Income inequality depresses support for higher minimum wages

Area of Science:

• Social Psychology
• Labor Economics
• Public Policy

Background:

• Economic inequality is rising globally.
• Public demand for higher minimum wages has not kept pace with income disparities.
• Minimum wage policies are a key tool for addressing economic inequality.

Purpose of the Study:

• To investigate the relationship between economic inequality and public demand for minimum wage increases.
• To identify the psychological mechanisms underlying public support for minimum wage policies.
• To explore interventions to counteract decreased support for higher minimum wages.

Main Methods:

• Analysis of protest attendance data in the U.S. over six and a half years (N = 130,562).
• Eight laboratory experiments, including a U.S. nationally representative sample (N = 7,286), to establish causal links.
• Psychological assessments to measure "is-to-ought" reasoning.

Main Results:

• Higher economic inequality correlated with fewer and less-attended protests for minimum wage increases.
• Causal evidence shows increased income inequality significantly decreases support for higher minimum wages.
• The "is-to-ought" reasoning bias, where current earnings influence perceived fair earnings, was identified as a key factor.

Conclusions:

• Economic inequality can suppress public demand for policies aimed at reducing it, such as minimum wage hikes.
• Psychological "is-to-ought" reasoning plays a critical role in diminishing support for higher minimum wages.
• Interventions can mitigate this psychological effect, with implications for effective policy communication strategies.