Why do some employers oppose a mandatory living wage and others support it?

• In Event: Organizations, Occupations, and Work Section Roundtables
  In Refereed Roundtable (90 minute): Table 29: Worker and Employer Beliefs and Justifications

Abstract

Based on a case study of a US county, including two rounds of interviews with 40 employers, we ask two questions: What are the main factors shaping whether employers support or oppose a mandatory living wage? What is the relative impact of normative versus instrumental reasoning in shaping employer views on a mandatory living wage?

We find that nearly two-thirds of employers (25 of 40) expressed unequivocal support for a mandatory living wage and an additional three offered qualified or contradictory support. Just under one-third of employers (12 of 40) unequivocally opposed it. Across employers in our sample normative reasoning is the decisive factor in shaping employer views on the living wage. Small business owners in our sample overwhelming support a mandatory living wage but many struggle with how to afford it.

Our findings uncover an important blind spot in the literature on living wage, which sees normative reasoning as driving only support for (but not opposition to) a living wage (Heery, Hann and Nash 2023). Further, it contradicts psychology-based theories of social comparison predicting that normative pressures inside organizations make employers seek to reduce internal wage inequality (Cobb and Stevens 2017). In our study, both small and large employers sought to counteract wage compression to maintain internal wage inequality.

Theoretically, we draw on Weber’s ([1921] 1978 ) distinction between instrumental rationality and value-rationality, and recent work (Friedland 2017; Haveman and Gualtieri 2017) emphasizing the grounding of institutional logics in values and the role of normative (value-driven) reasoning in how individuals assess their situation and make decisions. We argue that the institutional logic underlying the normative reasons offered in opposition the mandatory living wage is a class-based logic of capitalist solidarity, while the normative reasons offered in support are part of a non-class-based logic of humanism.

Authors

• Matt Vidal, Loughborough University

• Ian Greer, Cornell University

• Sean O'Brady, McMaster University

• Reed K Eaglesham, Cornell University