How Much Would You Pay for the Good Society? Where the Income Inequality Debate Can Take Us

If we were able to ask the average American if s/he would be willing to pay $12.50 annually so that thousands upon thousands of people who work for a living might stand a chance of meeting their basic needs, I wonder how s/he would respond? A fully-fledged national conversation on income inequality might yield an answer.

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In my last article, “How to Create Policies to Address Income Inequality?: De-Mythologize Upward Mobility,” I argued that the entrenched and very powerful narrative of individual upward mobility in U.S. culture, which often on some level informs our political thought, poses a major obstacle to creating effective policies to address income inequality as it legitimates income inequality rather than systemically confronting it. An individual might escape a low-wage  job and move up the income ladder, but that doesn’t eliminate the low-wage job or the work we need done as a society. I suggested that to address income inequality, we actually need to do something more direct—like actually address income inequality by, for example (among many possible actions), raising the minimum wage.

My brother read the article and asked me a question that I think is more generally at play in the debate: “Won’t the costs of increasing the minimum wage simply be passed on to consumers?” My first, rather knee-jerk, response to such a question is always why can’t these costs come out of salaries at the top of these companies or come out of corporate profits? I did, in that article, refer not just to raising the minimum wage but also to equalizing wages, which—if you didn’t get it—means salaries at the top might have to be adjusted lower (go ahead and call me a communist), as any solution to income inequality, almost by definition, will need to involve redistribution of existing wealth. Corporations for decades have maximized profits by lowering wages and decreasing benefits. Can’t we ask that corporations show a minimal responsibility not just to their workers but to the society of which they are a part? Such behavior is actually in the self-interest of these corporations—even Harvard says so.

But then I moved past my knee-jerk thinking and considered the question, and it became pretty interesting to me. So what if the costs of raising the minimum wage were passed on to consumers? When that question is posed, it is usually done so rhetorically, with the assumed answer that—God forbid!–it would be horribly unacceptable to raise prices for consumers, and thus we cannot raise the minimum wage—end of conversation. But what would it mean to pass the cost of a minimum wage hike on to consumers (who, let’s not forget, are typically workers, too, a fact often lost or neglected in such conversations)? I started to think about this question as something more than rhetorical, and my thinking led me to reflect also on how this debate on income inequality provides an important opportunity for us to really re-assess American values and, in ways we haven’t done, consciously craft—and pay for—the kind of world we want.

If corporations (who, after all, are apparently people) are unwilling in the name of the Good Society (a concept I refuse to believe is obsolete) to make sure their workers have the wages and benefits necessary to meet their basic needs, are the rest of us worker-consumers willing to fund it? It’s not at all clear that the citizen-consumer of today wants the lowest-priced goods and services regardless of social and human consequences. In fact, the opposite seems to be true. CNBC editor Heesun Wee reports, for example, that, “Particularly for younger consumers, including millennials, purchasing decisions are about more than cheap prices. Shoppers are buying based on a company’s values, which can include domestic manufacturing, environmentalism and ethically sourced raw materials, ranging from cocoa to cotton fibers.” These millennials, and no doubt others across generations, appear to be thinking very consciously about the type of world they want, buying organic goods and recycled products to protect the environment, free-range chickens to ensure humane treatment of the earth’s creatures, fair-trade coffee, and the like.

It may very well be that this evolving socially conscious consumer will pay for goods and services produced and provided by unexploited labor, or by more justly paid labor. What would the cost be for this Better, if not Good, Society? Well, a 2011 study regarding wages at Walmart offers some insight into this issue, finding that to raise every worker at Walmart to at least a $12 per hour wage would cost the average Walmart customer 46 cents per trip or about $12.50 annually.

This doesn’t seem like much to pay so many can receive a more livable wage (we might have to pay more for a true living wage), but maybe I’m wrong. The main point I want to make, though, is that I’m not sure we’ve ever posed the question to the average American in a way that would enable us as a collective culture to make a conscious choice in the matter. Our culture and economy function on the assumption that consumers want the lowest price, but has anybody ever asked the consumer if they want the lowest price regardless of social and human consequences? If we were able to ask the average American if s/he would be willing to pay $12.50 annually so that thousands upon thousands of people who work for a living might stand a chance of meeting their basic needs, I wonder how s/he would respond? A fully-fledged national conversation on income inequality might yield an answer.

And we can make the question more telling by elaborating more fully the economic ramifications of this choice. For example, while I am not a political economist by trade, let me risk the observation that it stands to reason that if more Americans made a living wage, state and federal governments would not only bring in more tax revenues, they would also need to spend substantially less in assistance programs from food stamps to housing and healthcare subsidies. In such a scenario, our governments might legitimately be able to afford to cut taxes, improving people’s economic lives even further and returning more than that $12.50 required to raise the minimum wage. Ironically, if corporations and the wealthiest Americans want tax cuts, perhaps the surest way to achieve those cuts is by raising the minimum wage and moving toward greater income equality.

While I don’t mean to absolve corporations of their social responsibilties (more about this in a future article), I do want us to think about options for empowering ourselves to create the world we want even if we can’t get the cooperation of the Koch brothers and their ilk. The argument that we need to exploit labor so that we have affordable goods and services is both sad—not to mention pretty evil—as well as finally uncompelling, I hope you’ll see. We can move toward the Great Society for pennies a week. It’s hard to imagine a better bargain.

Tim Libretti

Tim Libretti is a professor of U.S. literature and culture at a state university in Chicago. A long-time progressive voice, he has published many academic and journalistic articles on culture, class, race, gender, and politics, for which he has received awards from the Working Class Studies Association, the International Labor Communications Association, the National Federation of Press Women, and the Illinois Woman’s Press Association.