Striving for more: Work and Organizational Psychology (WOP) and living wages

KEYWORDS:

• Living Wages
• Decent Work
• Social Impact

Introduction

Research focusing on the lower end of the wage spectrum has typically centred on the economic business case for, and against, a living wage. But as work and organizational psychologists (WOPs) know, there are important psychological consequences of low wages too. Wages have far-reaching consequences for work motivation, employee performance, and job losses or gains, as well as for broader questions of wellbeing and quality of life. It is surprising, therefore, given the depth of existing WOP knowledge about wages, that psychological research on living wages has only emerged relatively recently (e.g., Smith, 2015).

Over the past five years or so, there has been notable growth in the psychological study of living wages (see Searle & McWha-Hermann, this issue, for a review). Our goal in instigating this special issue was to gather together this interesting current work, stimulate further psychological research on living wages, and facilitate further theoretical development which incorporates psychological perspectives on this topic.

In this editorial, we first introduce the topic of living wages to provide context to the five papers that comprise this special issue, before summarizing the contribution of each paper. Building a synthesis of these papers, we then identify some important avenues for future research. In doing so, we highlight how research on the living wage is an integral part of a broader agenda within work psychology to enhance social impact (Arnold et al., 2021; www.eawopimpact.org), further extend the value of our discipline (Lefkowitz, 2008, 2017), and consider how WOP science can contribute to creating decent work for all workers (Bal et al., 2019; Grote & Guest, 2017; Parker & Jorritsma, 2020).

The living wage

The living wage is generally defined as a wage that not only enables workers to meet their essential needs but also facilitates meaningful participation in society beyond mere survival (Yao et al., 2017). Consistent with the United Nations’ 2016–30 Sustainable Development Goals (SDGs), and the International Labour Organization’s Decent Work Agenda (International Labour Organization, 2019a), a living wage is significant for a good quality of work-life, and beyond that, for life in general (Werner & Lim, 2016). A living wage is typically higher than a subsistence-level, legally mandated minimum wage floor (Smith, 2015). An important distinction between the two is the living wage focus beyond provision of a basic income, to an income that offers workers and their families the means to improve their lives in whatever way they wish. Central here is therefore differentiation from a minimum wage that often perpetuates the status quo subsistence, to a higher wage level that provides workers with choices, and critically resources to help them change their lives and move out of poverty. There is ample opportunity here for WOP research to contribute to understanding how a living wage enables choice and autonomy, and the subsequent implications for wellbeing.

In recent years, work psychologists have begun to map the connections between living wages and quality of life. This work has indicated the existence of a wage tipping point, namely an interval where wages shift from subsistence to a level at which quality of life can be substantially and sustainably increased (Carr et al., 2016). Focusing on the relationship between wage thresholds that transition from working poverty and subsistence to occupational wellbeing is a significant development. Immediately prior to the pandemic at the end of 2019, poor working conditions were identified as the number one challenge in the world of work (International Labour Organization, 2019b). Since the pandemic, there has been considerable downward pressure applied on those very workers whose wages were most precarious to begin with (International Labour Organization, 2021a, 2021b). Hence, addressing the necessary work conditions, including wage thresholds, that can enable an escape from working poverty are more crucial now than ever (McWha-Herman & Searle, 2020).

Some of that discussion has already begun, for instance, through an EAWOP small group meeting on living wages and their links to decent work (in 2019) (see http://www.eawop.org/reports). Global networks like Project GLOW (Global Living Organizational Wage) have examined links between living wages and transformational changes in wellbeing and quality of life across countries including: South Africa, The Philippines, the United States, Thailand, and New Zealand (Project GLOW, 2020). Recently, GLOW study has extended to the People’s Republic of China (Hu & Carr, 2020). Research on living wages by WOP researchers has the potential to offer governments innovative perspectives on how the inclusion of living wages can help post-pandemic drives to “building back better” (e.g., Eurofound, 2020).

Critical empirical insight from such WOP research challenges the dominant economic perspectives on wages. Much of this work has appeared in journals out-with WOP, but this is changing, and so it must, if we are to ensure WOP researchers and perspectives are part of the emergent discussion.

A note on COVID-19

When we put out our call for living wage contributions to this special issue in September 2019, we could never have predicted how the world (and specifically the world of work) would be thrown into disruption because of COVID-19. But the pandemic, in parallel with the global movement around racial injustice, has brought inequalities to the foreground highlighting important lines of disparity and revealing their further consequences. These global disruptors have accelerated the need to understand low-wage work, showing its link to resilience of both organizations and of societies. Study has shown how the pandemic has further exacerbated existing structural inequalities including gender, age, ethnicity and socio-economic status (Blundell et al., 2020). While considerable attention was paid to the efforts organizations took to keep their workforces safe, less consideration was paid to those who also took action to reduce the financial consequences for their employees, such as through “hero” pay, paid leave, recruiting, or provision of emergency financial support (Steinbach et al., 2021). The findings indicated the immediate boost to discretionary effort resulted in positive stakeholder sentiments, especially when combined with organization leaders viewed as benevolent. These immediate reactions to the pandemic were seen as reflecting genuine support for employee wellbeing, rather than being a more calculated response. As such they point the way forwards towards more sustainable livelihoods and shared prosperity (Carr et al., 2020).

Workers from marginalized and vulnerable groups have been struck hardest by the pandemic, and such workers are often already working under precarious conditions (Cubrich & Tengesdal, 2021; Kantamneni, 2020). Research on living wages is therefore particularly salient and timely in identifying a key area of intervention for organizations, and on which WOP science has considerable potential for impact. As societies seek to build back better post-pandemic, a focus on living wages is emerging as an important means to add resilience.

Overview of the special issue

The five papers that comprise this special issue provide a diversity of insight and methodological approach to the psychological understanding of the living wage:

In a systematic review of the research to-date on living wages, Searle and McWha-Hermann chart landmark transitions in the field from a macro-economic and econometric lens to a more humanitarian perspective that foregrounds employees, and through them, extends attention on consequences for individual workers, their families, employing organizations, and societal wellbeing. Living wages are re-operationalized from consequences of engagement to predictors of them, in diverse contexts and social movements. The review calls for more inclusive definitions, fresh operationalization of living wages and measures and innovative connections to the wider Decent Work Agenda. It outlines the significant opportunity for psychology more broadly to shift focus to upstream impacts of policy through providing new empirical evidence, and challenges to long-standing structural inequalities.

In that vein, unlike Minimum Wages which are legal statutes, living wages are largely a matter of employer choice. Employer choices are the focus in Werner’s study of choice rationales in the voluntary adoption of the living wage in small and medium-sized enterprises (SMEs) in the UK. Viewed through a transdisciplinary perspective on employment relations/HRM in SMEs, business ethics and signalling, this paper reports findings from interviews with owners and directors of 23 SMEs. Four choice rationales for implementing the living wage are identified, including: a reflection of care for employees, as the basis for a high-quality service business model, an indicator for corporate social responsibility, and a way to challenge competitors and their practices. With barriers to and opportunities for economic development, at an organizational level the choice calculus for voluntary adoption of the living wage has practical implications for living wage movements and SMEs alike, and thereby for SDG – 8 (Decent Work and Economic Development). There is also scope for practice-informed partnerships with WOP researchers under SDG – 17 (Partnerships for Development).

Attention shifts in Klug, Selenko & Gerlitz’s paper to examine the psychological impact of economic vulnerability on mental wellbeing. Drawing on data from a panel sample of over 7000 German employed adults, they reveal the reduced health and life satisfaction for those on low income and experiencing greater financial strain. This work uncovers the significant psychological role of perceived control in how economic vulnerability affects individuals.

Seubert, Hopfgartner & Glaser’s conceptual contribution to the special issue synthesizes psychological and sociological study of decent work and living wages to delineate how capability is enhanced by the provision of living wages. Their conceptual framework builds on sociological study of precarious work to identify the five factors that make work decent. These factors include: “reproductive material” that includes living wages and job security; “social-communicative”, which involves social integration, inclusion and co-operation and concerns; “legal-institutional” facets that offer protection for workers through labour laws and rights to participate in work; “status and recognition” dimensions, which acknowledges status and appreciation; and finally, “meaningfulness” which concerns identification and meaning derived from working. They identify nine testable propositions regarding how these different factors meet the distinct needs of individuals, and why their importance might vary in different contexts.

As WOP researchers, we can no longer afford to ignore the informal sector beyond formal “jobs.” As Saxena points out in the final paper of the special issue, over 61% of the world’s population lives and works in the informal economic sector, yet workers in the informal economy are conspicuous by their relative absence in work psychology research and practice. Challenging the implicit stereotype of informal work as unskilled, Saxena presents grassroots-level field data from highly skilled artisans in rural India. Their work narratives share person-centric inner experiences of informal work. They operationalize the psychological foundations of decent work for a largely unexamined population of workers in the informal economy. These experiences reveal core facets of wellbeing in the world of work in the informal economy, and an operational definition of psychologically sustainable work that is aligned with local values, aspirations, and capabilities and can be harmonized with evidence-informed decent work policies.

Looking ahead

The insights from these five papers are important because they show how WOP research can contribute to societal grand challenges such as poverty and inequality. The diversity of this special issues’ papers provides valuable insights into how research on living wages requires (and is enabling) a broader scope for WOP, that can be 1) inclusive of all workers including those in informal and precarious work, and relevant in all contexts and for all worldviews, 2) provides a pathway for linking WOP theories and tools to decent work, and 3) applies WOP methodologies in order to advance its study.

1. Inclusive work

The research in this special issue draws out the importance of understanding who are studied, and what precisely is considered to be work. As Saxena (this issue) highlights, the majority of the world’s population lives and works in the informal sector, and these workers are largely absent in WOP study. Such workers include for example, artisans, own-account farmers and micro-entrepreneurs, sex and other street workers, gig drivers and deliverers (Groot & Hodgetts, 2015; International Labour Organization, 2021a). Similarly, those engaged in precarious work often shift jobs frequently or are employed in ad hoc positions; thereby missing out on efforts to enhance working conditions such as pay (Seubert, Hopfgartner & Glaser, this issue). Such a situation of economic vulnerability leads to important mental health deficits (Klug et al., this issue), and leaves a range of important needs unmet (Seubert, Hopfgartner & Glaser, this issue). WOP has much to contribute to understanding the rise (and fall) of the “gig economy,” (International Labour Organization, 2021a), and should look at how living wages dovetail with research on precarious and insecure work in related fields (e.g., Allan et al., 2021; Blustein et al., 2020). Future research should consider employee perceptions and experiences of living wages, including examining the multiple (individual, family, organizational, societal) consequences of living wages. In doing so, drawing out its social embeddedness and the links between living wages and affective, cognitive, behavioural and physiological indicators (such as self-efficacy and self-worth, wellbeing, job security, and work motivation).

As well as extending the focus of WOP research to workers in non-traditional job roles, we join the voices of other WOP scholars in calling for intentional research in understudied contexts, and from new and alternative perspectives. Much has already been written critiquing WOP’s historic focus on higher income contexts and workers in more stable and secure white-collar roles (Bergman & Jean, 2016; Gloss et al., 2017). There has been heated debate about the role of ideology (see Bal & Dóci, 2018, and related commentaries), and the types of values needed for WOP to contribute to a sustainable future (Bal et al., 2019; McWhirter & McWha-Hermann, 2021). Research on living wages will help to address these concerns and to create a WOP that reflects all workers and can integrate a variety of ideological perspectives.

Future research should consider if and how living wage conceptualizations transfer cross-culturally and we should strive to understand whether a global theory of living wages can be developed (Project GLOW , 2020). Country-level differences in how wages and other working conditions are regulated are an important contextual consideration of living wage research. Also important is understanding organizational context. Werner (this issue) identifies choice rationales for adopting a living wage amongst SMEs. Such research provides a promising avenue for future research. How might this differ in organizations of other sizes? And indeed in non-private-sector organizations? What about organizations operating internationally? Little is known about the living wage policies of multinational organizations, and how such organizations navigate the differing living wage benchmarks in different countries. Furthermore, it is unknown how organizations operating in or from the Global South address questions of decent wages. Such work should connect with existing research looking at living wages in global supply chains (e.g., Egels-Zandén, 2017). It should also be open to integrating and studying indigenous perspectives on wages, recognizing the cultural and contextual influences on wage mechanisms (see Yoelao et al., 2019 for an example of such a study in a Thai context).

2. From a living wage to decent work

Inherent in the definition of living wages as providing sufficient wage for a decent quality of life is the idea that living wages are linked with decent work. Decent work is a concept proposed by the ILO, which has been embraced as a basis for the Psychology of Working Theory (Blustein et al., 2016), and in other emerging research from WOP scholars (Di Fabio & Maree, 2016; Ferraro et al., 2021). Decent work is generally defined as work that is fair, dignified, stable and secure (Blustein et al., 2016) and is what many WOPs strive to understand and promote in and through their research and practice, though not often articulated in such a way. Living wages are one way that our collective goal to improve the world of work can be focused on a particularly marginalized group in society – the economically vulnerable. This is where we can apply our existing and emerging knowledge to improve the work experiences of low wage workers.

Recently, we have seen reinvigorated discussion about the importance of quality of working life as a way of addressing rigour and relevance, and the importance of work design for this (Grote & Guest, 2017; Parker & Jorritsma, 2020). Where does a living wage fit within work design processes? How can psychological study of wage mechanisms for low-wage workers inform how work design is understood and done? Seubert, Hopfgartner & Glaser’s, (this issue) framework distinguishes distinct factors that contribute to making work decent, outlining nine testable propositions. Importantly, they position living wages as part of a suite of ways to enhance work for workers. Such propositions must be tested, and the relative and accumulative contribution of living wages to decent work must be understood. WOP has provided clear evidence of how work design can enhance work, such as in improving workers’ mental health (Parker & Jorritsma, 2020). Synthesis exploring 55 work design interventions (Knight and Parker, 2021) has outlined the distinct ways that these changes affect performance, notably in enhancing the feedback, motivation, and learning opportunities of workers. Do living wage interventions lead to the same outcomes? Do they accentuate them, or do they catalyse different outcomes, such as enhancing citizenship behaviours, or bolstering trust? Future research should recognize that earning a living wage is therefore just one component through which work can be improved and enhanced, and should strive to understand how a living wage contributes to, and interacts with, other components of decent work.

Living wages are an important means to helping to level the playing field for workers from all backgrounds, but particularly those from marginalized groups who are most detrimentally impacted by structural inequality. Through consideration of the multiple lines of structural inequality around poverty, future research should study how living wages can be used as a regulatory intervention to improve quality of life in a post-pandemic world.

3. Methodological considerations

Finally, the growth of WOP research on living wages provides an opportunity to consider and add fidelity to the methodological tools deployed to studying living wages. Future research should be interdisciplinary, cross-level, and include voices of multiple stakeholders. Greater efforts should be made to study living wages longitudinally, to offer insights into short-, medium-, and long-term consequences and for a range of stakeholders. We call for research that draws on existing methodologies, while also engaging with living wages from new and emerging perspectives, such as critical-WOP, as well as research that recognizes, draws on, and is informed by, indigenous knowledge and wisdom.

Existing methodologies can be used to capture the nuances of living wages, including questions related to how earning a living wage influences short- and long-term affective, cognitive, behavioural and physiological dimensions. For example, surveys, in-depth interviews, case studies and mixed-method approaches can continue to be helpful here. Research should be cross-level, including micro (individual), meso (organization and family) and macro (societal, legislation), studying the interactions between individual, organizational and societal perspectives on living wages. How precisely do living wages support organizational success, for example? And in what ways does this affect outcomes for families and children, and contribute to broader societal development? What are the important intervening variables that explain these connections, such as the opportunity for rest and recovery from work? How do enhancing choice and autonomy lead to changes amongst families and communities? The integration of voices of multiple stakeholders, including organizations, trade unions, living wage bodies, policymakers, employees, and families can provide more compelling evidence for the role of a decent income at all levels of society and for societal development.

Qualitative approaches might include ethnography or participatory action research, to allow capture of the graduated changes to wellbeing of workers and families, and the spillovers for families. Such work could capture potential recursive implications of living wages, such as on (individual, organizational and societal) resilience, recognizing the systems nature of decent wages.

Emerging perspectives such as critical-WOP (see previous Special Issue in this journal) may also be helpful for drawing out dynamics of power in wage mechanisms. How do historical dimensions of power and privilege, or social class, perpetuate inequality and poverty? And crucially, what role does a living wage play in addressing these historical imbalances? Critical methodologies might be usefully applied to understanding the drivers and contexts underpinning different stakeholder perspectives on living wages.

Conclusion

2020 has been a major pivot point for the world as we faced challenges around covid, global racial injustice, and ongoing challenges of climate change. The themes of this special issue have become more urgent during this time, in the light of disproportionate impacts of these global challenges on low-waged workers. Through our research and practice on living wages, as showcased in this special issue, WOP has much to contribute to fostering decent work – work which enables and enhances quality of life for workers and their families, and which in turn is an important contributor to flourishing and resilience within organizations and societies.

Acknowledgement

The authors wish to acknowledge funding and support from the European Association of Work and Organizational Psychology (EAWOP) to hold a Small Group Meeting on living wages in 2019. This meeting was fundamental to the development of this special issue.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.