‘Living wages are crucial now more than ever’

Ishbel McWha-Hermann and Rosalind Searle rethink poverty in the light of Covid-19.

On one hand, the Covid-19 crisis immediately levelled many existing inequalities within society, suddenly rendering everyone at risk. People, rich or poor, were drawn together around their shared sense of responsibility to one another. Previously unseen members of society became ‘seen’, including the homeless who are now housed in newly vacated hotels – literally saving their lives

However, as more data has emerged about the virus’s pattern of transmission and mortality rates, the familiar picture of inequalities re-emerged, revealing the higher mortality risk for older and vulnerable people, and those of BAME backgrounds (Khunti et al., 2020). At the same time some new lines of inequality have been unexpectedly highlighted, with many low wage workers such as supermarket employees and cleaners becoming essential frontline workers. Covid-19 has forced us all to stop and look differently at who and what is valued in our society, showing that our old ways of organising are now wanting. 

One of the most critical issues has been regarding income, and questions of what level is required to enable a decent quality of life. In this way Covid-19 provides a once in a generation opportunity to rethink how society is organised, and to review the consequences of current divisions concerning socioeconomic status and class. 

Studies show that being from a lower socioeconomic class has important psychological consequences for individuals, shaping their interpersonal processes, including levels of happiness, life satisfaction, identity and educational attainment, and intergroup processes including societal trust, morality and deservingness, stereotypes, ideologies and group behaviours (Fiske, Moya et al., 2012; Moya & Fiske 2017). Thus, our social class can profoundly affect our beliefs about ourselves and others that can have very significant and life-long consequences. While much of psychologists’ attention has been consumed by dealing with the downstream consequences of inequality, Covid-19 has provided an opportunity to instead focus upstream and to apply our understanding to the source of inequality – wage rates.

Living wages are crucial now more than ever. These are wage levels sufficient to shift from merely surviving at a basic subsistence level to being able to achieve and maintain a decent quality of life (Yao et al., 2017). Living wages enable individuals and their families to thrive (Carr et al., 2017). The UK government furlough scheme provided many employees and their families with what is essentially a universal income, offering them income security and certainty in a time of serious uncertainty. However, it also exposed the situation of many self-employed workers who are not eligible for furlough payments. The provision of a decent and secure income is crucial to keeping individuals and their families safe, stopping the crisis pushing them into debt and poverty, and enabling them to have a decent quality of life. While government has been central in providing these incomes during the pandemic, there is further important learning to follow concerning how best to pay and support workers. 

Covid-19 has highlighted how government and organisations can work together to regulate for decent work and to increase minimum wage levels to reflect living wages. While economists have argued against the distortion to labour markets such wage regulation can create, new evidence that includes insight into their impact on workers, shows these fairer levels may actually be cost neutral; evidence shows paying living wages has substantial psychological effects on individuals, raising their job satisfaction and through this their productivity, but also reducing absence and turnover rates. These are important downstream benefits for organisations making them more resilient and sustainable (Fairris, 2005). Living wage employees are potentially less stressed and anxious about their work, having a sense of security and of being valued, and less likely to burnout from holding down multiple jobs. 

Investing in people through living wages not only reaps rewards for employees and their organisations; it also addresses poverty at root cause, enabling individuals, families, and societies to flourish. We have seen the clear evidence of the diminished health and longevity that accompanies poverty. In the new normal required post-Covid-19 there is the means to address poverty and its causes by rethinking how society is organised – in particular, by questioning the construction of class divisions and income inequalities. Living wages are not the labour market threat many economists would have us believe. Instead psychology is providing insight into recipients’ perspectives and revealing the important benefits they offer individuals, families, organisations and societies. It is time to shift our attention upstream; our science has much to offer policy makers about how to be a more resilient society.   

- Dr Ishbel McWha-Hermann (University of Edinburgh) is a member of the British Psychological Society’s ‘From poverty to flourishing’ expert reference group 

- Professor Rosalind Searle (University of Glasgow) 

References

Carr, S. C., Parker, J., Arrowsmith, J., Haar, J., & Jones, H. (2017). Humanistic management and living wages: A case of compelling connections? Humanistic Management Journal, 1(2): 215-236. 

Fairris, D. (2005). "The Impact of Living Wages on Employers: A Control Group Analysis of the Los Angeles Ordinance." Industrial Relations: A Journal of Economy and Society 44(1): 84-105.

Fiske, S. T., M. Moya, A. M. Russell and C. Bearns (2012). The secret handshake: Trust in cross-class encounters. Facing social class: How societal rank influences interaction. S. T. Fiske and H. R. Markus. New York, Russell Sage: 234-251.

Khunti, K., Singh, A. K., Pareek, M., & Hanif, W. (2020). “Is ethnicity linked to incidence or outcomes of covid-19?” British Medical Journal, 369:m1548.

Moya, M. and S. T. Fiske (2017). "The Social Psychology of the Great Recession and Social Class Divides." Journal of Social Issues 73(1): 8-22.

Yao, C., Parker, J., Arrowsmith, J., & Carr, S. C. (2017). “The living wage as an income range for decent work and life”. Employee Relations, 39(6): 875-887.

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