 90/10 ratio increased by 3.1 percent. Again, this increase by 8.1 percent may still be in large measure a function of declining relative incomes of those at the bottom of the distribution as suggested in Table 1. Between 2000 and 2008 the ratio increase was 4.8 percent. The increases between 2008 and 2009 are particularly important, as that was the beginning of the recession. The ratio of the middle to the bottom does not really change between 2008 and 2010, but from 2008 to 2009 the ratio of the top to the middle does increase by 4.5 percent. The real question, however, is what is happening with regards to civic engagement. Civic engagement can be measured by any number of variables. In this study, I divide civic engagement into three levels. The lowest level involves discussing politics on a daily basis. Voting, for example, is the most basic form of participation, but voting, especially if voters are to be engaged requires that they be knowledgeable about politics. Discussing politics and the frequency with which one discuses politics certainly speaks to an interest in politics. Active participation, however, might require more, such as visiting public officials, participating in a school group, participating in civic organizations and participating in religious organizations. The second level, 15

16 medium, involves visiting public officials. The third level, high, represents actual participation in organizations, such as school groups, religious organizations and civic organizations. It is this third level where we are bound to see individuals most involved in the affairs of their local communities. Participation at the third level is particularly important as a gage of local civic participation involvement in the affairs of one s community, which Alexis de Tocqueville considered to be a defining characteristic of American democracy. Both visiting political officials and participating in different types of civic organizations can serve as a proxy for interest in political affairs that extend beyond the nominal level of voting. They are clearly reflective of the type of associative life that Putnam and other students of social capital believe to be critical to a vibrant democracy. If voting itself is viewed as a passive form of participation, visiting a public official might be viewed as a proxy for political activism. And yet, they are also important because, as many students of social capital point out, they serve to provide important participatory skills for those who choose to get involved in larger civic organizations and/or social and political movements. Table 3 shows crosstabs for civic participation by different income groups. Table 3 Civic Participation by Income Groups Low Medium High Yes No Yes No Yes No 2008 Less than $30, $30,000 to 59, $60,000 to 99, $100, Less than $30,

17 $30,000 to 59, $60,000 to 99, $100, Less than $30, $30,000 to 59, $60,000 to 99, $100, * Statistically significant at the 5 percent confidence level Source: Current Population Survey s Civic Engagement Files for As Table 3 shows, participation does increase as income levels increase. Participation is greater in all years among those in households earning more than $100,000 a year than it is among those earning less than $30,000. At the lowest level of civic engagement, in 2008, only 12.3 percent of those in households earning more than $100,000 are participating than those in households earning less than $30,000, although it is 60.3 percent more in Those at the highest end of the distribution are not necessarily more likely to be engaged at the lowest level, but those in households at the next income level $30,000 to 59,999 are considerably more likely to be involved. At this level, the difference is 35.8 percent, percent, and 23.3 percent in 2008, 2009, and 2010 respectively. Percentage differences at both the medium and high levels suggest that those in households with incomes of at least $100,000 are more likely to participate than those in households with incomes below $30,000. Some of the key differences can be seen in Table 4. Table 4 Percentage Differences between Groups Low Medium High 2008 <$30,000/$100, <$30,000/$30-59,

18 2009 <$30,000/$100, <$30,000/$30-59, <$30,000/$100, <$30,000/$30-59, Source: Author s calculations based on Civic Engagement Files As Table 3 suggests, the differences between the less than $30,000 income group and the greater than $100,000 income group is considerable. And yet what really stands out is the percentage differences just from moving from the less than $30,000 income group to the $30,000-$59,999 income group, especially in 2009, which was when the recession following the 2007 financial meltdown was really beginning to set in. Participation appears to improve dramatically when one is in a household with income greater than $30,000. These differences alone might suggest that entry into the middle class might result in greater levels of civic participation. This is important because the impact of a wage policy is bound to be felt more by those whom we would classify as being in the middle class. Despite these differences between groups in each year, the changes in participation among the lowest income group, as Table 3 suggests are especially profound. These differences can be seen in Table 5. Table 5 Participation Changes Among Income Groups Low Medium High <$30, / / $30 to $59, / / $60 to $99,999 18

19 2008/ / Source: Author s calculations based on Civic Engagement Files As Table 5 shows, from 2008 to 2009 those engaged in low level participation in households with less than $30,000 in income dropped by 25.9 percent, although it rebounded from 2009 to It dropped 28.4 percent at the medium level engagement, but only 14.7 percent at the high level participation. Meanwhile, participation among those in households dropped 24.4 percent among those in households with less than $30,000 from 2008 to 2009, but unlike low level participation, it does not rebound from 2009 to Among the $30,000 to $59,999 income group participation appears to increase in all categories from 2008 to 2009, but then decreases again from 2009 to And among the $60,000 to $99,999 income group, there is actually little change from 2008 to 2009, although there appear to be relatively modest increases at a medium level of engagement. But there is again a decline at a high level of engagement. From 2009 to 2010, there do appear to be more significant decreases in participation among the $60,000 to $99,999 income group. Fewer in this group are participating at the medium level. And fewer in this group are engaged at either the medium or high levels. All of this would appear to be the opposite of what is happening among the bottom income group. Still, the question remains as to whether income levels are more likely to affect civic engagement over other factors. Although participation does appear to increase as household income goes up, there could be other variables that affect whether one is more likely to participate in civic activity. To test the effects of these other variables on civic engagement, I conducted a logistical regression analysis on the three levels of civic participation as dependent variables with all variables being dichotomous. The first set of regressions tests for the effects of being female, 19

20 being in a high income occupation, having high educational attainment (defined as college education or more), being in a low income industry, being in a low income household, having low educational attainment (defined as having less than a high school education), earning less than the minimum wage, being married, being in the age cohort, and being older than 65 for each of the measures of civic engagement. The second tests for the effects of being in a High Income Occupation, being in a High Income Household, being in a Low Income Industry, being in a Low Income Household, Earning less than the Minimum Wage, and being Covered by a Union on the same dependent variables. In each equation, all variables are set to a value of 1. 20

21 Table 6 Regression Coefficients Low Medium High Low Medium High Low Medium High Low Educational Attainment (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) High Educational Attainment (.000) (.000) (.000) (.000) (.000) (.495) (.000) (.000) (.343) Female (.086) (.447) (.000) (.001) (.011) (.869) (.000) (.000) (.000) Low-Income Industry (.000) (.002) (.539) (.109) (.230) (.120) (.021) (.583) (.002) High-Income Occupation (.000) (.017) (.805) (.000) (.000) (.000) (.000) (.000) (.000) Low-Income Household (.000) (.000) (.021) (.341) (.233) (.563) (.371) (.000) (.001) High-Income Household (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) Earn Less than Minimum Wage (.969) (.626) (.000) (.000) (.000) (.078) (.000) (.001) Married (.000) (.000) (.000) (000) (.000) (.000) (.000) (.000) (.000) Age Group (.000) (.000) (.229) (.234) (.000) (.750) (.002) (.000) (.000) Older than (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) Constant (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) 21

22 Table 7 Labor Market Coefficients Low Medium High Low Medium High Low Medium High Low-Income Industry (.000) (.111) (.128) (.452) (.625) (.310) (.000) (.112).(001) High-Income Occupation (.000) (.443) (.336) (.000) (.000) (.000) (.000) (.000) (.000) Low-Income Household (.019) (.000) (.000) (.012) (.000) (.016) (.000) (.000) (.000) High-Income Household (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) Earn Less than Minimum Wage (.523) (.747) (.000) (.000) (.000) (.045) (.000) (.001) Covered by Union (.000) (.004) (.147) (.000) (.004) (.342) (.171) (.002) Constant (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) (.000) 22

23 What appears to stand out in Table 6 is that at least in 2009 and 2010, low educational attainment has strong negative effects for both medium and high levels of civic engagement, which are statistically significant. Ironically, high educational attainment has strong positive effects which are statistically significant for all three levels only in Although being in a high income household does have positive effects, they are not nearly as strong as being in a high income occupation, particularly in 2009 and The strongest effects throughout at all three levels of engagement appear to be among married people. It is also worth noting that at least during 2009, earning less than the minimum wage had very strong negative effects for all three levels of civic engagement. Somewhat anomalously earning less than the minimum wage does have a positive effect that is statistically significant in 2010 for high levels of civic engagement. In Table 7, just looking at labor market variables, those most likely to be engaged at all three levels, especially in 2009 and 2010 are those in high-income occupations. Although being in a high-income household does have effects throughout at all levels, the effects are not as strong as being in a high-income household. Of course, it follows that one in a high income occupation will be a member of a high income household, whereas the converse may not necessarily be true. What is interesting among the labor market variables is the effects of union coverage. Being covered by a union appears to have positive effects that are statistically significant in 2008 and 2009 at both low and medium levels of engagement and a very strong positive effect at a high level of engagement in This would appear to support the notion that union membership perhaps provides members with social capital that can perhaps be used in other areas. Still, the important point about these regressions is the suggestion that those with higher incomes are more likely to be civically engaged. And to the extent that those earning less than a minimum wage are least likely to be engaged, it could be 23

24 inferred that a wage policy could result in more people being engaged, which will only further the ends of democracy. It is also suggestive that people with higher incomes participate more because they have greater capabilities. Personal Autonomy As this analysis suggests, a wage policy that might reduce the gap between the top and the bottom, or one that would enable individuals to move to higher income ranges, may lead to greater participation. A wage policy, then, would be in keeping with the ends of democratic society because it may contribute to greater personal autonomy. A higher income would enable them to develop their capabilities. Amartya Sen (1999) points out that income deprivations and capability deprivations have considerable correlational linkages. To the extent that individuals at the bottom of the income distribution could be said to be poor, Sen suggests that poverty deprives individuals of their capabilities. Morever, poverty should be viewed as a deprivation of basic capabilities rather than merely as low income. When Sen talks about a capability he means the alternative combination of functioning that are feasible for a person. A capability is a kind of freedom. Therefore, he suggests that there is a strong case to be made for judging individual advantage in terms of the capability that a person has the substantive freedoms he or she enjoys to lead the kind of life he or she has reason to value (p.87). Sen takes the argument further when he says: The problem of inequality, in fact, gets magnified as the attention is shifted from income inequality to the inequality in the distribution of substantive freedoms and capabilities. This is mainly because of the possibility of some coupling of income inequality, on the one hand, with unequal advantage in connecting incomes into capabilities, on the other (p.119). 24

25 Mark Rank (2004), for instance, suggests that poverty might be the most visible effect of income inequality, but because few people are affected by it, the connection between inequality and poverty might not be so readily apparent. And yet, poverty, just like income inequality, results from failings in economic and social structures. But it is self-perpetuating because to the extent that it deprives individuals of their capabilities, it effectively places them in the disadvantaged position that they will be unable to earn income sufficient to lift themselves out of poverty. Of course, it isn t only one s current status in poverty that determines whether one will remain in poverty, or the extent to which one will be disadvantaged in the labor market. Ultimately, however, wage policy is essential to democratic theory because through the personal autonomy it either confers or enhances, it serves as a bulwark against exploitation. Democratic theory, as I have been arguing, assumes a society of free, equal, and autonomous individuals. These individuals enjoy the same rights of citizenship as others and must enjoy their autonomy so that they can participate as full-fledged citizens in the democratic process. The greater their autonomy, the more likely they are to participate in the democratic process. This value of autonomy, which is ultimately a matter of human dignity, is considered to be an essential element in the complete attainment of democracy. One cannot participate as a full-fledged citizen if one isn t fully autonomous. Bruce Kaufman (2005) suggests that democracy promotes self development by giving people independence and autonomy, as well as opportunities to have voice in the political process. That voice, however, is meaningless if their personal autonomy is undermined because the low wages they earn in the marketplace renders them dependent on others and subject to exploitation. A variety of theorists talk about the need for a minimum income as a basis for personal autonomy, 25

26 which in turn is a requisite for democracy. Timothy Gaffaney (2000), for instance, maintains that a democratic polity operates on the premise that individuals will be politically autonomous that they indeed will be citizens. A goal of democracy does not necessarily have to entail economic equality. But a democratic polity doesn t merely respect and ensure noninterference and noncoercion. It must also ensure that conditions for participation in that democracy are available to all individuals, for by doing so it guarantees a universal application of citizenship. In fact, the state must guarantee conditions for full citizenship. This ideally means that government provide the poor with the practical training and skills necessary for conducting democratic government. It might mean providing them the basis upon which they can achieve economic independence. Amy Guttman and Dennis Thompson (1996) argue for autonomy on the basis of what they call a fair opportunity. In a deliberative democracy a basic opportunity principle secures citizens an adequate level of basic opportunity goods. Such opportunity goods include an adequate income level, defined as that which enables one to live a decent life according to society s current standards. By talking about opportunity to join the middle class, they in essence acknowledge the importance of the middle class to the maintenance of democracy. Their basic opportunity principle is within the context of welfare provision, but the same arguments could just as easily be applied to wage policies in whatever form. A wage that enables workers to live in dignity is at the root of what it means to have a fair opportunity. The call for a fair opportunity, then, might really be seen as a response to the unequal opportunities that are the product of income inequality By calling for fair opportunity they are asserting that society has an obligation to redress the imbalance and ensure that each has the resources to participate. Fair opportunity would actually suggest something broader than the statutory minimum 26

27 wage. As a broader measure, Philipe VanParijs (1992) calls for Basic Income Capitalism, defined as a socioeconomic regime in which the means of production are for the most part privately owned, but where each citizen is entitled to substantial unconditional income over and above what s/he might earn through normal participation in the labor market. A basic income as such is essentially a pathway towards the achievement of a just society, which Van Parijs understands to be a free society in which all members are as free as possible. To be truly free, one must possess the means to whatever one might want, and not just the right to do it. A basic income, then, especially if it is unconditional, and ideally if set at as high a level as possible, provides individuals with the means to be truly free. As Van Parijs (1993) explains, real freedom extends beyond formal freedom, which involves the ability to make choices among various goods that may be consumed. Rather it involves the real freedom to choose among the various lives one might wish to lead (p. 33), or to be free of external controls. But without a basic minimum income, one s ability to take advantage of opportunity, i.e. make choices, is indeed adversely affected. Real freedom, in other words, entails being able to effectively act on one s formal freedom. To earn an income that enables one to take advantage of opportunity is to effectively enable one to be autonomous. Stuart White (2003) too talks about a basic minimum as a vehicle for achieving what he defines as justice as fair reciprocity. According to this conception of justice, a good society is one of mutual concern and respect it is one in which individuals exhibit what he calls democratic mutual regard. A society governed by democratic mutual regard is one in which individuals seek to justify their preferred political and economic institutions to others by appealing to shared basic interests, and to related principles that express a willingness to cooperate with their fellow citizens 27

28 as equals (pp ). Each citizen has a basic interest in having adequate opportunity to reflect and deliberate critically about those matters that are essential to each s ethical agency. Therefore, the primary commitment of justice as fair reciprocity is the upholding of basic liberties and securities. In a society built around the ethos of democratic mutual regard, citizens must accept and affirm each other as equals, and consequently design a common set of institutions that will govern their lives together in a fundamental way. Justice as fair reciprocity, however, entails more than this give and take; it also involves a commitment to substantive economic reciprocity. Society, then, has a responsibility to ensure that all who participate, which by definition would have to include all regardless of endowments and where one falls in the wage distribution are in no way burdened by their participation. This would imply that workers who do not earn wages sufficient to sustain themselves in dignity are indeed burdened. Therefore, society has to guarantee a Universal Basic Income (UBI), not because one merely exists; but because as a member of the community who is expected to participate in the productive enterprise of that community, that person has a right to expect that s/he will be able to live in dignity. To live in dignity is essentially to live without being exploited. In a larger sense, White is suggesting that a member of the community, who participates in the common project of society by working, has a right not only to expect that s/he will live in dignity, but that government through policy will ensure conditions that enable individuals to continue being autonomous. The UBI, of course, reflects a broader wage policy than a mere minimum wage, but it nonetheless assumes that the path to freedom, and ultimate capabilities, is indeed a liveable wage. 28