Why We Need Minimum Wages: Pay, Recognition, and Economic Citizenship

Abstract

Statutory minimum wages have become an important tool for regulating labor markets. One major reason is the decline in collective wage bargaining. But how can minimum wages be justified? We show that their best justification does not lie in their economic effects but in the respect for social contributors that they express. The article takes an innovative interdisciplinary approach, bridging political philosophy and comparative political economy. We first discuss existing justifications in political practice and theory. We then show how a distinctive and robust justification should regard minimum wages as paying necessary respect to those who fulfill their obligation to contribute to social cooperation. Our justification thus suggests a new concept of economic citizenship and advances recognition theory applied to work. We outline further implications of the argument, such as the desirability of setting minimum wages through collective bargaining, and a tentative case for a maximum income.

INTRODUCTION

Low-paid and precarious work is a pressing and salient problem in many developed countries, including the US (Gautié and Schmitt 2010; Thelen 2019). There are several reasons for increasing low-wage employment. Some are structural (the rise of service employment, globalization, and automation); some are political (deregulation of labor markets and weakening of union power). In particular, fewer workers are covered by collectively bargained agreements, thus leaving them exposed to employer pressure for low wages (Baccaro and Howell 2017). Many countries have reacted to this trend by introducing minimum wage legislation or raising the level of statutory minimum wages. Especially in liberal welfare states, minimum wages are at the center of the labor market debate (Wilson 2021), and there is significant support for their use within the public at large, with many agreeing that they respond to a pressing moral problem (Benton 2021; Jeong and Lee 2021).

At the same time, it is clear that minimum wages could only ever amount to a structurally minor change to the workings of contemporary capitalism. So what exactly is the moral problem, if any, that minimum wages can claim to solve? We argue that the few existing accounts misdiagnose the problem or fail to explain why minimum wages, specifically, must be used to address the problem identified. Many people who are in favor of minimum wages probably support them because, when faced with a limited set of currently feasible policy options, they support any policies that do something, however limited, to improve economic outcomes for the worst-paid workers and their families. We had a similar view when we started to study minimum wages. However, the more one analyzes the economic problems that minimum wages may be thought to address, such as in-work poverty and income inequality, the more one realizes how inadequate they are for these purposes (as we will show below). Hence, the question arises: is there any better, more principled justification for minimum wages, or is there perhaps no good justification at all, and other policy instruments should be prioritized? Therefore, this article, after inspecting and rejecting alternative justifications, focuses on recognition theory as a more promising path to justify minimum wages, which can also provide a theoretical basis for vague notions expressed in political practice about the “indecency” of low pay, and minimum wages being somehow about “respect.” Our main argument indeed draws centrally on a recognition-theoretic concept of respect: minimum wages ensure a form of basic respect for individuals who fulfill their obligation to contribute to social cooperation by undertaking paid work (while other activities may fulfill this obligation, too).

We accept, for the purposes of this article, that minimum wages are a policy within capitalism. However, we also find that our recognition-based justification of minimum wages has substantial critical potential. For instance, it highlights severe deficiencies of existing capitalist recognition orders, where capital ownership often receives unjustified recognition while much work goes without.

Identifying a robust justification of minimum wages matters because we should want to know whether this increasingly used policy is, normatively speaking, on the right track. Developing this justification also yields three additional contributions. (1) It reveals general insights about the moral status of paid work in contemporary market economies and points to a distinctive, recognition-theoretic concept of economic citizenship. (2) It advances recognition theory by delivering a novel account of the different kinds of recognition owed to economic contributors, and how these are related and sometimes in tension. (3) The article also points to a set of additional measures and policies needed to recognize the demands of economic citizenship more fully, such as the participation of workers’ organizations in setting minimum wages, and tackling excessive wages as well as non-work income.

More generally, our article offers two innovations. First, it is a rare example of direct interdisciplinary collaboration by being firmly rooted in political philosophy as well as comparative political economy. Second, we show that minimum wages, although being an economic policy in the widest sense, are best justified not in narrowly economic terms but in terms of their social meaning. We pin down this meaning and demonstrate how it matters. While recognition theory is a well-established research paradigm within critical theory, broadly conceived, it has not yet been brought to bear sufficiently on debates focusing on concrete social and economic policies outside political theory.

The article is structured as follows. The next section takes stock of existing justifications of minimum wages. Here, we first establish what is required from a sound justification of this policy. Then we discuss commonly assumed objectives of minimum wages, justifications empirically given by policy makers, and justifications provided in normative theory. The following section delivers the main argument by developing our recognition-theoretical, respect-based justification of minimum wages. The penultimate section rebuts the objection that these requirements of respect can be fulfilled equally well by other policies, such as in-work benefits. The concluding section indicates further implications of the argument.

JUSTIFYING MINIMUM WAGES IN THEORY AND PRACTICE

Our main aim in this article is theoretical: to identify the best justification for minimum wages, and reflect on its further implications. Is there any strong justification at all, given that they amount only to a minor change in capitalist economies, leaving, for example, structures of ownership and control of firms unchanged? There are two desiderata for a justification of minimum wages. The first is that it needs to be robust. It should deliver strong reasons to implement minimum wages: reasons that can outweigh countervailing considerations. For example, even if decent minimum wages had a negative effect on employment (which, according to current research, is unlikely; see below), a robust justification would defeat this concern because the reasons for minimum wages are important enough to tolerate limited negative side effects.

Second, the justification ought to be distinctive. Minimum wages ought to make a necessary or important contribution to a normative objective that would be very difficult to obtain through different policies. We need to pinpoint the specific normative benefit of minimum wages and show that it will not be achieved as well by other policies—in short, show why they are really needed (as the title of the article says). Distinctiveness, so understood, amounts to modal robustness, across a larger rather than smaller range of contexts. Otherwise, it would be possible that there are strong reasons to implement a minimum wage in a specific context, but that this is merely because a better policy alternative is currently infeasible. Distinctiveness is essential for a reasonably general theoretical justification.

Robustness and distinctiveness are evidently scalar properties. As noted, how well a justification does depends on the context. Therefore, changing this context radically—for example, by introducing a high unconditional basic income (UBI) for all, ¹ or any deeper structural reforms of capitalism—might affect our case for minimum wages. Consequently, in this article, our interest is in minimum wages within a capitalist context, absent radical reforms. Our aim is a justification that is significantly more distinctive and robust than rival proposals.

It is important to clarify that minimum wages can be set in two ways: by law and by collective bargaining (Dingeldey, Grimshaw, and Schulten 2021; Picot 2023). The term “minimum wages” most commonly refers to statutory minimum wages. Yet, collective agreements between trade unions and employers ² also normally define the lowest possible wage along with wage rates and working conditions for all workers in their area of application. Thus, collective bargaining sets minimum wages, too. In this case, the coverage and uniformity of the minimum wage across the economy depend on the coverage, centralization, and coordination of collective bargaining. For most of this article, we do not distinguish between the two forms of minimum wages, but we return to the distinction in the concluding section, where we examine the pros and cons of each option.

Poverty and Inequality

As minimum wages are about low earnings, fighting poverty, namely in-work poverty, and reducing economic inequality are easily considered objectives. However, the potential of minimum wages to address these is limited.

In most advanced capitalist economies, poverty is largely a problem of being out of work, and finding decent work is regarded as a way out of poverty (Lister 2004). Many neoclassical economists used to think that minimum wages can be too high for low-skilled people to find work (Neumark and Wascher 2008). If this was true, they could exacerbate the problems of poverty. However, the overwhelming evidence now shows that minimum wages have no or only a negligible negative effect on employment (Belman and Wolfson 2014; Card and Krueger 1995; Doucouliagos and Stanley 2009). Instead, minimum wages can in fact increase the incentive to take up work as even low-skill jobs get better paid and become more attractive compared to benefit income.

Since the 1990s, in-work poverty has become more common in advanced capitalist countries: when someone is poor despite being in work. It seems plausible that minimum wages, if appropriately high, can be an effective measure against in-work poverty. This is the idea behind the concept of “living wages.” “A living wage refers to an hourly rate of pay considered sufficient to produce an acceptable standard of living” (Hirsch and Valadez-Martinez 2017, xiii). Employers can pay living wages voluntarily, but minimum wages can also be set at living-wage level, making the living wage mandatory.

Income poverty is normally defined in terms of disposable household income, which consists of all sources of income (from work, public benefits, and capital), after taxes, and from all household members. Consequently, it is difficult to fight in-work poverty with minimum wages even if set at living-wage level. There are three main reasons. First, household needs depend on the number of household members. The lower the ratio of working over non-working household members, the higher the wage has to be (Zatz 2009, 10–1). Second, wage guarantees specify hourly rates and many low-paid workers work part-time. This further increases the wage level required to lift a household out of poverty. Third, disposable income depends also on taxes and benefits. These issues make it infeasible to define a living wage across all possible household types, work patterns, and tax-benefit rules (Bennett 2014). Certainly, minimum wages can lift some workers out of poverty, but overall they are ineffective for fighting in-work poverty (Hick and Marx 2023). Belman and Wolfson (2014, 321) judge that the available econometric studies leave us “without any strong evidence that the minimum wage affects the poverty rate one way or the other” (similarly Neumark and Wascher 2008, chap. 5).

The potential of minimum wages to reduce income inequality is impaired by the same underlying issue as for poverty: income inequality is measured by disposable household income, too (Backhaus and Müller 2023). Still, the outlook is a bit different here. Wage inequality is a major component of income inequality (Kenworthy 2008, chap. 3), and several studies have shown that minimum wages do reduce wage inequality (Belman and Wolfson 2014, chap. 7; Pedersen 2023). However, reducing income inequality can hardly be the main motivation for a statutory minimum wage, for three main reasons. (1) Income inequality regards not only work earnings, but also capital income, public benefits, and taxes. Inequality of capital income, which the minimum wage does not address, drives a considerable part of income inequality. (2) Minimum wages disregard household size and other earners in the household. (3) Minimum wages do not change anything about the upper end of the distribution, be it income or even wage distribution.

So, the usefulness of minimum wages as tools to fight poverty or reduce income inequality is very limited. Such objectives cannot deliver a distinctive justification of minimum wages because other policies (such as in-work benefits regarding in-work poverty and progressive income taxation regarding income inequality) would be more effective. However, wages have also an expressive function in what Rubery, Johnson and Grimshaw (2021, 29) call “wages as social practice.” They “signify the value placed on people” (Rubery, Johnson and Grimshaw 2021) as workers. As we will see in the next section, justifications of minimum wages alluding to such a dimension of meaning and recognition are common in political practice.

Justifications in Practice

There is very limited research on how minimum wages are justified in practice. ³ We analyzed how policymakers in the United Kingdom (UK) and Germany justified statutory minimum wages when they were adopted (1998 in the UK and 2014 in Germany). We have chosen the UK and Germany because these were the last two large European countries to introduce statutory minimum wages and because they have very different institutional and economic contexts. We focused on the main political party pushing for the minimum wage (Labour and Social Democrats, SPD, respectively) as well as official justifications in the legislation process. Overall, we were surprised by how little effort politicians made to systematically justify the minimum wage. They mostly presented it as a tool to fight low pay and left implicit that low pay is bad. Thus, in the UK, the main slogan for the minimum wage in Labour’s electoral campaign 1997 was simply “National minimum wage to tackle low pay” (Labour 1997, 16). In the House of Commons, the responsible minister stated that the minimum wage “will begin to end the scandal of poverty pay.” ⁴ The first report of the Low Pay Commission generally framed the objective of the minimum wage as to “make a difference to low-paid workers and support a competitive economy” (Low Pay Commission 1998, 13).

Similarly, in Germany, the SPD framed its minimum wage proposal in the 2013 electoral campaign generally in the context of “overcoming precarious work” (SPD 2013, 18). ⁵ The coalition agreement between SPD and the Christian Democrats (CDU/CSU) presented the reason for the statutory minimum wage succinctly as “to secure appropriate minimum protection for employees” (CDU, CSU, SPD 2013, 48–9). When the Federal Minister of Labor presented the minimum wage bill to the Bundestag, she emphasized that the minimum wage was vital to prevent wage dumping and low pay (Deutscher Bundestag 2014, 3316). The report by the parliamentary committee also pointed to “inappropriately low wages” as the main problem to be addressed by the law (Ausschuss für Arbeit und Soziales 2014, 1).

While the general arguments for minimum wages lacked systematic justification, in both countries politicians pointed to the indecency or disrespect of low pay countered by minimum wages. In the UK, the minister referred in her speech to the House of Commons to the “dignity of work,” adding that “work can contribute to self-esteem” and that “being brazenly and blatantly exploited does not contribute to anybody’s self-esteem.” ⁶ Subsequently, she pointed out that “[t]he popularity of the national minimum wage with the general public is a triumph of decency over dogma.” ⁷ The Low Pay Commission report mentioned among a longer list of potential benefits of the minimum wage “removing the worst cases of exploitation, thereby ensuring greater decency and fairness in the workplace” (Low Pay Commission 1998, 15).

In Germany, the SPD electoral manifesto from 2013 stated that “[i]ntegration into the labor market is the precondition for participation, self-determination, and recognition” (SPD 2013, 17). The minister told the Bundestag that the minimum wage would make sure that workers are “paid somewhat decently” (Deutscher Bundestag 2014, 3316). She closed her speech saying: “We reconstitute the value of work,” specifying that the value of work is not exclusively but largely measured by pay. She added: “I can read off the wage whether my work is appreciated and valued” (Deutscher Bundestag 2014, 3317). In 2022, the German government decided to raise the level of the minimum wage substantially. The Federal Minister of Labor presented the bill as leading to “more respect for those who ensure every day that the business is running, who accomplish a lot, often for little money” (Deutscher Bundestag 2022, 2755). Also in other public statements, the Ministry of Labor promoted the rise as “a question of respect.” ⁸

So, while we could not find a systematic justification of minimum wages beyond a vague notion that low pay is wrong, in Britain and Germany, politicians on several occasions specified that low pay is indecent and that minimum wages can reconstitute dignity or respect. Our argument below provides theoretical foundations to such intuitions and explains why and in what sense they are justified.

Justifications in Theory

There is a rich literature on the living wage, debating how it should be calculated and set, and who should pay it. We will return to this literature in the next section. However, it does not sufficiently engage with the deeper question of why imposing minimum wages on employers has any robust and distinctive justification at all, compared to possible alternatives. One of the few attempts in normative theory to deliver such a justification is Zatz (2009). Zatz proposes to think of minimum wages as parallel to civil rights and, in particular, anti-discrimination legislation. On this view, they protect those whose “earnings capacity” is very low, due to reasons for which they are not responsible (Zatz 2009, 33). ⁹ In the group of lowest-paid workers, there are disproportionately many members of social groups discriminated against or otherwise structurally disadvantaged, such as women and non-white individuals. However, Zatz maintains that it is justified to assume, at least as a matter of “rough generalizations” (2009, 39), that all very low-paid workers, whether or not they are members of a group otherwise requiring special protection, fall in that category for reasons for which they cannot be fairly held responsible. Perhaps they lacked access to education or faced other adverse circumstances in early life. It is therefore justified to shore up all low-paid workers’ earnings capacity via a minimum wage.

One problem with this proposal is that it invites us to consider cases, even if rare, or perhaps only hypothetical, in which workers are fully responsible for their low earnings capacity. These individuals are then not deserving of a decent minimum wage. It merely pragmatically extends to them, to avoid missing any genuinely deserving case. This is in some tension with the intuition, appealed to also in policy discourse, as shown above, that all work should pay at least a certain amount—without having to consider the individual circumstances of low-paid workers.

However, the account has an even deeper problem. It does not explain what is so special about low earnings capacity that it merits a specific policy intervention into wage levels, to start with. Why could one not hold that the basic problem is simply that very low earning capacity makes people end up with insufficient resources? This outcome could be altered also by way of other, anti-poverty or egalitarian redistributive, policies. Zatz recognizes this problem, suggesting that “the social meaning of the wage is such that workers may be deprived of equal respect if their work is valued too little” (2009, 44). However, this merely points to the need for a sound account of the meaning of the minimum wage. Zatz’s anti-discrimination rationale itself is not about valuing work, but about compensating individual disadvantage.

On Rogers’s (2014) account, the aim of minimum wages is to fulfill the requirements of just social equality: ¹⁰ they contribute to a more acceptable balance of power between employers and employees, and combat “pervasive status harms” (Rogers 2014, 1573) besetting low-paid workers. Minimum wages are consequently apt to improve workers’ self-respect because “[w]ages measure the value of our work, and signify our place within the class and status structure” (Rogers 2014, 1571). Statutory minimum wages provide formal legal entitlements that workers can draw on in their conflicts with employers. They are particularly well-placed to boost workers’ self-respect, because they publicly signify the state’s commitment to them (Rogers 2014, 1574).

Now, minimum wages only make a limited contribution to improving the balance of power in employment relations: they merely ensure that low-paid workers do not have to bargain to get at least this much. Moreover, Rogers’s account, like Zatz’s, would greatly benefit from an argument showing not only why low-paid workers need some protection, but also why their work in fact merits (at least) a minimum wage as a distinctive form of recognition. It would be a better basis for self-respect if workers not only knew that the state is on their side to protect them from at least some harms, but that this is because of their contribution to society. Rogers’s (2014) argument relies on existing social perceptions of the link between pay and social status, and its typical consequences on self-respect. However, perhaps these perceptions are misguided, and ought to be changed. Furthermore, it is unclear what exactly minimum wages, being minimum, can do about a society’s “class and status structure.” Thus, Rogers’s argument, too, points to the need for a successful account of the meaning of wages, and of the distinctive kind of status that minimum wages confer or contribute to.

RECOGNIZING SOCIAL CONTRIBUTION AND ECONOMIC CITIZENSHIP

In search for such an account, this section delves into recognition theory, as the best-developed general normative framework for the social meaning of wages. Standard recognition theory seeks to account for wages as indicators of social esteem for contributions, but this cannot deliver a strong justification for the minimum wage. Instead, we put forward a novel proposal to conceive of minimum wages as expressing respect for fulfilling one’s duty to contribute to social cooperation, as a core component of economic citizenship—a dimension of citizenship supplementing the well-known, and generally accepted, dimensions of legal, political, and social citizenship (Marshall 1950). This section develops this proposal by showing under which conditions labor market participation can count as fulfilling this duty of citizenship, and how minimum wages can express justified respect for contributions without having to look at the kind of work individuals do. It closes by investigating the resulting interplay between respect and esteem for work.

Recognition Theory (I): Minimum Wages as Minimum Social Esteem?

In functioning labor markets, wage offers by employers are signals for where skills can be put to productive use. For workers, high wage offers create incentives to acquire such skills. However, beyond these economic functions, wages can also signal the social value of work, and therefore of people qua workers (Rubery, Johnson, and Grimshaw 2021), in societies in which wages are the dominant instrument to reward work, compared to other social means and honors, and therefore familiar to everybody. ¹¹ This is the case in market economies. It is familiar to see wages as expressing a certain judgment of social worth, not merely as tools for allocating people to tasks and material inducements to keep working. Most of us regard a raise, for example, not only as instrumentally valuable, because it increases one’s purchasing power and financial security, but also as a token of appreciation for our contributions.

Recognition theory presents the most well-developed framework for making systematic sense of such a broader social meaning of wages within modern market economies. ¹² According to recognition theory, requirements of justice do not derive from abstract principles of distributive fairness or equality, or general theories of human nature specifying a supposedly universal list of basic human needs or capabilities. Instead, they derive from a basic requirement to express recognition for individuals as capable of self-realization within their concrete social contexts, by providing them with the material, psychological, and symbolic preconditions for it, within the most relevant social spheres of interaction in the type of society they live in. Recognition theory arrives at more specific requirements of justice by investigating what successful interaction in these spheres amounts to, and pays sustained attention to the psychological prerequisites for such interaction, especially self-respect and self-esteem. ¹³ Appropriate recognition reconciles individuals to their position in society: successful reconciliation assures individuals that the order of their society is a reasonable one, and allows them to regard their place in society as meaningful. ¹⁴

According to Honneth’s (1995) Hegelian approach, individuals need recognition in three different spheres. In the sphere of citizenship, recognition takes the form of respect, and requires effectively instituting equal basic rights. In the sphere of civil society, the currency of recognition is esteem for one’s social contributions; the economy and world of work are, broadly, part of this domain, as are one’s contributions to cultural or religious associations. Finally, in intimate relationships, recognition takes the form of love. Recognition in these three spheres is generally needed to develop and maintain healthy self-respect, self-esteem, and self-love, as preconditions of self-realization. ¹⁵ Crucially, in the spheres of love and esteem, individuals need recognition for their particular, personal qualities and actions. While, in the sphere of citizenship, equal basic rights affirm everybody’s fundamental standing as respect-worthy, social esteem complements this recognition with the assurance that individuals do not only generally possess moral capacities mandating unconditional respect but are actually making valuable social contributions based on their personal capacities. This chimes with the demand made in policy discourse, noted in the preceding section, that people’s work needs to be valued through decent pay. Jütten puts it well:

People in low-paid jobs cannot cherish their work, because they know that it is not socially valued.[…] Money is a medium of social esteem, and therefore pay is an expression of the value of one’s work to the organisation, to society and, ultimately, to the worker herself. (2017, 272) ¹⁶

Jütten also notes that the “connection between low pay and a lack of dignity has been recognized” in demands for decent minimum wages (2017, 272). Given that wages function as prices and incentives, and that their level depends on—constantly fluctuating—national and global economic background circumstances, there is good reason to doubt that one’s wage ever perfectly matches actual social esteem. There is even more reason to doubt that this esteem is fully justified, or deserved, according to broader moral standards of justice (we will return to this point further below). However, recognition-theoretic approaches to wages need not make such ambitious claims. If labor markets are organized well enough, efficiently directing workers to tasks that fulfill social needs or are otherwise in demand, then conditions offered to workers, including wages, can reasonably be taken to express social esteem to an extent that matters significantly for individuals’ integration into society. Given the central place of work and employment in the lives of many people, this seems plausible.

Unfortunately, however, the esteem rationale cannot deliver a distinctive and robust justification for minimum wages. To start, we need to note that interpreting minimum wages as expressions of esteem would call for two significant modifications of the conception of esteem outlined above. Firstly, on that conception, esteeming normally takes place in relations and exchanges within “civil society”—employers offer a certain rate of pay rather than another because they value one’s skills; consumers choose one’s product over rivals, or over saving the money. Yet the point of minimum wages is that they are mandatory: employers must pay at least as much. Therefore, even if they express esteem, it is not, in the first instance, the employers’ (Rogers 2014, 1573), but comes from political institutions. Employers might sometimes be independently willing to pay as much—or they might do so grudgingly. Secondly, and relatedly, minimum wages are not only mandatory, but also uniform. While they respond to particular contributions that workers make, not merely to generic possession of relevant capacities, this response is not tailored in any way to how well an individual worker has exercised their particular skills. This, however, was mainly how esteem was supposed to complement general respect. ¹⁷ Therefore, these two considerations show that to make room for minimum wages as esteem, we would need to add a more generic kind of esteem to this sphere of recognition (Laitinen 2015).

Even then, however, esteem could only deliver a weak, not a robust, justification for minimum wages. This is because they could only ever deliver a modicum of esteem, and there is no reason to suppose that it might be enough, in any socially relevant sense, or at least make a distinctive contribution to reaching that level of sufficiency. Contributor esteem essentially involves differentiation and gradation. Acts of esteeming display a valuing attitude (Ikäheimo 2022, 14) focusing on how somebody is contributing to cooperation enhancing somebody else’s good. So, it is always pertinent how much value they produce: esteem is due in proportion to it. We all believe that some contributions merit more esteem than others. This is why esteeming as a social practice tends to involve comparisons and therefore invites competition (whether that invitation is always taken up or not). Not only is “an equal distribution of social esteem […] utopian, due to the fact that people differ in their abilities and inclinations, and therefore cannot or do not contribute equally to socially shared goals” (Jütten 2017, 276). The comparative logic of our practices of esteeming seems at odds with the idea that there is a “threshold of social esteem […] sufficient for a dignified life” (Jütten 2017, 276) so that, once workers cross it, they can remain untroubled by esteem inequalities above—a suggestion of which Jütten, too, is skeptical (277).

Even if we grant that minimum wages improve the esteem position of some workers paid less before, workers on the minimum wage are still, by definition, at the bottom of any wage-based esteem order, even if the bottom moves up in absolute terms. What is more, the distance to other work can only be shortened so much by raising minimum wages, given that, at some high level, minimum wages may negatively affect labor demand. So, even if a general idea of what should count as sufficient social esteem could be defined and defended, any practicable minimum wage still looks set to fall far short of meeting that level. An esteem-based justification of minimum wages is not distinctive because there is a large array of possible other measures to correct skewed esteem distributions, including combating unreasonable esteem attributions to privileged people for engaging in practices lacking contributory value, such as displaying lavish consumption styles—or for merely owning wealth.

Recognition Theory (II): Respecting Contributors

If considerations of social esteem cannot yield a strong justification of minimum wages, we need a different solution. However, this can still build on recognition theory. According to our proposal, minimum wages respond to workers discharging their obligation to contribute to social cooperation. If individuals have a duty to contribute, they also have a corresponding right to have that contribution appropriately recognized. Decent minimum wages are an important part of this. They are part of recognizing low-paid workers as economic citizens: a status they share with all other participants in economic cooperation. This subsection outlines the fundamental elements of the proposal. The next subsection explains the conditions under which the proposal can work in practice, on real labor markets.

The basic idea of the proposal is to enlarge the sphere of respect within recognition theory to incorporate respect for actual social contributions that count as fulfilling an obligation. Moral respect is a required response to the possession of certain capacities, especially moral agency. It is appropriately expressed by effectively instituting equal basic rights—human rights and, within states, citizenship rights. However, respect is also a required moral response to some performances: in particular, those that fulfill one’s moral obligations, such as keeping one’s promises. That fulfilling one’s obligation calls for this form of respect need not mean that the obligation is conditional on receiving respect. Respect for fulfilling one’s moral obligation is importantly similar to Darwallian “recognition respect” (Darwall 1977) for the possession of moral capacities: it is a mandatory response to a morally salient fact, and it is owed in full to whoever meets the obligation, so that all who do are to be “treated equally” (Darwall 1977, 46), by receiving the same respect. It is in these crucial aspects unlike social esteem, which, as noted, can not only be given or withheld, but always admits of degrees.

The difference can be further explained by focusing on the attitude underlying this kind of respect. As noted, it is a response to agency, affirming a kind of standing of the other (unlike esteem, which focuses on how much they contribute to others’ good). We respect others, in this sense, as having normative authority, including co-authority with us over setting the terms for joint enterprises (Ikäheimo 2022, 22, 164). One such enterprise is economic cooperation. Accordingly, recent contributions to recognition theory have started to stress that economic recognition must include a category of “production respect” for capacities constituting economic agency (Schaub and Odigbo 2019, 113; see also Ikäheimo 2022, 165). Crucially, however, there is no reason to restrict this kind of respect to responding to required capacities. If somebody does not only possess these, but also exercises them to comply with justified demands put on them by others (their “co-authorities”), respect is due, acknowledging that they are doing what others have a right to ask of them—in this case, to contribute to cooperation. This clarifies also how contribution esteem and respect are not mutually exclusive but attitudes we can take up toward the same person with regard to the same actions, only with different focus. We can respect them for fulfilling their obligation to contribute, but also ask how valuable (beyond the threshold necessary to meet the obligation) the contribution is.

That we have an obligation to participate actively in social cooperation is an important building block of many people’s conception of social morality, across the political spectrum, even if not all political philosophers agree (libertarians do not). Many philosophers accept that there is a duty to contribute actively at least to the production of essential public goods as well as of goods that, while perhaps not entirely public in any technical sense (such as being non-excludable), are nevertheless essential. ¹⁸ For example, all humans need care at different points in life, especially at the beginning and toward the end (Bubeck 1995; Kittay 2020). One general argument for an obligation to contribute actively is that, simply by existing, we actively consume resources, and pollute (Becker 1980, 42). We need to stress that the duty requires contributing to social cooperation, not undertaking paid work. ¹⁹ The latter is merely one way of discharging it, under the right conditions (which we outline below). Furthermore, as it requires active participation, and, in this sense, work (whether paid or not), merely owning economic resources, including means of production, does not fulfill it. Owning merits neither contribution esteem nor respect.

If, then, there is such an obligation, all those who discharge it are entitled to corresponding respect. Different agents can express it in different ways, but the institutions responsible for organizing social cooperation at large must express it in a tangible and guaranteed way. They must fulfill individuals’ justified interest in knowing, and having recognized by others, that they are successfully discharging their obligation, and thus fully enjoy the status of a contributor—that they are, for want of a better word, respectable. ²⁰ Just as these institutions cannot appropriately express respect for capacities of agency by saying that people have basic rights constitutive of citizenship, but only by effectively guaranteeing these, contributor respect must take an appropriate material form. In liberal societies with market economies, this form is money because, other things being equal, money gives individuals most freedom to decide how they want to meet their needs and preferences. So, if doing paid work fulfills one’s obligation, decent minimum wages express contributor respect.

Minimum Wage Levels

How high must a minimum wage be in order to express appropriate respect? There are many thorny technical challenges in the discussion of appropriate minimum wage levels (e.g., Bennett 2014; Müller and Schulten 2020). We propose a distinctive kind of living wage: a decent minimum wage should provide individuals with at least sufficient work earnings to attain independence from other individuals in their ability to cover basic needs and participate meaningfully in society (“contributory self-reliance,” Maskivker 2023, 359). ²¹ What independence entails may legitimately differ from place to place, depending, among other things, on what needs are already met by public services for all.

This proposal is an individual-based benchmark disregarding the household context. This is because wages are paid to individuals, and defining a living wage for all possible households is infeasible, as shown in the preceding section. To assist workers with sustaining other, dependent household members, other policies may be needed, such as family benefits. However, it is crucial that this is only a minimum benchmark: minimum wages may well be higher as long as they do not have a major negative effect on employment. There are two main methods for calculating their target level in practice (Müller and Schulten 2020): defining them in relation to overall wage levels (e.g., as a percentage of the median wage); or defining a certain basket of goods and services that minimum-wage earners should be able to afford. The benchmark of individual independence might seem to recommend reliance on the second. However, the first method may not only be, in practice, more conducive to meeting that benchmark. It also makes for continuity with collective bargaining, in which unions consider the overall wage distribution rather than baskets of goods. Minimum wages need to be set in appropriately democratic procedures, and the concluding section will show that collective bargaining ought to be part of those. So, minimum reasoning ought to be extended to the minimum wage itself: individual independence only specifies the “minimum minimum wage.”

Rights and Duties of Economic Citizenship

It should now be clear how the contributor respect at stake in minimum wages belongs to a hitherto overlooked economic dimension of citizenship. A citizen is somebody enabled and empowered to participate fully in society. They possess a bundle of (legal and moral) rights guaranteeing access to opportunities for participation; these rights are matched by a set of duties to participate. The duty to contribute actively to cooperation and the corresponding right to have its fulfillment appropriately recognized mark the economic dimension of citizenship. This dimension supplements the well-known, and generally accepted, legal, political, and social dimensions of citizenship: rights to basic liberties, to political participation, and to essential social goods and benefits (Marshall 1950). The hallmark of citizenship rights, on Marshall’s influential account, is that they must be guaranteed to all individuals without discriminating based on competence, contributions, or any other kind of social status, and can be conditional, if at all, only on fulfilling general duties. Social rights of citizenship, such as the right to healthcare or to an abode, must not depend on the nature and level of economic contribution. Similarly, contributor respect must not fluctuate with one’s level of performance. A right to a decent wage, understood as a right of economic citizenship, must be guaranteed as long as one’s contribution meets a basic, non-discriminating standard of value (on which more in the next subsection).

Work, on this proposal, thus has a dual nature. Most people want to work, at least if the quality of work is good enough (Wielers and van der Meer 2021), ²² and most also want esteem for their work performance. Nevertheless, work is also a burden. It must be regarded as one if making social contributions is a duty. A contributor could, in principle, choose to do something else instead, something they merely prefer for themselves. That they do not calls for respect: as argued above, respect is the appropriate response to someone fulfilling their duty. This respect is particularly pertinent when work is less enjoyable and does not receive much esteem—as is often the case at the lower end of the labor market.

Importantly, however, our argument does not require instituting a legal duty to contribute economically, in particular not a legal duty to do paid work. Enforceable obligations to undertake paid work involve sizable difficulties. Not only might enforcement turn out to be unfairly selective. Vagueness and uncertainty pose significant obstacles in principle: we would not only need to pin down how much paid work people have to do (over the course of their lives), taking into account the level of productivity and capacity for needs fulfillment our societies have already reached. ²³ We would also have to establish that, and why, other ways of contributing (e.g., extensive, but informal and unpaid, voluntary work) cannot suffice (Becker 1980, 46). While an obligation to contribute should thus certainly feature in informal social morality, a legal duty to work is something we should be very cautious about, to say the least. This approach is familiar from other citizenship duties: most people think that citizens have some duties to participate in politics, but few countries have a legal duty to vote, and none is trying to codify all relevant expectations. This is why the emphasis of the economic citizenship argument is not on what exactly individuals have to contribute, but on how institutions have to respond to what we can be sure fully discharges one’s duty, independently of whatever else does.

However, we still need to show under which conditions participating in labor markets and holding a job counts as discharging one’s duty to contribute—without having to investigate the individual nature and quality of one’s contributions. It is a step from moralized ideas of cooperation fulfilling worthy goals, such as the Rawlsian notion of a just society as a fair scheme of cooperation producing goods that everybody needs (Rawls 1999), to actual cooperation, organized by real-world labor and other markets. This step is essential for justifying minimum wages in our economies and labor markets as expressing respect for economic citizenship.

Labor Markets as Vehicles of Contribution Respect

Fortunately, this step is not too difficult to make, because we can mainly rely on procedural certifications of the usefulness of paid work. To be sure, for some work, usefulness is not onerous to ascertain, if it is done in at least minimally competent fashion, because it directly aims at meeting essential needs, calling for a reward in kind (Maskivker 2023). This is true for most care work, including in healthcare, work in education, at least at nursery, primary, and secondary stages, constructing and maintaining necessary infrastructure, and so on. Some of this work is low-paid in many economies. However, it is not possible, at least in a liberal society where people reasonably disagree about what is valuable, to ascertain the usefulness of all paid activities by substantive judgment of the quality and size of contributions. It is also unnecessary. It is possible to ascertain usefulness procedurally, relying on the two familiar procedures of democratic legislation and well-regulated markets.

Public sector work is mandated by law and other regulations with democratic legitimacy. It thus embodies a judgment of usefulness by the public through its representatives. For private sector work, there are two reasons why it can be seen as making sufficiently useful contributions. First, it fulfills some people’s preferences—preferences that are important enough to warrant a monetary sacrifice. That, already, corresponds to a minimal notion of contribution to the common good. Second, such work contributes to creating the economic surplus needed to sustain adequate provision of public and essential other goods.

To make sure that both procedures (democratic law and markets) serve as adequate certification mechanisms for contributions, they need to fulfill several conditions. ²⁴ First, both democratic law and markets can certainly reward activities that unjustly harm and endanger others, so there needs to be a sufficient and effective regulatory framework tackling these. Second, it is necessary to ensure that real-world markets display a reasonable level of competitiveness, because, if they do not, there will be niches escaping the disciplining function necessary for confirmation of usefulness. For example, under severely imperfect markets and accountability mechanisms, large monopolistic or oligopolistic companies are under insufficient pressure to assure productivity (say, CEOs get little armies of personal assistants struggling to find anything worthwhile to do). Similarly, corrupted public services might provide sinecures for family members of important politicians. Furthermore, under excessive economic inequality, some services, only delivered to the rich, lack certification of usefulness because the rich actually do not have to make any sacrifice to buy them.

However, while it seems easy to think of examples of useless work, institutions must not withhold basic contributor respect from any worker because, in mass societies with highly intricate divisions of labor, workers typically cannot themselves ensure usefulness. They discharge their obligation by participating in the division of labor. The onus to make it more efficient (as well as fairer) lies squarely on those institutions themselves, as they organize the economy, not low-paid workers. This also clarifies how making a basic contribution does not consist, fundamentally, of following managerial directives, as most workers are bound to do (with managers typically being more accountable to owners of firms, not employees). It consists of participation in an economic system sufficiently geared toward producing things that consumers need and want. ²⁵

This is consistent with workers and customers esteeming, or failing to esteem, work in all sorts of other ways. However, for our purposes, the strength of democratic and market competition—if regulated in line with the conditions outlined—is that they provide systemic, dynamic procedures for certifying basic usefulness. If any employment on minimum wages really does not make enough of a contribution, employers in a competitive environment will have to invest and reorganize to increase productivity (see the next section).

It is now also easy to see how this conception of economic citizenship differs from the role that earning arguably plays in the currently dominant conception of US citizenship, as reconstructed by Shklar (1991). ²⁶ Shklar’s analysis of the economic part of US citizenship highlights the central importance of self-reliance, not of respect for useful contributions. ²⁷ She argues that “[w]hen they cease to earn, […], whatever the character of their work, Americans lose their standing in their communities” (1991, 98): on this conception, economic respect comes from earning alone, not from work being “socially useful” (97). Shklar frankly points out that “[i]t is irrational and unfair, but it is a fundamental fact of life constituted of enduring and deeply entrenched social beliefs” (98). Our argument starts from the premise that it is not irrational or unfair to hold that people have to contribute to social cooperation. It is that, at least in reasonably well-functioning democracies with market economies, undertaking paid work can be the primary avenue for discharging that obligation, and that all those who do are entitled to contributor respect marking their status as economic citizens. Receiving the means for adequate independence is the main form that this respect has to take, not what makes people respect-worthy, as in Shklar’s (1991) analysis of US citizenship.

Respect versus Esteem for Work

To conclude the main argument, a final question must be addressed: what is the resulting interplay of contributor respect with social esteem for contribution? As noted earlier, these two forms of recognition are not mutually exclusive. There is reason to hold that, with the assurance of contributor respect through decent minimum wages, workers at the bottom of the labor market can remain more indifferent toward pervasive esteem inequalities in the world of work. This is not to say that there are no requirements of justice for esteem, regarding especially fair opportunities to acquire justified, as well as making efforts to disparage unjustified, esteem. However, if these are unmet—or, where not much esteem is forthcoming for other reasons—then knowing that one does one’s duty through one’s work, and that others recognize this, with institutions responding appropriately, is at least one good reason to worry less about esteem for work. One enjoys the status of a full contributor and is, in this dimension at least, equal to all other contributors, however fancy their contributions might be. ²⁸

Of course, it may still happen that work remunerated with the minimum wage carries a social status penalty. If things go very badly, statutory minimum wages can even increase such a penalty, when the public at large uses “minimum wage jobs” as a derogatory term. However, that possibility merely suggests that full, equal economic citizenship requires other measures in addition to minimum wages. The concluding section will take up some of these. The possibility of such status penalties also illustrates the perils of attempts to read justified comparative social esteem off people’s salaries, and the consequent necessity to deemphasize the nexus between pay and esteem. Not only is everybody’s opportunity to reap de facto esteem through work, in unequal societies, unfairly affected by pervasive background inequalities of class, race, and gender. As already noted, even under ideal conditions of market functionality and background fairness, it is not plausible that salaries could ever tightly match justified esteem. For example, it is unlikely that comparing wages between private and public sectors can tell us much about how worthy of esteem the respective contributions made in each typically are. That labor markets can be so arranged that all active in them command adequate contribution respect is much easier to maintain than that they can be arranged to give rise to a justified esteem order. Thus, by bringing the differences between these two categories of economic recognition fully into view, and noting their interplay, our argument for minimum wages develops and advances recognition theory applied to work in modern market societies.

ALTERNATIVES TO MINIMUM WAGES

Before concluding by broadening the view to other dimensions of economic citizenship, it is necessary to double-check that minimum wages are indeed necessary for expressing contributor respect appropriately. The argument so far has shown that the institutions regulating labor markets must guarantee this respect. Yet the hallmark of minimum wages is that employers have to pay. Why should that be so, if what is at stake is ultimately the respect of one’s society, not the employers’? There are other policy instruments responding to low wages by intervening into wage levels, such as in-work benefits topping up disposable income for low earners (Abbas and Robertson 2023; Pedersen and Picot 2023). These could, in principle, express contributor respect, too.

However, there are several reasons why these are not good substitutes for minimum wages. First, there are good reasons to think that decent minimum wages are, as a matter of current fact, the symbolically strongest—communicatively most powerful—instrument for expressing recognition for low-paid workers (Rogers 2014, 1574). Substitute policies would require, at least, a transparent and publicly effective explanation of why, if one’s work is worthy of full contributor respect, part of its remuneration has to come from the state, like other benefits, which are not tied to contribution. Second, labor markets are characterized, certainly at the bottom end, by significant power imbalances, which economists capture with the term monopsony (Card and Krueger 1995; Manning 2003). Low-paid workers may not only lack skills that are in high demand; they typically also lack financial capacity to hold out for better offers from employers. Sizeable unemployment exacerbates this problem. In the absence of safeguards, there are large bargaining power advantages for employers, enabling them to exploit employees on low pay, and extract rent. ²⁹ In these cases, in-work benefits merely spread the cost to the public at large. Low-pay employees therefore need their position in the labor market shored up by minimum wages, to reduce employer domination in this sector of the labor market, as Rogers (2014) argues. ³⁰

Third, even if low-pay employers were unable to exploit their employees, raising the minimum wage beyond current levels can serve as an important signal in some sectors that productivity is too low. It signals, to employers in particular, a need for investments in innovation and upskilling (Dingeldey, Grimshaw, and Schulten 2021, 10; Rubery, Johnson and Grimshaw 2021, 20–1). This signal must be accompanied by full employment policies (see also the concluding section), as was the case in Sweden during the time of the Rehn-Meidner model (Erixon 2010). Generally, economies with higher labor productivity and wages tend to display less stark income inequality overall (Hall and Soskice 2001), creating a desirable continuity of increased minimum wages with broader markers of social justice (even if they have their own distinctive rationale). Minimum wages are thus not only a straightforward policy with intuitive appeal; there are several reasons why they really are superior to alternatives that are more indirect.

CONCLUSION AND FURTHER IMPLICATIONS

Sound normative justifications of major policies, such as minimum wages, matter. Our argument for decent minimum wages as expressing contributor respect, and therefore economic citizenship, provides such a justification. However, one might still wonder whether we expend a lot of theoretical labor for limited practical gain. The argument required showing how respect for contribution is distinct from social esteem, how the former is not subject to the same essentially comparative logic, and how decent minimum wages are indeed apt to express respect. Yet, decent minimum wages already enjoy considerable political support and are by no means radical. They do not amount to structurally changing market economies, leaving sizeable power and income inequalities in place.

However, this critique would not only overlook that a distinctive and robust justification for minimum wages is an important contribution, regardless of the support they already enjoy—both in its own right and for bolstering support. It would also overlook that the recognition-theoretical idea of economic citizenship opens up a new research agenda: development of the concept, its general justification, and its wider implications. One implication close to hand is, as noted, full employment policies. Expressing respect for contribution is incomplete without giving everybody the assured opportunity to attain that respect. Another implication is that those who do currently unpaid, but essential, work must be regarded as fulfilling their duties as economic citizens, and therefore as entitled to the same respect. This pertains especially to essential care work, for example, at home for elderly relatives—linking the argument to feminist scholarship about the value and status of domestic work and its proper, including material, recognition (Federici 1975).

Finally, we should highlight two additional implications that are more directly related to minimum wage policies. First, contribution respect must not only aim at guaranteeing decent pay for all, but at giving contributors an adequate say in determining what counts as decent. As mentioned earlier, minimum wages can be set by law or by collective bargaining (Picot 2023). Minimum wages enshrined in law are based on the input of non-workers (e.g., pensioners) just as much as of workers because they issue from the political institutions of electoral democracy. The annual updating of statutory minimum wage levels sometimes includes worker and employer organizations to varying degrees, but the process is still conditional on legislation passed by parliament. By contrast, minimum wages set by collective bargaining have the advantage that worker organizations directly participate in setting them. This appropriately empowers workers in matters that affect them more than other citizens. ³¹ In addition, empirical research suggests that collective bargaining is more effective at containing low-wage employment because it protects workers in general from sliding down the wage scale (Pedersen and Picot 2023). A downside of it is, however, that it can generate inequities if few workers are organized, leaving others uncovered, or if it is decentralized and uncoordinated, thus setting vastly different work conditions depending on economic conditions and union strength by sector. Hence, minimum wages by collective bargaining are preferable for democratic reasons, but union density should be high and bargaining centralized or otherwise coordinated. The desirability of collectively bargained minimum wages thus follows directly from our concept of economic citizenship, interpreted as being just as much about democratic citizenship as its other, more familiar dimensions.

The second important implication is that economic citizenship generates distinctive objections to excessively high pay and capital income; objections which are based neither on the injustice of overall material inequality, nor on inequality of esteem. Low-paid workers may have a justified complaint against excessive wages and capital income even if minimum wages are, taken on their own, appropriate. This is because the dimension of economic citizenship, in which all workers are to be equally respected as contributors, breaks down if some are paid exponentially more than others—at least if there is no mutually acceptable reason why this is necessary. Failure to curb excessive capital income, for example, dividends from shares, is even worse, because it undermines the significance of work as such. Therefore, constraints on upper incomes are necessary: at a minimum, effective firm-external accountability mechanisms for top pay and dividends; or even an upper limit to net income. This could be implemented through a 100% marginal income tax rate above a certain ceiling. Top income tax rates above 80% were not uncommon in affluent democracies between the end of World War II and the end of the 1970s (Piketty 2014, chap. 14). What exactly the right remedy is requires further analysis, just as the concept of economic citizenship requires further development, justification, and integration with the best theories of citizenship and social justice. Our aim here was to illustrate the likely richness of its implications.

The main subject of this article was, of course, the minimum wage: a pervasively used policy whose justification had not been convincingly established so far. Even if minimum wages are, in the end, just one part of economic citizenship, our recognition-theoretic argument provides a distinctive justification of why they are needed. Whatever other elements a program of economic citizenship may have, in a context of capitalist labor markets it must, on grounds of respect, include a democratically set, substantively acceptable lower bound to pay, for those who contribute to social cooperation through paid work.