Income Inequality Depresses Support for Higher Minimum Wages [pdf]
95 comments
·June 16, 2025Sprotch
danans
> If everyone has access to medical care, housing, and education, does it really matter if some people have more on their bank account?
It still matters when some people have 6+ orders of magnitude more wealth than the median person.
Because of this wealth disparity, through the legal channels of campaign contributions, they are able to have a disproportionate and therefore antidemocratic effect on government policy.
msgodel
That's always going to exist. Unless you make people themselves absolutely uniform you're always going to have individuals with unusual amounts of influence. Instead of freaking out over this you should try to ensure their interests are aligned as closely as possible and that they're not abusing each other.
const_cast
As with everything in life, it's a matter of scale.
It's truly not a problem if some people have maybe 10x more influence than others. It becomes a problem when some people have so much influence that they, alone, can change the trajectory of their country and even sidestep democratic processes. Which is what we're seeing in countries like the US.
TFYS
With the technologies we have today, I'm pretty sure it would be possible to create a system that doesn't have to give anyone so much influence that it becomes a problem. If you allow a system to have such concentrations of power, it's only a matter of time until someone incompetent or otherwise faulty person takes control and a lot of lives are ruined.
user____name
Political influence is not a step function.
surgical_fire
Maybe if we bow enough to our billionaire overlords they will spare us is your rationale?
This is bullshit. You can have lower income inequality without necessarily having an elite with destructive amounts of money with proper regulations and taxation against the most wealthy.
It's alright for a rich guy to live in a nice house ans drive around in a luxury car. It's not right when they have enough money to just buy access to the highest levels of everything to their benefit (and the rest of society prejudice).
candiddevmike
We all only have so much time on this earth. Why is it fair for some folks to spend a disproportionate amount of that time toiling away for basic sustenance while others spend their days on their personal hotel sized yachts?
delichon
For the same reason that it's fair when one seed falls on asphalt and dies when another seed falls in shit and thrives: it isn't. Fairness turns out not to be one of the forces of the universe.
candiddevmike
Wealth inequality isn't some random thing though, our government and economic system enables it. It's not like we have no control over it.
ToucanLoucan
But that unfairness is itself based on forces of the universe, in this case: a seed can grow in shit, a seed cannot grow in asphalt.
To extend your metaphor, we have tons of the available "surface area" for people to fall on paved with asphalt, to suit the preferences of those sitting in shit. These are not fixed things. We placed the asphalt. We can tear it up, if we so choose to.
tw600040
When someone asks how something is fair - coming back with life is like that or life isn't fair is not a valid response. Humanity should strive to make the systems as fair as possible while accepting the fact that unfairness will still exist. Why will theft etc be a crime if not for the idea of fairness. You can make the same life is unfair argument to defend theft but that's not the way it should be / is.
gruez
>Humanity should strive to make the systems as fair as possible while accepting the fact that unfairness will still exist.
The standard argument against this is that "inequality is a good thing because it leads to innovation" or whatever.
drewcoo
So the question is "why is life unfair?"
Or is it "why do bad beginnings with lots of drudgery not lead to yacht ownership?"
lotsofpulp
It’s not fair, just like most of life due to the genes/parents/geography/etc you are born to.
jjice
I don't know enough about anything to intellectually comment on this kind of thing, but I do agree that the standard of living for the poorest is probably a good metric of a society.
If the poorest people in a country get to live a happy, healthy life with people that love in not be stressed about food or housing, that sounds like a fantastic world.
Do any countries current achieve this? Japan maybe? I have no clue.
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johnnyanmac
These days, I believe every country is struggling with housing in some regard. But a good part of the EU and Japan and maybe South Korea might have had all those in the 2010's
bongoman42
I think all GCC countries achieve this for their citizens, going well above just living wage.
socalgal2
It's hard to compare countries. Japan has a culture of lots of construction, and that housing is not an investment. They also have far less zoning rules and far less housing requirements (less of "must have 2 parking spaces, must have N meters of space in front of lot, must have X size bathroom", etc. The result is there are plenty of inexpensive and small places to rent. For example, I just did a search on suumo.jp on one train line 1 or 2 stops from Shibuya. 36 units came up under $275 a month. (would be several hundred units if I search all lines that go through Shibuya). The units are small (7.5 to 15 square meters), Many don't even have a shower (you'd walk to a public bath). But, you'll have shelter. So even on a minimum wage part time salary you can probably afford to have a roof over your head. And, that was in Shibuya. Go out 10-15 stops and it will get even cheaper or they'll get larger with more amenities for the same price.
Food can also be affordable in Japan.
rangestransform
I think housing is the biggest problem here, the ideology-based encouragement of homeownership led to homeowners voting for people who would protect their “””””investment””””” and preserve their particular lifestyle. Restrictive zoning and well meaning but restrictive laws (affordable housing requirements, minimum floor area, union labour requirement, countless procedural burdens) mean that we will effectively never have the Japan housing situation in the US
AliAbdoli
Yes it does. I presume you don't wanna live in a world where Elon owns every company and you have no choice to work for him even if his wage is livable
abdullahkhalids
Because even modern democracies are much closer to 1-money-1-vote than 1-person-1-vote. "If some people have more on their bank account", what we have observed is that they use that money to change the rules of the game to extract even more wealth from those who have less in their bank account. So pretty soon the system evolves to where many don't have "access to medical care, housing, and education".
Give me a viable political system where wealth is not correlated with political power, and I will be liable to agree with you.
twoodfin
If that’s the scheme it’s failing miserably:
stego-tech
Because once you change the goal post, it becomes gameable. If we say the better metric is healthcare, housing, and education, then:
* Healthcare will be defined as “Primary Care Visits with approved in-network physicians”, who will also have proportionally lower pay so those who made that definition can keep more money for themselves
* Housing will be redefined to include cockroach-infested squallor, so landlords can pocket more money
* Education will have more stratas put in place at higher costs, such that “free” or “baseline” education is increasingly worthless, wages depressed, and only those of means may participate in society
All of those circle back to wealth inequality, and is why that metric won’t go away - and why the rich have a vested interest in convincing the poor that it’s everyone and everything else’s fault for their precarity.
It’s all about money. When more people have a larger share of the money, better decisions and outcomes are more likely than 1.1% of people hoarding 50% of global wealth for themselves. The math is absolutely that simple, as are the solutions (TAXES).
user____name
Inequality always expends until the political interests of the rich and poor diverge so much that societies come apart at the seams.
Relative equality is just as important, people get all kinds of stress related illnesses if they cannot keep up.
One example is people people putting themselves in debt in order to get a college degree.
Furthermore, the financial system works as a procyclical tool for the wealthy, since they can use debt financing as a leverage mechanism, while the poor have an insufficient credit score. This makes is easy for those with money to commandeer an outsized share of the available resources within an economy.
For example, wealthy owners using real estate and as an investment vehicle, bidding up house prices for everyone. The banks make a killing on selling mortgages while the population becomes indebted and precarity rises.
Here are some theories which I find interesting:
The Iron Law of Oligarchy https://en.m.wikipedia.org/wiki/Iron_law_of_oligarchy
Structural Demographic Theory https://peterturchin.com/structural-demographic-theory/
Elite Overproduction https://en.m.wikipedia.org/wiki/Elite_overproduction
Firm Hierarchy predicts Income https://economicsfromthetopdown.com/2022/11/19/firming-up-hi...
talkingtab
I apologize in advance but this issue is a crucial one. The effects of this "inequality" for all people, rich and poor alike should not be underestimated.
Accurately understanding cause and effect, having a diagnosis that actually affords an understanding and solution to the problem is of some importance then.
In the US we see a severe and dramatic event: falling income and rising stock market. In simple terms, corporation profits are rising and those rising profits are going to those who are already wealthy. At the same time, the real income of common people is falling. The discussion often turns to "inflation" as though low inflation is good news. If you cannot afford reasonable health care, food, adequate housing, low inflation does not help. In the discussion of these increasingly common problems, the obvious solution - paying a living wage - does not come up.
A key tool in understanding situations is "Cuo bono?" Who benefits? In the US and other countries it is corporations. An ancillary question is who does not benefit? The answer to that is question is given by the fact that the national minimum wage in the US is $7.25 per hour. Who benefits? Who does not? When the "too big to fail" banks had problems, the US instituted socialism for corporations. Who benefited? Who did not?
And certainly there is less public opinion support for higher minimum wages. Why could this be? Public support is to some extent determined by public discussion - where people express their problems and issues. If there is no forum for this discussion, then perhaps that is the crucial factor. In which case measuring "public opinion" will not be predictive.
A question then is whether there are forums where the experiences of common people are primary. Perhaps the Washington Post, owned by Jeff Bezos, is a such a forum? Really? Or perhaps other media, supported for the most part by corporate advertising is the answer. For example, the NYT with their articles about where to buy your two million dollar vacation home? Or here is a recent article for you:
https://www.nytimes.com/2025/04/23/style/plant-sitter-nanny....
Our so called news media have dramatically failed. And somehow the NYT is surprised that there are people who will now choose any alternative over the status quo. And if you had the nerve to reject both candidates in the last election, the NYT deemed you a "double hater".
comrade1234
It feels like the USA is becoming like India (and others) where a middle class lifestyle depends more and more on the work of the extreme poor. I have friends in India with live-in Nannie's, live-in chef and a driver and they aren't extremely rich - they can get by paying these people a pittance.
The USA similarly relies on low-paid, often illegal, workers being paid less than minimum wage to harvest their food, wash their cars, do their gardening, etc...
nostrademons
A lot of this is because of the housing theory of everything along with increasing wages and professional opportunities for (a subset of) women.
In the post-WW2 era, housing, food, and energy were cheap, which made it possible for a single wage earner (usually the husband) to support a family. All of the things that upper-middle-class families commonly outsource - cooking, cleaning, gardening, childcare, housework, driving kids around - were done by the wife. Now they are low-paid labor; before they were unpaid labor, but they still had to get done.
The existence of a market for low-productivity tasks like childcare and cleaning depends upon income inequality. These are not jobs where capital and specialization makes you more efficient; one person can do them roughly as well as another, and often times a household member is more efficient than external paid help. For a market to be profitable in these activities, the opportunity cost of one person’s time must be much greater than the wages they pay for this service, which implies wage inequality.
Two-edged swords and all that. Greater equality between sexes within a family is made up for by greater inequality between families.
danans
> It feels like the USA is becoming like India (and others) where a middle class lifestyle depends more and more on the work of the extreme poor.
With a longer perspective, the trend in the US can be seen more as a reversion to a prior state. 100 years ago the US wasn't that different than India today in terms of exploitation of poor laborers.
drewcoo
> 100 years ago the US wasn't that different than India today in terms of exploitation of poor laborers.
100 years ago there was a period of prosperity in the US following WWI.
100 years ago there was much stronger unionization for Americans both in factories and on farms.
The high tech infrastructure 100 years ago was electrification, US cities being wired up and almost all rural (where most Americans lived and worked) areas not. You might argue for the phone but rural phones took longer than electricity to deploy. The high tech infra today is Internet and rural Indians are much more connected than century-ago Americans.
Conditions are very different in important ways. I'm intentionally leaving out race/caste comparisons, which are valid but will also lead to massive downvotes.
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msgodel
Most of the world looks that way and it's largely a consequence of their culture.
We've spent decades saying that the US's culture was immoral for various reasons and did everything we could to import foreigners from places like that, now we're seeing the cultural shift and it turns out the ideas we had weren't as bad as we thought.
mindslight
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isapoor
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baggy_trough
I feel a deep sympathy for poor people, especially young people with minimal skills, which is why I think the minimum wage should be abolished. Making it much easier for them to get jobs is an important way for them to start gaining skills and becoming more productive, justifying a higher wage.
johnnyanmac
I'll take "what is a dead end job" for $500, Alex.
The kind of jobs offering sub-living wages are generally not ones that care about your growth. If they could get away with slave labor they would.
baggy_trough
A so-called dead end job is much preferable to no job at all, which is the option on offer.
msgodel
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jdasdf
>The minimum wage can be an effective policy tool for mitigating economic inequality, but public demand for higher minimum wages has not kept up with rising levels of income disparities
They could start the paper by not stating something obviously false.
johnnyanmac
Given some of the takes in this comment section so far, this community seems to be proving its point. I imagine almost no one in tech is making minimum wage, so I'm a bit perplexed why we seem to be so split on raising it. Some seem to have fallen for the "prices raise" narrative, as if they didn't raise regardless for the last 1t years.
user____name
You can find metastudies on historic minimum wage effects on prices or employment rates, spoiler alert: there is no correlation in sight. Same for rent control. Sadly that doesn't stop people from taking econ 101 and think they can use it to explain everything.
const_cast
People ham-fisting free market economics is incredibly frustrating. Nobody actually bothers to do step 1: explain how a particular market is a free market.
If they did that, they would be realize that all their conclusions they draw have zero foundation. The labor market is NOT a free market, and that's good. Everyone wants it to not be a free market. But that complicates things, and we can't make 1 million assumptions and draw basic conclusions. We actually have to, you know, analyze things.
almosthere
If you force the federal minimum wage to be $15 for the entire country - we're only exporting more jobs to other countries - nearly instantly.
I do believe that Tariffs should actually be determined by wage disparity. So if the US can make a paper plate for $0.01 each, but China can make it for $0.00001, then the Tariff for the paper plate should just be $0.01 - $0.00001. That way both plates are sell-able for the same price.
johnnyanmac
People always says this, but the impact in CA's minimum wage increases never happens. Turns out jobs woth minimum wage aren't ones you can easily outsource at this point.
aerostable_slug
That opinion is not universal:
https://californiaglobe.com/fr/californias-20-fast-food-mini...
BurningFrog
This system ends up with very high tariffs and prices on things like coffee and bananas, which can only be produced in the US at very high cost.
This system optimizes for some kind of "fairness" between producers, rather than living standard for consumers.
In reality, everyone is best of if things are produced where they can be made most effectively.
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tptacek
The paper doesn't appear to advocate for a federal minimum wage.
lesuorac
Who determines the price that you can make a paper plate at?
glitchc
You do realize you just advocated for a 100,000% tariff on paper plates, right? Here everyone is shitting the bed at 100% and 150% values.
notyourwork
Who can afford to live on $15/hr, let alone less?
almosthere
People that need a job but can't get a $15 one or hold it steady enough. You end up with roommates or living with mom, but you can live off that.
johnnyanmac
Who's getting approved for a house @ $15 an hour? And now you're hoping your parents can support you as if everyone has a healthy family life. As a not-so-fun fact, many homeless people were orphans aged out of the system. They end up straight on the streets.
loxodrome
This paper seems based on the premise that inequality is bad, which is completely false. Inequality is absolutely necessary so that resources go to where they are used most effectively. This maximizes overall wealth/value creation, which is better for everyone, even if it is unequally shared. USA has highest median income in the world by a large margin for this very reason.
pbhjpbhj
I mean, little could be clearly less true - people spend billions on advertising because they want to brainwash people into seeing their product as necessary/useful when it isn't. If you want to target resources, kill advertising is probably number 1.
Second, you think we need more "CEO yachts"? That's where the resources are going more and more. IIRC billionaires in UK are 5 times richer since Covid. We have many little with poor housing and food situations.
Western Capitalism directs resources to the wealthy, often those who gained wealth through past feudalism or [other?] crime.
loxodrome
Look at this table
https://en.m.wikipedia.org/wiki/Disposable_household_and_per...
The USA has the highest median disposable income (purchasing power) per household.
How could you possibly believe that capitalism is making Americans and other capitalist countries worse off?
There’s a reason practically everyone wants to move to those places!
pbhjpbhj
We're talking about wealth distribution within countries.
A better metric than income inequality would be the standard of living of the poorest. If everyone has access to medical care, housing, and education, does it really matter if some people have more on their bank account?