Debating Equal Pay for All: Economy, Practicability and Ethics 3030535746, 9783030535742

Table of contents :
Foreword
References
Praise for Debating Equal Pay for All
Contents
Notes on Contributors
List of Figures
List of Tables
1: Background and Introduction: Why Debating Equal Pay for All?
Book Content: The Chapters and Their Arguments
Part I: Against Equal Pay for All
Part II: Against Equal Pay for All But for Equal Minimum Income for All
Part III: Toward Increased Pay Equality
Part IV: For Equal Pay for All
Part V: Afterword
References
Part I: Against Equal Pay for All
2: Equal Pay for All: An Idea Whose Time Has Not, and Will Not, Come
What, Exactly, Is EPI?
On the Inefficiency of EPI
The Empirical Work on Justice
References
3: Universal Equal Pay Wrong-foots the Distribution of Incomes
Distribution of Individual Wages
Distribution of Household Incomes in Relation to Wages
Important Implications
Conclusions
References
4: More Onerous Work Deserves Higher Pay
The Luck Challenge Examined: Deserving to Deserve
Compensatory Desert: Why Responsibility Is Not Required
Does Work Come with Different Goods and Bads?
Do People Choose Their Job?
The Compensatory Desert Principle
Compensatory Desert in Practice
Objections
Conclusion
References
5: Equal Pay for Knowledge Workers in Academia: An Unrealistic Proposition
Knowledge Worker, an Idealistic Call or Just Another Job
Do We Need Incentives?
Unequal Pay for Individual Motivation
Unequal Pay as a Tool for Change
Competition and Unequal Pay
Pay Versus Other Incentives
Honors
Special Privileges
Differentiated Pay
Conclusions
References
Part II: Against Equal Pay for All But for Equal Minimum Income for All
6: Equal Pay: A Floor Not a Ceiling
The Equal-Pay Proposal
The Economic Functions of Unequal Wages
The Immorality of Equal Pay
EPP Is Not Egalitarian
EPP Infringes Liberty
EPP Is Unfair to Sellers
EPP Is Self-defeating
An Equal Minimum, Not an Equal Maximum
Conclusion
References
7: Limiting Insecurity, Not Opportunity
Introduction
The Economy Today
Equal Wages
Basic Income
Conclusion
References
Part III: Toward Increased Pay Equality
8: A “Middle Way” Between the Free Market and Full Equality: A Pay Ratio
The Scale of Pay Inequality
The Right’s Rejection of Egalitarianism
The Either/Or Dichotomy
Greater Equality Entails State Control
The Rich Are Wealth Creators
Pursuing Equality Will Cause the Rich to Emigrate
The Case for a “Pay Ratio”
A “Pay Ratio”: An Idea Whose Time Has Come?
Conclusion
References
9: Closing the Gap: The Benefits of Lowering Pay Ratios
Introduction
Fairness, Pay Ratios, and Public Expectations
Examining Policy Initiatives
Conclusion
References
10: How Fair Is Equal Pay? The Need for a More Balanced Perspective
Introduction
Arguments for Pay Equality
What Are the Benefits?
Where Pay Equality Might Work?
Arguments Against Pay Equality
Resolving These Arguments and the Way Forward for a Modern, Progressive Economy
References
11: Are There Moral Limits to Wage Inequality?
Wage Inequality in Labor Markets
Freedom, Coercion, and Wage Offers
Moral Limits to Wage Inequality
References
12: Equal Pay for a Green Future
Introduction
Income Gaps and Job Losses
Globalization and Technology Unemployment
Climate and the Natural Environment
Toward a New Agenda
An Absurdity Perspective
A “Dugnad” Perspective
Ingredients of a New Agenda
Taxation for Inequality
Taxation for Climate and Environment Mitigation
Helplessness, Security and Flourishing
Concluding Remarks
References
Part IV: For Equal Pay for All
13: Can a Honduran Have What a Norwegian Has? Equal Pay for All Countries: An Exploration
Two Leaps in Scale
Inequality between Countries
Distributive Justice: Theories and Experiments
An Actual Test
Solutions: Mechanisms and Policies
Conclusions and Recommended Reading
Appendix
References
14: Economic Equality as a Precondition for Democracy and Social Justice
Introduction
Part I
Part II
Part III
Conclusion
References
15: Defending Equal Pay for All Against Objections from the Achievement Principle
What Is the Achievement Principle?
The Achievement Principle as Justification for Unequal Pay
A Rejoinder in Four Points
Conclusion
References
16: Equal Pay as a Precondition of Justice?
Introduction
Equality and Justice
The Just World Fallacy
An Argument for Equal Pay
Concluding Remarks
References
17: Equal Pay for All (Per Hour Worked)
References
Part V: Afterword
18: Afterword: Equality, Not Equal Pay—Distributional Justice Beyond Money
Introduction
Money as a System of Production
Money as a Labor-Driven Phenomenon
Differentiated Output, Differentiated Value
Universal Commons, Not Equal Pay
Conclusion
References
Index

Citation preview

PALGRAVE DEBATES IN BUSINESS AND MANAGEMENT

Debating Equal Pay for All

Economy, Practicability and Ethics Edited by Anders Örtenblad

Palgrave Debates in Business and Management

Series Editor Anders Örtenblad University of Agder Grimstad, Norway

​ is series will take a refreshing and creative approach to business manTh agement research, consisting of a number of edited collections that showcase a current academic debate. Each title will examine one specific topic and shall include a number of chapters from authors around the world, presenting their differing points of view on the question in hand. The intention of this series is to take stock of controversial and complicated topics of debate within business and management, and to clearly present the variety of positions within it. More information about this series at http://www.palgrave.com/gp/series/16112

Anders Örtenblad Editor

Debating Equal Pay for All Economy, Practicability and Ethics

Editor Anders Örtenblad University of Agder Grimstad, Norway

ISSN 2524-5082     ISSN 2524-5090 (electronic) Palgrave Debates in Business and Management ISBN 978-3-030-53574-2    ISBN 978-3-030-53575-9 (eBook) https://doi.org/10.1007/978-3-030-53575-9 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Foreword

Philosophical questions, when first encountered by the uninitiated, often seem either silly or meaningless. Why is there something rather than nothing? Do physical objects continue to exist when nobody is perceiving them? Does it make sense to say “this sentence is false”? What is beauty? This book boldly adds a new question to the already long list of such philosophical conundrums: Should all workers receive equal pay? Once posed, genuinely philosophical questions, even those that seem ridiculous or absurd at first glance, have a stubborn way of continually resurfacing until we take them seriously. Some who see the title of this book will have an initially negative reaction: “What a crazy idea! Paying everyone equally, regardless of what they do, would never work!” Nevertheless, most readers would concede that a just world is better than an unjust world, and that ultimately equality at some level is a necessary condition for justice. If this is the case, then perhaps we need to think harder about what type of equality, what type of pay, what type of workers, and what type of “should” this question would need to pose in order to be taken seriously. When teaching introductory philosophy courses I often tell my students that there are good and bad ways of doing philosophy. A good philosopher will think outside the box, so to speak, avoiding simplistic, black-and-white answers as much as possible. Indeed, I sometimes joke v

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(at least half-seriously) that every genuinely philosophical question has the same answer: yes and no. The point, of course, is not that genuine philosophical questions must literally be worded in a “yes-or-no” form. Rather, it is that the best way to think philosophically is to resist the temptation we all have to defend one of two extreme answers, assumed to be mutually exclusive. Fixed, definite answers are appropriate and often even essential to most other academic disciplines. For example, given the standard mathematical definitions of the terms, the answer to the question “What is 4 plus 4?” will always be “8”—end of story. Because of the peculiar nature of philosophical questions, many philosophers are fond of saying that in this discipline, unlike all others, “there are no definite answers.” But I definitely disagree with this common claim! Read any good work of philosophy and you will find an author who is proposing and defending very definite answers to the philosophical question(s) under consideration. Plato had a definite answer to the standard question of epistemology: How do we come to know what we do not already know? We are remembering the world of forms that we knew before we were born. Aristotle disagreed, and in so doing, he proposed an equally definite answer. Their answers do not cease to be philosophical simply because they were (or attempted to be) definite. Therefore my version of this common claim is: We know a question is genuinely philosophical when it has too many definite answers.1 The chapters in this book may not convince most readers that there is one completely correct way to meet the challenge posed by the title, but they will surely persuade any attentive reader that the matter at hand is a genuinely philosophical question. Not all contributors to this book would identify themselves first and foremost as philosophers, nor even are all of them employed as academics (to say nothing of being academic philosophers). Nevertheless, they are all contributing, in one way or another, to a genuinely philosophical debate, one that could not be more relevant to our modern quest for the ideal of “equality and justice for all”, as hinted in the US Declaration of Independence (Jefferson et al. 1776) and affirmed more explicitly in countless other influential writings.2 In dealing with such an obviously important question, the difference between a good philosopher and a great philosopher is this: the former

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will offer persuasive arguments to defend a given definite answer and demonstrate in the process that the opposite answer must be wrong; the latter will catch a vision of a higher perspective, from which he or she can demonstrate that both of the (opposite) standard answers have an element of truth—hence, both “yes” and “no” are correct answers—when each is viewed from the different (lower) perspective it assumes. Thus, for example, Immanuel Kant was a truly great philosopher because he recognized that both idealism and realism are correct, the former from a transcendental perspective, the latter from an empirical perspective (Palmquist 2000, chapter 3). He was able to explain why the many “definite answers” offered by his predecessors correctly reflected an aspect of the way things are, while each also had the fatal flaw of not making room for the opposite perspective. By incorporating many voices from the whole spectrum of possible answers to its question, the present book steers clear of this fatal flaw. It challenges every reader to think philosophically about the topic at hand and is sure to surprise any readers who assume they already possess the one definite answer. Realistically, the result of thinking outside the box along with many of the contributors to this collection might not be to spark a revolution that changes one extreme system (namely, the system of “differentiated pay” that characterizes the vast majority of working situations today) to the opposite extreme (namely, a version of the new system that features equal pay for all), but the serious reader will find ample opportunities to press forward to what Kant called “a third thing”—a creative synthesis of both extremes (Palmquist 2000, chapter 4). Indeed, I believe Kant would have welcomed a book in which philosophers debate with academics from disciplines outside philosophy, for he thought of creative conflict as being an important—if not the single most important—contribution scholars can make to society.3 Ideas such as introducing pay ratios offer one possible synthesis, but what if we synthesized equal pay with its true opposite? Could there be a system of equal pay without any form of government assistance or regulation? Could the correct eschatological ideal of equal pay for all be a synthesis of absolute government control and total lack of intervention? Could these lead to the same end?

viii Foreword

Philosophers often give lip-service to the ideal of conducting open, civilized debate on issues that matter to all human beings, but we actually practice this ideal far less than we preach it. This book is part of a series that aims to put an end to—or at least to clip the wings of—this all-too-­ common tendency. If readers do not find in these pages a single, definite answer to the question of whether all workers should receive equal pay, this will be a sign not of failure but of the book’s great success. Stephen R. Palmquist Professor of Religion and Philosophy Hong Kong Baptist University Kowloon Tong, Hong Kong

Notes 1. I discuss and illustrate this and other claims made above about the nature of philosophy in Palmquist (2000). 2. Probably the most famous phrase of the Declaration of Independence, “all men are created equal”, explicitly affirms the equality of all, while the rest of the document appeals to the many injustices perpetrated by the British government as justification for the need to declare independence. According to Kozleski (2015, chapter 1), when the Pledge of Allegiance, memorized by virtually every American school child, was originally drafted in 1892 by Francis Bellamy, he originally wrote: “with Liberty, Equality, and Justice for all”; however, he eventually deleted “equality” as a concession to those who were still voicing opposition to the recent emancipation of slaves. As such, this deletion might epitomize the difficulty many citizens of the United States would have, to this day, in accepting the notion of equal pay for all. The mentality of many is likely to be: Liberty and justice for all, yes. But if we are all created equal, then why should governments introduce artificial pay structures that try to erase the real differences in how we were all (equally!) created? Other literary references to “equality and justice for all” are too numerous to list here. 3. The main theme of Kant (1798/1979) is the creative conflict between the philosophy faculty (called the “lower faculty” in the Prussian universities

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of his day) and the other three (“higher”) faculties of medicine, law, and theology. Whereas the higher faculties train the three main types of professionals (doctors, lawyers, and priests), the philosophy faculty has no corresponding profession because its main task (as far as the general public is concerned) is to criticize the guidelines and principles put forward by scholars in the other three faculties in their attempts to shape government regulation of the three professions.

References Jefferson, T., et al. (1776). Declaration of independence. Retrieved May 12, 2020, from https://constitution.org/us_doi.pdf. Kant, I. (1798). Der Streit der Facultäten. Königsberg, Prussia: Friedrich Nicolovius. English version: Kant, I. (1979). The conflict of the faculties (M. J. Gregor, Trans. and Ed.). New York: Abaris Books. Kozleski, L. (2015). The pledge of allegiance: The story of one indivisible nation. Broomall, PA: Mason Crest. Palmquist, S. (2000). The tree of philosophy: A course of introductory lectures for beginning students of philosophy. Hong Kong: Philopsychy Press.

Praise for Debating Equal Pay for All “Who knew, when the authors here were working on ‘equal pay’, that COVID19 was limbering up to invade and spotlight so many of our socio-economy’s weaknesses, equal or inequal pay being one of a plethora. Notwithstanding, just as we have yet to outline the, or even a, post COVID socioeconomy, these authors explore many of the equal pay proposals and ramifactions that now push themselves into the center of our efforts to rebuild society. Perhaps most profound is the relationship between the public and private sectors. It is too easy to presume on moral grounds that ‘equality’ is both desirable and possible and ignore how human societies are contexts of power differences. Before the distribution of economic wealth and benefit come our attempts to manage social power’s distribution. We see politics everywhere being upended. Societies are changing, being rethought and reorganized according to many differing principles. This volume raises these important questions usefully, the authors little aware they will now play on today’s much larger stage.” —J.-C. Spender, Kozminski University, Warsaw “This book is an inspiring contribution to an important topic. It is a must read not only for university students but for all who are interested in equality and equal opportunity.” —Prof. Dr. Gudrun Sander, University of St. Gallen, Switzerland “A timely book that will help reward professionals not only think about the various ways that organisations can pay their employees, but also about how they can distribute this pay among their workforce.” —Charles Cotton, Senior Adviser for Reward and Performance, CIPD

Contents

1 Background and Introduction: Why Debating Equal Pay for All?  1 Anders Örtenblad Part I Against Equal Pay for All  19 2 Equal Pay for All: An Idea Whose Time Has Not, and Will Not, Come 21 Thomas Mulligan 3 Universal Equal Pay Wrong-foots the Distribution of Incomes 37 Wiemer Salverda 4 More Onerous Work Deserves Higher Pay 55 Huub Brouwer and Willem van der Deijl 5 Equal Pay for Knowledge Workers in Academia: An Unrealistic Proposition 71 Frode Eika Sandnes xiii

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Part II Against Equal Pay for All But for Equal Minimum Income for All  83 6 Equal Pay: A Floor Not a Ceiling 85 Matt Zwolinski 7 Limiting Insecurity, Not Opportunity 99 Jamie Cooke Part III Toward Increased Pay Equality 115 8 A “Middle Way” Between the Free Market and Full Equality: A Pay Ratio117 Peter Dorey 9 Closing the Gap: The Benefits of Lowering Pay Ratios135 Bhavya Mohan 10 How Fair Is Equal Pay? The Need for a More Balanced Perspective149 Peter Reilly and Duncan Brown 11 Are There Moral Limits to Wage Inequality?167 Kory P. Schaff 12 Equal Pay for a Green Future183 Harald Knudsen Part IV For Equal Pay for All 201 13 Can a Honduran Have What a Norwegian Has? Equal Pay for All Countries: An Exploration203 Jur Schuurman

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14 Economic Equality as a Precondition for Democracy and Social Justice227 Lauretta Conklin Frederking 15 Defending Equal Pay for All Against Objections from the Achievement Principle241 Jean-Philippe Deranty 16 Equal Pay as a Precondition of Justice?255 Daniel Pointon and Matthew Sinnicks 17 Equal Pay for All (Per Hour Worked)267 Einar Duenger Bøhn Part V Afterword281 18 Afterword: Equality, Not Equal Pay—Distributional Justice Beyond Money283 Rohan Grey Index 301

Notes on Contributors

Einar  Duenger  Bøhn  is Professor of Philosophy at the University of Agder, Norway. His research is mainly in metaphysics, the philosophy of religion, the philosophy of technology, and ethics. In addition to having published many articles, he has edited translations of Gottlob Frege into Norwegian, as well as written two books, most recently God and Abstract Objects (2019). He is working on a book on the philosophy of technology. Huub Brouwer  is an assistant professor at the Philosophy Department of Tilburg University. His research focuses on desert. He also has a research interest in moral status, property, and well-being. Huub has published in journals such as the Journal of Moral Philosophy, Proceedings of the Aristotelian Society, and Philosophical Studies. He has held visiting positions at Yale University and Oxford University. Duncan Brown  is a principal associate at the Institute for Employment Studies and visiting professor at the University of Greenwich in London. Duncan has extensive experience in pay and rewards research and consultancy. He is a fellow of the The Chartered Institute of Personnel and Development (CIPD), where he was Director of Research and Policy for five years. His previous employers include Aon Hewitt and Willis Towers Watson. His PhD is in reward strategy.

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Notes on Contributors

Jamie Cooke  is a policy entrepreneur, speaker, writer, and commentator, working across a broad range of subject areas, including economic insecurity, cities, work, and civic engagement. Based outside Glasgow in Scotland, he is a leading member of the global discussion around basic income, collaborating with partners at home and abroad to develop and deliver research, policy, and public engagement on the topic. Willem  van der Deijl is an assistant professor at the Philosophy Department of Tilburg University. His research focuses on the nature of well-being. He also has a research interest in desert, philosophy of social science, and animal well-being. Willem has published in journals such as the Journal of Moral Philosophy, Proceedings of the Aristotelian Society, and Philosophical Studies. He has held a visiting position at Cambridge University. Jean-Philippe  Deranty is Professor of Philosophy at Macquarie University, Sydney. He researches social and political issues from the perspective of post-Hegelian philosophy and critical theory. Among his recent publications is the co-authored volume: The Return of Work in Critical Theory (2018). His forthcoming publications include the edited collection Whither Work?, on ethical and political issues of contemporary work. Peter  Dorey  is Professor of British Politics at the Cardiff University, United Kingdom. He has published widely on aspects of industrial relations, incomes policies, inequality, the politics of pay determination, social partnership, and state-trade union relations in Britain since 1945. He has published 16 books, the most recent of which was Comrades in Conflict: The Labour Party, the Trade Unions and 1969’s In Place of Strife, published in 2019. Lauretta  Conklin  Frederking  is Professor of Political Science, Vice-­ President, and Academic Dean at Brescia University College. Brescia is Canada’s only women’s university and is affiliated with Western University in London, Ontario. Dr. Frederking’s articles and books focus on the themes of power and identity, including her book Reconstructing Social Justice, and numerous articles on immigration and economic integration of migrant communities (Journal of Economic Behavior and Organization, Policy Studies, and Entrepreneurship and Regional Development).

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Rohan Grey  is Assistant Professor of Law at Willamette University and the President of the Modern Money Network. His research focuses on the legal design and regulation of money and finance, including digital public currency technologies, as well as on broader issues of law and political economy, including macroeconomics. His forthcoming book (Melville House, 2021) is titled “Digitizing the Dollar: The Battle for the Soul of Public Money in the Age of Cryptocurrency.” Harald  Knudsen  is Professor Emeritus of International and Strategic Management at the University of Agder, Norway. His research and teaching career has been mainly in these fields, but he also has been engaged in international leadership development and “leadership jazz” sessions. Also, he has done extensive work in the philosophy and ethics of leadership. In recent years his interest has turned to managerial challenges linked to environmental and climate issues. Bhavya Mohan  is an assistant professor in the Marketing Department at the University of San Francisco’s School of Management. She received her doctorate in Marketing from the Harvard Business School. Her research examines topics related to transparency and marketing ethics. She has served as an academic advisor to the UK Government Equalities Office. Her research has been published in the Journal of Consumer Psychology and featured by The Washington Post and The Wall Street Journal. Thomas  Mulligan is a visiting scholar at Georgetown University’s Institute for the Study of Markets and Ethics. He conducts research in, primarily, economic justice and the theory of group decision-making, and his work has appeared in journals like Ethics, Synthese, and The Philosophical Quarterly. His 2018 monograph, Justice and the Meritocratic State, advances a desert-based, meritocratic theory of justice. Anders Örtenblad  is Professor of Working Life Science at the University of Agder, Norway. He is the editor-in-chief of The Learning Organization and has edited books for publishers such as Edward Elgar Publishing, Oxford University Press, Palgrave Macmillan, Routledge, and Sage. His main research interest is learning in and by organizations. He is the founding editor of the book series “Palgrave Debates in Business and Management.”

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Notes on Contributors

Stephen R. Palmquist  is Professor of Religion and Philosophy at Hong Kong Baptist University, where he has taught since earning his doctorate from Oxford University in 1987. His 200+ publications, translated into at least 12 languages, include over 110 refereed articles and book chapters. Most recent among his 12 books are Kant on Intuition: Western and Asian Perspectives on Transcendental Idealism and Kant and Mysticism: Critique as the Experience of Baring All in Reason’s Light. Daniel Pointon  studied Philosophy at the University of Southampton and King’s College London, where he completed his PhD under Professor David Papineau. His research interests include egalitarianism, the role of theories of justice as a justification for specific legal apparatus (and the impact of philosophical theory on constitutional practice more widely), and virtue ethics in business and society. His work has appeared in Res Publica. Peter  Reilly  is a principal associate at the Institute for Employment Studies, where he had been Director HR Research and Consultancy. His areas of expertise include reward and performance management. Previously, he had a 16-year career with Shell, holding various HR posts in the United Kingdom and abroad. He is a graduate in History and Politics from Cambridge and Kent universities. A list of his publications can be found here: https://www.employment-studies.co.uk/staff/ peter-reilly. Wiemer Salverda  is Professor Emeritus of Labour Market and Inequality at the Amsterdam Centre for Inequality Studies, University of Amsterdam; project coordinator of Growing Inequalities’ Impacts GINI (2010–2013) and European Low-Wage Employment Research Network LoWER (1996–2008); lead editor of the Oxford Handbook of Economic Inequality; European Commission (ECFIN) research fellow (2014–2015); and World Inequality Database (WID.world) fellow. His comparative research concerns wages, employment, and inequality. Frode  Eika  Sandnes is Professor of Computer Science at Oslo Metropolitan University and a distinguished teaching fellow. His research interests include human-computer interaction generally, and accessibility and innovative interaction techniques, specifically. Sandnes has also pub-

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lished work on academic salaries and research incentive systems. He has also served as pro-rector and been involved in academic career development and diversity management. Kory  P.  Schaff  teaches Philosophy and Applied Ethics at California State University, Los Angeles. His research focuses on work, consumption, and technology at the intersection of ethics and economics. He is the editor of Philosophy and the Problems of Work (2001) and Fair Work: Ethics, Social Policy, Globalization (2017), and is writing a book on work and democratic rights in the age of automation. Jur  Schuurman  is Dutch and lives in Costa Rica, where he teaches Political Geography at the Universidad Nacional in Heredia. After spending part of his youth in Argentina, he studied Human Geography of Developing Countries in Utrecht, the Netherlands. In 1998 he joined Agriterra, a Dutch NGO that supports farmers’ organizations and cooperatives. In 2016 he co-edited the volume Cooperatives, Economic Democratization and Rural Development. Matthew  Sinnicks is a lecturer at the York Management School, University of York, United Kingdom. His research interests include flourishing and alienation in the workplace, the ethical quality of market society, virtue ethics in business and organizations, and the work of Alasdair MacIntyre. His work has appeared in journals such as Business Ethics Quarterly, the Journal of Business Ethics, and Business & Society. Matt  Zwolinski  is Professor of Philosophy at the University of San Diego (USD) and director of USD’s Center for Ethics, Economics, and Public Policy. He is the editor of Arguing About Political Philosophy and, with Benjamin Ferguson, The Routledge Companion to Libertarianism. With John Tomasi, he is the author of A Brief History of Libertarianism (forthcoming with Princeton University Press), and with Miranda Fleischer, Basic Income: What Everyone Needs to Know (forthcoming with Oxford University Press).

List of Figures

Fig. 2.1 The labor/leisure choice—no tax situation. (Source: author) 26 Fig. 2.2 Effect of a 33% tax. (Source: author) 28 Fig. 2.3 Effect of a 33% tax (dotted line represents hypothetical lump-sum tax). (Source: author) 30 Fig. 3.1 Distributions of wages and incomes before and after equal pay, EU27 average, 2014. (Source: Author’s calculations on Eurostat EU-SILC wave 2015 for outcomes of the year 2014) 41 Fig. 8.1 CEO pay compared to workers’ pay in the United Kingdom, 2000–2014. (Source: UK Parliament/House of Commons, Business, Energy and Industrial Strategy Committee, Corporate Governance, Fourth Report of Session 2016–2017, 30 March 2017, p. 35, Figure 7) 119 Fig. 8.2 Pay ratio of average CEOs to average workers in the United States. (Source: Mishel and Wolfe 2019) 120 Fig. 12.1 Analytical framework for a new agenda. (Source: Author) 186 Fig. 13.1 The countries of the world ranked by GDP/capita (US$/PPP), 2019. (Data source: IMF, World Economic Outlook, October 2019)207 Fig. 13.2 Four scenarios for distribution of countries according to their GDP/capita. (Source: author) 211 Fig. 13.3 The results of the “veil of ignorance” experiment among 27 Geography students in Costa Rica. (Source: author) 212

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List of Tables

Table 3.1 Distributional shifts by social groups Table 7.1 A comparison between “equal wages” and “basic income” Table 13.1 Countries of the world and their gross domestic product per capita, in 2011 international dollars, at purchasing power parity (PPP) (2019)

43 108 218

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1 Background and Introduction: Why Debating Equal Pay for All? Anders Örtenblad

Medical doctors are often—not to say always—generally more well paid than nurses (see, e.g., OECD 2011, pp. 114–115). Why is that so? Does it have to be like that? Should it be this way? The same, and many similar questions, can, of course, be asked regarding differentiated pay in any other industry than the healthcare sector. How are pay levels generally decided? Could and should other factors replace the existing ones? It has been shown that “the market” currently is one of the factors that has a great impact on the level of pay (see, e.g., Armstrong and Brown 2017) (for an interesting and thought-provoking discussion of the market as a pay setter, see Ohlsson and Rombach 2014), and that level of education is another such important factor (see, e.g., Hussey and Jetter 2017). On such backdrop, it would make perfectly sense to argue that at least in market economies it would be impossible to practice “equal pay for all”, and that it would be unfair to not give those who choose to educate themselves some returns on their investments. A. Örtenblad (*) University of Agder, Grimstad, Norway e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_1

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Against such argumentation, one could, on the other hand, argue that people are given different “tools” in their lives, tools that make them better or worse prepared for taking on well-paid jobs, and—since nobody chooses which tools to be born with, differentiated pay is an unfair system (for a discussion on this, see, e.g., Lister 2018). Furthermore, one could question whether pay in itself and the chance of getting a pay raise really are motivating factors in the long run, and—if so—whether it is healthy for humans that such factors are used to increase motivation. Is there even a risk that some people choose a certain profession because it is well paid instead of being genuinely interested in it? Would we, for instance, get better leaders if leadership positions not automatically— which often is the case—come with higher pay (than what non-managers within the same profession are paid) (see, e.g., Örtenblad 2018)? Could there, thus, be reasons for equalizing pay? One could also wonder that if level of responsibility is a factor that can justify differences in pay levels, why, then, do bus drivers generally get so relatively low pay? Against such arguments, in turn, it would be reasonable to question if everything really has to be totally equal—why should not those who work harder, take on more responsibility, or take on positions that nobody else is either capable or eager to take on be compensated for their additional efforts? If some are motivated by the chance of getting a pay raise, why would such opportunities have to be eroded? As quite a few chapters in this book claim, pay inequality has recently increased (e.g., Schaff, Chap. 11 in this volume; Knudsen, Chap. 12 in this volume)—not least in companies, between those who are paid the most and those who are paid the least (see, e.g., Dorey, Chap. 8 in this volume; Mohan, Chap. 9 in this volume). Pay inequality is presently an issue of debate (e.g., Knudsen, Chap. 12 in this volume) and has also begun to be more frequently questioned and discussed (e.g., Cooke, Chap. 7 in this volume; Dorey, Chap. 8 in this volume; Reilly and Brown, Chap. 10 in this volume). In this book, the suggestion of letting all people—no matter in which profession they work and which hierarchical position they have (inclusive of those who for various reasons do not have any job)—be paid the exact same amount, will be debated. While there are different definitions of “pay”—for instance, some include bonuses while others do not (see, e.g., Impact Group 2020), the definition of “pay” that has been the starting

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point for this book is, simply, “the money paid to someone for regular work” (Lexico 2020). Such suggestion is put forward in order to stimulate to reflecting critically and exploring new ideas by thinking the other way around, or, as Ohlsson and Rombach (2015, p. 151) put it, “why not the opposite?” Since differentiated pay is the established system/norm in most parts of the world—and it could be assumed that “differentiated pay” is what most people tend to take for granted and is how it should be—this book asks what if it would be the other way around (in terms of “equal pay for all”)? The result of exploring and critically reflect upon something may not necessarily be any change in standpoint; enlightenment may be the “only” outcome. A number of (mainly) scholars—working in various academic disciplines—were invited to argue for, against, or anywhere in between equal pay for all. The book as such is multi-disciplinary; disciplines represented by the contributors include (but are not limited to) philosophy, economics, political science, employment studies, labor market, law, and business management. As the sub-title of the book exposes, the bases of some of the main arguments suggested in the book are economy, practicability and ethics (respectively)—that is, some contributors argue that “equal pay for all” is not economically defensible, others that it is impossible in practice to pay all the same amount, and yet others that differentiated pay is not an ethically defensible system. The book, though, is far more complex than that, and many more arguments are put forward. To take merely one example of such complexity, there are also those who argue that it is not ethically defensible to offer all the same pay (see, especially, Salverda, Chap. 3 in this volume; Brouwer and van der Deijl, Chap. 4 in this volume; Zwolinski, Chap. 6 in this volume). The book is divided into four parts, containing chapters in which the authors argue against equal pay for all (Part I), chapters arguing against equal pay for all but where the idea of a universal basic income is proposed (Part II), chapters arguing for more equal pay but not for total equality (Part III), and chapters arguing for equal pay (Part IV). In addition, there is an afterword, in which the author puts forward some critique of the very question that is debated in the book (Grey, Afterword in this volume). While (unfortunately) not each and every grown-up on earth has a relation to pay, most people do have a relation to this topic. Many get

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some kind of pay in return for their work. Some may be happy with what they get, while others are frustrated over not getting more pay than they get. The book should, thus, be of interest to many people, since it deals more or less directly with their pay and the level of it. The book should also be of interest for policy setting actors on the employment market, such as trade union representatives and employer organization representatives. The book’s special character makes it relevant also for another target group. Unlike many other edited books, the chapters and their contributions are not summarized in any kind of unified conclusion for the whole book. Expressed in other words—there are theses and antitheses but no syntheses in the book. Instead, readers are offered to take part of various positions in the debate on “equal pay for all”, as well as various kinds of arguments, and are thereby given opportunities to make up their own minds. Thus, in this book one question (“is equal pay for all a good idea?”) is given a multitude of answers. For this reason, the book can also be assumed to be of interest to those who believe that there always is reason to question that which we presently tend to take for granted (such as differentiated pay), who want to challenge the existing way of thought or current practices, and who are ready to explore other ways of thought and dealing with things. Thus, of particular interest should the book be for university programs and courses where pay is a subject and where the students are intended to learn to be critical—critical in, for instance, the senses that Mingers (2000, pp. 225–226, emphasis in original) suggests evaluate whether people’s arguments and propositions are sound in a logical sense … sceptical of conventional wisdom … taking less for granted and questioning deeper the more fundamental assumptions that we usually make … sceptical of one dominant view…as opposed to a plurality of different but valid perspectives … sceptical of information and knowledge…questioning the validity of the knowledge and information that is available, and recognizing that it is never value-free and objective.

This kind of book, where arguments and counterarguments are presented, is something that is in line with what could be said to be the mission of universities. To openly debate various questions and topics could

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even be said to be one corner stone of the answer to the question “what are universities for?” (see, e.g., Calhoun 2009; Kolakowski 1997; Ryan 2009). It is, for instance, clearly expressed in The Swedish Higher Education Act (chapter 1, section 8) that [f ]irst-cycle courses and study programmes shall develop: • the ability of students to make independent and critical assessments, • the ability of students to identify, formulate and solve problems autonomously. (Swedish Council for Higher Education 2020)

Ideally, at least in social science, the academy could favorably offer both arguments and counterarguments on any specific topic. The same “facts” can be interpreted and/or evaluated in different ways, depending on perspective. The choice of theoretical perspective, thus, is not rarely one that is influenced by subjectivity and politics. To offer arguments and counterarguments may appear to be less relevant outside of the sphere of social science, but even in science such an approach could occasionally be relevant and fruitful. It would, for instance, be interesting to see a debate between those who suggest that the climate changes are caused by humans and those who do not believe so (as well as anyone who stands somewhere in between). Too seldom these “camps” meet and debate, something which may lead to difficulties in comparing the different arguments. There is also a risk that people in general (wrongfully or not) start to believe that those who do not want to take part in the debate have weak arguments. Thus, this book could be placed within the tradition of education and—especially—debating as a democracy project (e.g., Putnam et  al. 1993; cf. also Spies-Butcher 2007; Valkering et al. 2018), an “academic speaker’s corner” if you will. With such an ambition, the arguments and counterarguments presented in the book are a basis that is supposed to encourage readers to explore and critically scrutinize the different positions and arguments, and also encourage to further debate. If all arguments are given space to be put, formulated and presented, those taking part of the arguments are assumed to be given opportunities to think for themselves and make up their minds—on basis of the academic arguments having been put forward. The point is not (necessarily) that all arguments are equally “relevant” or “good”, but that the open and free

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debate gives those with strong arguments an advantage, rather than those who—for instance—are the only ones who get an opportunity to put forward their arguments. In that way, the aim and mission of this book goes beyond academic reasoning and debate; there is also an ambition to exemplify that a debate—in which people have diametrically different standpoints—could take place on the same “stage”, which in this case is an anthology, without any unfair argumentation techniques. For a book that is intended to contribute within such a tradition of “bildung” as has been described in the above, it is also fair to include at least some critique of the very presumptions that the book rests on (see, e.g. Antonacopoulou 2010, p. S9; see also Hutchins 1936/1995), and thus let voices be heard who may not even agree that to debate “equal pay for all” is an important thing to do. Critique of that sort is in the present book mainly put forward in the Afterword (Grey, Afterword in this volume) but appears also in some other chapters (see, e.g., Cooke, Chap. 7 in this volume). What my own exact standpoint is in the debate on “equal pay for all”, is hardly of any interest here. It may nevertheless be of interest that (1) my position has, in fact, been affected through the process of getting this book together; (2) every time I read the book I again start to question my standpoint; (3) if I would have to choose which of the two main professions I have had during my life—cleaner and scholar—that I would prefer to work as during the rest of my working life, if both were paid the exact same amount, I would without any doubt whatsoever choose to work as a scholar; and (4) I am not happy if given the same or lower pay than a colleague who contributes less than I do. In the remainder of this chapter, the book content is presented in some more detail.

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 ook Content: The Chapters B and Their Arguments Part I: Against Equal Pay for All In the first part of the book, “Against Equal Pay for All”, there are four chapters in which the authors argue that “equal pay for all” is a bad idea. In Chap. 2, “Equal Pay for All: An Idea Whose Time Has Not, and Will Not, Come”, Thomas Mulligan suggests there are two strong reasons to be against equal pay for all. Firstly, he argues that it is inefficient—“equal pay for all” would remove more or less all incentives to work (although a few may nevertheless continue to work, for reasons such as boredom and altruism). Equal pay for all would shrink the “economic pie”, and under it there would also be less tax revenue to redistribute to the needy. Secondly, most people would reject “equal pay for all” due to injustice— while most people would object to unequal pay due to, for instance, race, very few would accept that those who work harder than others should not be paid more. Thus, Mulligan concludes that when deserts are unequal, justice requires that incomes be unequal as well. In Chap. 3, “Universal Equal Pay Wrong-foots the Distribution of Incomes”, Wiemer Salverda argues against equal hourly pay as a standalone measure towards more equitable society. Salverda argues that fairness of pay needs to be evaluated in relation to its contribution to society. The main reason for the author to argue against “equal pay for all” are its impact on fairness in society, while in addition it will remove financial incentives, and negatively impact the economy. Salverda shows that a change to equal hourly pay primarily benefits the category of secondary wage earners and therewith higher-income households, and questions therefore the ethics of the effects. Other consequences from a change to equal hourly pay that Salverda points at include that the financial incentives for academic studies would vanish; that the disappearance of lowwage labor may give rise to things such as hiring illegal labor; that those who combine top incomes from both labor and capital may shift to capital income and thereby escape from the system; and, in particular, that the only way to raise one’s income would be to work more hours—which

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could lead to a stronger exclusion from employment of the less experienced and less qualified. Chapter 4, “More Onerous Work Deserves Higher Pay”, is authored by Huub Brouwer and Willem van der Deijl. The authors start in the principle that people should be paid what they deserve, and the previous critique of it claiming that the desert-based argument fails because how hard people work, for instance, is a matter of luck—some are born in healthier families than others—, and that it would be unfair if some people received more than others on the basis of factors they cannot be held responsible for. Brouwer and van der Deijl believe that while this critique is valid for some arguments against the desert-base argument, it is not valid for all arguments. They argue that people in fact deserve to be paid differently—in relation to how onerous their work is, something which they call the deserved just wage. Thus, the authors argue that people should be compensated in relation to the bads and goods that the job they do is possessed by (something which the market helps to fulfil), in such a way so that they are compensated for any reduction in welfare opportunities that the job at stake brings. Chapter 5, “Equal Pay for Knowledge Workers in Academia: An Unrealistic Proposition”, authored by Frode Eika Sandnes, is the final chapter in the part of the book where chapters clearly argues against equal pay for all are placed. Sandnes focuses on knowledge workers—especially academics. He argues that there is a need to maintain inequality and provide incentives, which can be used to motivate individuals to work, to persuade and change behavior, and to compete for the most talented academics. Of all incentives, unequal pay is, according to Sandnes, the most effective one (at least for knowledge workers), in that it is operationally feasible for the organization, sustainable as a resource, and could benefit the knowledge worker’s whole family (offers possibilities for those different money needs). Sandnes concludes that the points made also are valid for other professions and, thus, that some degree of inequality is needed in all professions.

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 art II: Against Equal Pay for All But for Equal P Minimum Income for All Thereafter, in Part II of the book, “Against Equal Pay for All But for Equal Minimum Income for All”, there are two chapters that both argue—just like the chapters in Part I of the book—against equal pay but also add the suggestion that all should get a minimal income. The first of these chapters, Chap. 6, “Equal Pay: A Floor Not a Ceiling”, is authored by Matt Zwolinski. He suggests that “equal pay for all” not only is an unrealistic proposal—in that, for instance, few would work as hard for altruistic reasons as they do of self-interest—but also would result in economic and moral catastrophe. Economically, “equal pay for all” would remove incentives to, for instance, work harder, and would also remove the information for market participants about the relative supply and demand of labor. Moral-wise, Zwolinski argues that “equal pay for all”, for instance, is not egalitarian—in that it does not give more to those who need more—restricts freedom, and makes money worthless. Instead of equality, Zwolinski argues for the principles of sufficiency (that people have enough) and, thus, inequality without poverty. Accordingly, he suggests minimum equal pay (rather than a maximum one) or a universal basic income (UBI)—in terms of an unconditional and equal cash transfer to every person—would achieve that which may be valuable in the proposal of equal pay for all, but without the economic and moral costs. In Chap. 7, “Limiting Insecurity, Not Opportunity”, Jamie Cooke starts in people’s current reactions to inequality. He views “equal pay for all” as a radical and interesting idea, while in its character limiting, in contrast to the positive creation of a new system that is required, namely a broader reimaging of work, human activity and motivation. Among Cooke’s arguments against “equal pay for all” are that it may decrease individual liberty; that it removes incentives for people to, for instance, take risks and responsibility as well as learn new skills or academic studies; and that it removes the importance of money. As an alternative, he suggests basic income, which is an income floor that all can build and rely upon. Basic income means that each eligible citizen receives a cash payment directly from the State, offers autonomy for individuals to make

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choices for their own lives, and is also characterized by regularity and security, unconditionality, and universalness.

Part III: Toward Increased Pay Equality The third part of the book, “Toward Increased Pay Equality”, contains chapters which disagree with “equal pay for all” but that think there is reason to get closer to pay equality than what currently is the case, and starts off with two chapters arguing for pay ratios. In the first of these two chapters, Chap. 8, “A ‘Middle Way’ Between the Free Market and Full Equality: A Pay Ratio”, Peter Dorey argues against full pay equality, for reasons such as impracticability, inflexibility, and injustice, but he also argues against enormous salaries and bonuses. As a middle-way approach, Dorey suggests reducing or preventing excessive inequalities by adopting a “pay ratio”, where differences of incomes are still permitted, but to a much more limited degree than currently exists. “Pay ratio” means that the highest salaries in an enterprise or profession could not be x times those of the lowest-paid employees in the organization. Dorey suggests a 20:1 pay ratio, applied to firms rather than the whole economy. A pay ratio would, according to Dorey, be a way to increase equality without imposing uniformity, and practice fairness and transparency. The other chapter on pay ratios, Chap. 9, “Closing the Gap: the Benefits of Lowering Pay Ratios”, authored by Bhavya Mohan, starts by describing the increase of chief executive officer (CEO) compensation compared with that of the average worker and goes on to thoroughly justify the idea of lowering CEO-to-worker pay ratios. Among arguments for lowering pay ratios, Mohan suggests that increased executive pay relative to that of the average worker is not linked to significantly better firm performance, that more fair distributions can increase individual satisfaction and reduce envy, and that the pay ratio might influence how consumers choose between firms with relatively higher and lower ratios. The author suggests pay ratio disclosure laws may give consumers the option to put pressure on firms to reduce extreme income inequality. While Mohan suggests that the gap between those who are paid the most and those who are paid the least should be lessened, she is not arguing for

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total pay equality. The one reason against “equal pay for all” that Mohan emphasizes is the impossibility accomplishing it in practice, and that it thus is unrealistic to achieve in at least the near term. Chapter 10, “How Fair Is Equal Pay? The Need for a More Balanced Perspective”, authored by Peter Reilly and Duncan Brown, is also suggesting increased but not total pay equality. They review advantages and disadvantages of pay equality from an employer perspective. Among the arguments for pay equality that Reilly and Brown suggest are: proven ineffectiveness of performance-related pay; increased flexibility, both when it comes to deployment (through, e.g., faster transfer of staff) and organizational change (since staff can be more interchangeably assigned); innovation flourishes, when there are few impediments to trialing new ideas; and less demotivational effects of pay variability. Among their arguments against pay equality are: failure to acknowledge differences in, for instance, responsibilities and what people accomplish; and a lack of incentives for performance above and beyond the average or for learning. Reilly and Brown argue that there is justification for some to earn more than others but hardly for exploitation or excessive differentiation, and suggest: greater transparency; prevention of outright discrimination; reducing inequalities and more collective rather than individual pay for performance. Kory P. Schaff discusses, in Chap. 11, “Are There Moral Limits to Wage Inequality?”, whether or not wage inequality should be permitted and, if so, how much inequality that would be morally acceptable. He argues for increased pay equality, through interference in the labor market forces, but not that any inequality whatsoever is forbidden. Among the arguments against equal pay for all that he puts forward are that such a solution would limit the efficiency of the labor market and remove incentives for workers to learn. Schaff believes that relations between employers and workers are not totally equal, and that accepting a job offer or a certain wage level is not really a purely free choice—the alternative to decline may be unemployment. Until total freedom on the job and wage market is accomplished, Schaff suggests that a “minimum living wage standard” be established so that wages for, especially, low-wage workers would be increased, to a level for all workers to achieve a decent standard of living for themselves and their dependents (i.e., clean water, nutrition, housing,

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and health care). This would also imply that workers have more choices when it comes to employment and could worry less that rejecting a job offer would be a risk to their welfare. Above the minimum living wage standard, inequalities should, according to Schaff, be permitted. Just like the two chapters in Part II of the book, Harald Knudsen suggests, in Chap. 12, “Equal Pay for a Green Future”, a universal guaranteed basic income for all. However, for Knudsen basic income is one of a set of reform measures that need to be taken to reach a state of greater equality and economic security that will be needed in order to deal with escalating inequalities of income and wealth, threats to the environment and climate, and technological unemployment following robotization and artificial intelligence (AI). Other such measures, suggested by Knudsen, include greater taxation of high earnings and wealth, decreased company level pay ratios, and strong taxation of pollution and use of fossil fuels—and correspondingly public support for alternative energy and for sustainable production and consumption. The sum total of climate challenges and technological job losses will cause enormous insecurity among people all over the world, and a universal minimum income guarantee will be needed to provide basic security, needed to help people deal effectively and creatively with challenges and transitions. Knudsen does not believe that “equal pay for all” is practically feasible or ideologically possible for the moment. Also, he does not believe that the challenges of climate change and technological unemployment can be dealt with within the boundaries of present economic growth models. Therefore, major reforms of the predominant political-economic system are needed, including steps toward more equal pay for all.

Part IV: For Equal Pay for All The main argument in Chap. 13, “Can a Honduran Have What a Norwegian Has? Equal Pay for All Countries: An Exploration”, authored by Jur Schuurman, is equal pay for all countries (and not between individuals within a country). Schuurman does not believe in total income equality in that it would have a negative impact on incentives to innovate (and, hence, Schuurman’s chapter would be more reasonably placed in

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any of the former parts of the book). On the other hand (and that is why it makes sense to place the chapter in the part of the book where contributors argue for equal pay for all), he suggests going beyond income equality, since the latter would not reduce—or at least not eradicate— existing wealth inequalities, and neither does it take into account the fact that needs are not the same for everyone. Instead, Schuurman suggests, on the basis of cosmopolitanism and distributive justice ideas, that pay per capita should be (roughly) equal across all countries—one’s living conditions should not be dependent on where one happens to be born. To accomplish this, Schuurman suggests strategies to make governments in developing countries listen to the needs of the disadvantaged and that these governments advocate equality in international fora such as the United Nations. In the long run, Schuurman believes in the idea of a world state, where rights and duties are the same for everyone. In Chap. 14, “Economic Equality as a Precondition for Democracy and Social Justice”, Lauretta Conklin Frederking offers first an extensive background in terms of the systems of democracy and capitalism. She argues that democracy no longer is a guarantee for equality; that the market economy builds on the fact that one gets according to one’s abilities; that engagement with others has come to be defined in market terms; that, likewise, democratic processes are constrained and even have become infected by market principles; and that, in fact, inequality in the economic sphere also leads to increased inequality in the political sphere. She concludes this background that democracy has failed to protect equality—something which, in turn, weakens both the political and the economic system—and that repairing inequalities cannot happen with the existing unequal conditions. Frederking argues for equality, not only when it comes to pay but in general. One important step toward such general equality is “equal pay for all”. To accomplish “equal pay for all”— as well as equality in general—Frederking suggests a “restart” of the system, but not at all in terms of the kind of revolutionary processes that during the twentieth century lead to dictatorship. Rather, she believes that any kind of crisis—such as natural disasters, perhaps even a pandemic—could be an adequate catalyst for a well needed restart (even if, of course, the crisis per se is nothing she advocates). Frederking suggests that in Japan, during a post-World War II period, there was solidarity

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which contributed to make a restart, and that Japan also to at least some extent managed to create a society that was characterized by equality. Just like in Chap. 14, “solidarity” is a central concept in Chap. 15, “Defending Equal Pay for All Against Objections from the Achievement Principle”, authored by Jean-Philippe Deranty. The chapter is written as a defense of “equal pay for all” against recognition theory and the “achievement principle”, which according to the author can provide strong arguments against “equal pay for all”. The recognition theory and achievement principle stipulate that each person is recognized—and receives symbolical social goods (such as reputation and income)—in relation to their activity (inclusive of, e.g., education and training), that is, what they achieve. This can give rise to criticism against “equal pay for all”, such as that the latter principle does not give any room for people to get their due recognition. Among arguments against that and other criticism of “equal pay for all”, Deranty suggests that recognition could be shown in ways other than monetary; that intrinsic motivation and rewards not seldom drive people; that principles such as solidarity, need and welfare could be brought into the discussion (such as that, e.g., a toilet cleaner has the same right to have his or her needs fulfilled as a university professor); and that it is nearly impossible to objectively advise how much recognition any given achievement is worth. Deranty concludes that the achievement principle and “equal pay for all”, in fact, function well together—achievements can be recognized without differentiating pay. Solidarity plays a role also for Daniel Pointon and Matthew Sinnicks, in their Chap. 16, “Equal Pay as a Precondition of Justice?”. They argue that equal pay can help to sustain the relationships of equality required by egalitarian justice. Pointon and Sinnicks start with the “just world fallacy”, which is a kind of hypothesis stating that people generally tend to and have a need—for their own sanity—to believe the world is (much) more just than it actually is; even when confronted with examples of injustice, they tend to “reconstruct” what they are confronted with in a way so that both those who have been lucky and those who have been unlucky deserve what they get. This creates an obstacle for, for example, less successful colleagues—and, for example, those who get less benefits (such as lower pay)—to view themselves as equal to those colleagues who

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are more successful, something which will conserve relationships of inequality. “Equal pay for all” would be an important step toward equality, in that the propensity for people to commit the just world fallacy would be severely decreased, which—in turn—would increase the possibilities for relations characterized by equal respect and solidarity and thus equality in general. Pointon and Sinnicks are well aware that “equal pay for all” could not easily be accomplished, for reasons such as that a potentially forthcoming pay increase may be motivating. Nevertheless, Pointon and Sinnicks do believe that “equal pay for all” is worth striving for, toward a relationally egalitarian society. In Chap. 17, “Equal Pay for All (Per Hour Worked)”, Einar Duenger Bøhn explores and defends the idea of equal pay for all per hour, that is, the remuneration per hour is the exact same regardless of profession, but those who work more hours will get more pay than those working fewer hours. He argues that it is a moral act to decide which jobs should get more paid and which should be less paid per hour, that it is difficult to quantify quality, and that all works are important. The author exemplifies with hospitals and suggests that doctors should not be paid more per hour than, for instance, cleaning personnel—the doctors cannot perform their work well if the hospital is not clean. Bøhn presents some commonly suggested justifications for giving doctors more pay per hour than cleaning personnel, such as that the former takes more of an effort to become, that the former comes with more responsibility, and that the former is more stressful. He questions, though, that the reasons necessarily have to be rewarded in money, and suggests pay should see to that all are well off rather than differentiate them. Bøhn acknowledges the many difficulties that may appear when implementing a system of equal pay per hour, but argues that we cannot predict how we will react when having such a system. Among the advantages that Bøhn sees, with equal pay (per hour), are that it would give more economic freedom to more people, than the current system does, and that people would choose profession on basis of, for example, interest rather than on how much it pays.

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Part V: Afterword In an afterword, “Equality, Not Equal Pay: Distributional Justice Beyond Money”, Rohan Grey offers a healthy critique of the main question asked in the current book as well as the premises the book rests upon. He criticizes debates on “equal pay for all” for reasons such as that they tend to take money as such for granted—money that, of course, cannot be eaten. Further, he criticizes suggestions of “equal pay for all” for undermining the production dynamics that monetary economies are built on, for not recognizing the structural importance of labor, for being unable to solve problems of underemployment, and for merely bringing formal equality between all workers. Instead of “equal pay for all”, Grey believes more in “universal commons” than “equal pay” and suggests that the topic for debate should be how the monetary system best could be used to achieve equality. The author suggests a system that is based on moral and people’s (social) needs. More specifically, he suggests a job guarantee program, which hires anyone (able and willing to work) at a fixed wage and benefits, which is a system resting upon the premise that every person’s time is equally valuable to them (everyone has one life only). On top of such job guarantee program, Grey suggests measures such as workforce development programs, supporting people to acquire socially useful skills, credentials and experience; supplementary income programs; guaranteed income programs, for those who—for various reasons—do not work; and various forms of promoting worker equality even further.

References Antonacopoulou, E.  P. (2010). Making the business school more “critical”: Reflexive critique based on phronesis as a foundation for impact. British Journal of Management, 21(S1), S6–S25. https://doi.org/10.1111/j.14678551.2009.00679.x. Armstrong, M., & Brown, D. (2017). Job evaluation versus market pricing: Competing or combining methods of pay determination? Compensation & Benefits Review, 49(3), 153–160.

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Calhoun, C. (2009). Free inquiry and public mission in the research university. Social Research, 76(3), 901–932. Hussey, A., & Jetter, M. (2017). Long term trends in fair and unfair inequality in the United States. Applied Economics, 49(12), 1147–1163. Hutchins, R. M. (1936/1995). The higher learning in America. New Brunswick, NJ: Transaction. Impact Group. (2020). Understanding how severance policies impact human capital. Retrieved August 26, 2020, from http://www.impactgrouphr.com/ img/blog/Trends/Understanding%20How%20Severance%20Policies%20 Impact%20Human%20Capital.pdf. Kolakowski, L. (1997). What are universities for? In J. Brzezinski & L. Nowak (Eds.), The idea of the university (Poznan studies in the philosophy of the sciences and the humanities 50) (pp. 27–33). Amsterdam: Rodopi. Lexico. (2020). Pay. Retrieved May 31, 2020, from https://www.lexico.com/en/ definition/pay. Lister, A. (2018). Wages, talents, and egalitarianism. Erasmus Journal for Philosophy and Economics, 11(2), 34–56. Mingers, J. (2000). What is it to be critical? Teaching a critical approach to management undergraduates. Management Learning, 31(2), 219–237. https://doi.org/10.1177/1350507600312005. OECD (2011). Government at a glance 2011. OECD Publishing. Retrieved May 30, 2020, from https://doi.org/10.1787/gov_glance-2011-en. Ohlsson, Ö, & Rombach, B. (2014). The tyranny of metaphors: Pathways to freedom. Stockholm: Santérus Academic Press. Ohlsson, Ö., & Rombach, B. (2015). The art of constructive criticism. In A. Örtenblad (Ed.), Handbook of research on management ideas and panaceas: Adaptation and context (pp. 149–170). Cheltenham, UK, and Northampton, MA: Edward Elgar Publishing. Örtenblad, A. (2018). Preparing for turning leadership into a true profession. In A. Örtenblad (Ed.), Professionalizing leadership: Debating education, certification and practice (pp. 349–358). Cham, Switzerland: Palgrave Macmillan. Putnam, L.  P., Bantz, C., Deetz, S., Mumby, D., & Van Maanan, J. (1993). Ethnography versus critical theory: Debating organizational research. Journal of Management Inquiry, 2(3), 221–235. Ryan, A. (2009). Free inquiry: Easy times can be difficult too. Social Research: An International Quarterly, 76(3), 943–958. Spies-Butcher, B. (2007). Debating and public speaking as oral literary: Promoting democratic education. In A. Simpson (Ed.), Future directions in literacy: International conversations conference 2007 (pp. 269–279). Sydney: Sydney University Press.

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Swedish Council for Higher Education. (2020). The Swedish higher education act. Retrieved May 31, 2020, from https://www.uhr.se/en/start/laws-andregulations/Laws-and-regulations/The-Swedish-Higher-Education-Act/. Valkering, A., Nemčok, M., Matu, G., & Spáč, P. (2018). It’s more than just debating: The political participation and democratic attitudes of debate programme participants in seven “new” democracies. Sociální studia/Social Studies, 15(2), 35–53.

Part I Against Equal Pay for All

2 Equal Pay for All: An Idea Whose Time Has Not, and Will Not, Come Thomas Mulligan

My task in this chapter is to evaluate an idea: giving each person, regardless of profession or indeed whether he or she works or not, equal pay. I shall call this the equal pay idea, or EPI. We are to imagine an economy of X persons which generates (post-­ redistribution) $Y in national income (say, yearly). EPI, as I understand it, prescribes that each person receive $(Y/X). Under EPI, distinctions often thought to matter for economic or moral reasons are ignored. Everyone receives the same pay: doctors and mechanics; the lazy and the sedulous; those for whom $(Y/X) is a bounty and those who cannot survive on it. Such an economy will require redistribution. EPI’s desired, hyper-­ egalitarian pattern of distribution will not (generally) arise via market forces. Among other things, a (well-functioning) market does not pay someone if doing so does not entice him or her to work or otherwise T. Mulligan (*) Institute for the Study of Markets and Ethics, Georgetown University, Washington, DC, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_2

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contribute to production.1 But if EPI were in operation, we would doubtless encounter people who chose to not work—likely many of them—yet they would still receive $(Y/X). So there must be a government to produce the income distribution EPI demands. EPI is an ambiguous idea, and I shall discuss some of these ambiguities shortly. For example, suppose that in Year 1 Jack consumes his entire share while Denise consumes half of hers and invests the other half. In Year 2, Denise’s investments produce $Z in income. Is Denise alone entitled to that $Z? Or does she only get $(Z/X)? It is important to clear up questions like these—to make EPI reasonably precise—if we wish to subject it to economic and moral analysis. We shall see that EPI, even when construed in its most attractive form, falls short—and badly. This is for two reasons. First, EPI is inefficient. It would remove nearly all incentive to work, shrink national income, and leave all citizens badly off—albeit equally badly off. Second, EPI offends our sense of justice. I conclude this chapter by briefly describing the empirical literature on justice, which suggests that human beings across lines of race, gender, socioeconomic class, and culture would reject EPI. Indeed, we reject more modest egalitarian distributive rules. EPI has not attracted support even among philosophers and economists with strong egalitarian sentiments. This is for good reasons, which I shall explain. I note, however, that a form of EPI has been defended by Joseph Carens (1981), and I recommend that work to readers interested in a defense of the idea.

What, Exactly, Is EPI? EPI should not be confused with a universal basic income (UBI) (see Zwolinski, Chap. 6 in this volume; Cooke, Chap. 7 in this volume). The purpose of UBI is to supplement labor market earnings (if any), not replace them. Now, UBI is intended to replace elements of extant welfare systems, and for that reason (among others) I oppose it (see Mulligan 2018b). I do, however, concede that UBI is a far more attractive prospect than EPI is.

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The first point to clarify about EPI is the status of benefits like health insurance and employer contributions to retirement. These are increasingly important parts of compensation in contemporary economies, and EPI would seemingly ignore them. That is, even if each citizen received $(Y/X) in income, those who worked might well receive enormous benefits packages from their employers, undermining EPI’s egalitarian goal. Similarly, there are non-pecuniary benefits and costs which would be important to incorporate into EPI. Some jobs—copyediting, say—offer flexible hours and working location. Other jobs, like hauling trash, are arduous. Markets price these benefits and costs into wages in the form of compensating differentials—the copyeditor receives less than he or she otherwise would because of the job’s non-pecuniary benefits; garbage-­ men are paid more because of the non-pecuniary costs (see Brouwer and van der Deijl, Chap. 4 in this volume). The proper index for EPI would seem to be total compensation, including pecuniary and non-pecuniary benefits and costs. Next, we consider the question of investment income raised in the introduction. After each person receives his or her share, $(Y/X), some will choose to invest a portion of it rather than consume it in its entirety. These investments will generate income which would, without intervention, create inequality. The question is whether that inequality is of the type EPI is intended to prevent. I think not. For one thing, the proposal is for “equal pay”, not “equal income” simpliciter—suggesting that the concern is labor’s share of income only.2 Moreover, if EPI extended to capital income as well, there would be almost no incentive to invest, and thus almost no investment. This would be a catastrophe for economic growth. Then there is a question of scope. It cannot simply be that each person is entitled to a share, $(Y/X), because that would provide shares to infants, who cannot make use of them. This and similar cases (e.g. people in comas) raise non-trivial questions: are these people simply exempted? Does an infant’s share go to his or her parents? If so, must the parents spend it entirely altruistically, on the child? Or are the shares held in trust, so that upon reaching the age of majority (say, 18), a person receives $(Y0/X0 + Y1/X1 + Y2/X2 + ⋯ + Y17/X17) ?

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EPI provides a share to those who do not work—but what about non-­ citizens? People who are in the country illegally? Criminals? We can wave aside these complexities, assuming that consensus has been reached about EPI’s scope, but in fact I think these questions would spark hot debate. Finally, it is difficult to evaluate a pay proposal like this without context on the welfare programs which would operate alongside it. Extant welfare programs are not typically motivated by considerations of equality but of need. That is, these programs focus on needy groups like children and the elderly. (Of course, these programs may have the incidental effect of making the distribution of income more equal.) Now, if EPI is to replace welfare programs, then I cannot see who would support it. It could not possibly be generous enough to provide even minimal support to, say, poor families with dependent children. This is a fatal flaw for UBI, in my opinion, and for EPI the problem would be worse. Thus, we are driven to suppose that EPI is intended to operate alongside a suitable welfare system. However, this itself is impossible, because the disincentive effects of EPI would preclude raising sufficient revenue to support a welfare system, for reasons I shall now describe.

On the Inefficiency of EPI One fatal problem with EPI, albeit not the only one, is that it is “inefficient”. We might say, correctly, that EPI would make us poor, collectively and as individuals. But that is inadequate; the idea should be made precise. That is the main task for this section. We begin with an example. Suppose that Justin and Rachael wish to travel from Philadelphia to Providence by train. We may measure the benefit that this trip provides them by reference to their reservation prices—the maximum amount that they are willing to pay to take the trip. If the market price of a ticket is less than their reservation prices, they will, by definition, buy tickets. If it is more, they will not. If they do buy tickets, the difference between their reservation prices and the market price provides a measure of this trip’s economic benefit to them.

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Suppose that Justin’s reservation price is $120—he will pay up to this amount for a ticket, and no more—and Rachael’s is $100. Suppose, further, that the prevailing price of a Philadelphia-Providence ticket is $90. This is what the train company receives for each ticket. What economic value is created by this market of two consumers, if any? We calculate as above: Justin would pay up to $120 but only needs to pay $90. Thus, the economic benefit he enjoys—his surplus—is $30. Rachael’s surplus is $100 − $90 = $10. Thus, the economic surplus in this market is $40.3 We consider a tax’s effect on the total surplus. The government imposes, we’ll say, a $20 tax on the ticket. The new ticket price is thus $110, $20 of which goes to the government and $90 of which goes to the train company. First we consider Justin’s situation. He would pay up to $120 but now must pay $110. His surplus has decreased from $30 to $10. He is made worse off by the tax to the tune of $20. However, this tax has generated $20 of revenue for the government, which it can transfer to a poor family, or spend on national defense, or simply give back to Justin. Taxing Justin has a redistributive effect—it changes who is made better off by an economic interaction—but it does not affect the efficiency of the economy. The surplus remains $30. It is just divided differently. Second, we look at the tax’s effect on Rachael. Her reservation price is $100, and she enjoyed a $10 surplus before the tax was imposed. Once the tax is imposed, the price of a ticket rises to $110. But this exceeds her reservation price. Therefore, Rachael will not buy a ticket, and thereby not enjoy any surplus in this market. But what about the government? In Justin’s case, his surplus loss was offset by the gain in tax revenue. Does something similar happen with Rachael? The answer, unfortunately, is no. The government collects no revenue on market exchanges that do not take place. Unlike the case of Justin, in which the tax only served to change who benefits from his economic activity, taxing Rachael introduces inefficiency into the economy. It reduces the total surplus by $10. Rachael is forced out of the market by the tax, losing $10 in surplus which is not enjoyed by anyone else. This $10 of economic waste is known as the deadweight loss, or excess burden, of the tax.

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Let us now turn to a more general, and rigorous, example. Suppose that Jones may work at most 120 hours in a week, and that he earns a wage of $50 per hour. Jones thus faces a tradeoff between income and leisure, both of which he desires. For each $50 Jones earns, he loses an hour of leisure. For each hour of leisure he enjoys, he gives up $50. We may represent the situation facing Jones by Fig. 2.1. The vertical axis represents Jones’s labor choice; the horizontal axis, his leisure choice. At the extremes, Jones may choose to (1) earn $6000 a week (120 hours of work at $50/hour) with 0 hours of leisure and (2) $0 a week with 120 hours of leisure. Jones may also select any point in the segment connecting these two extremes, which we call Jones’s budget line. Which point on the budget line will Jones choose? This depends on his preferences. If he is already rich, he will likely favor leisure to labor. If he enjoys his job, that makes work a more attractive prospect. If he is caring for a sick relative, he will want to earn money to pay for her care. And so on. How preferences are formed and what, exactly, they are is a complicated matter. The important point is that Jones’s preferences, whatever they be, may be represented in the form of indifference curves.

Fig. 2.1  The labor/leisure choice—no tax situation. (Source: author)

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Three of Jones’s indifferences curves, A, B, and C, are shown in Fig. 2.1. The points on any given indifference curve are combinations of leisure and labor that Jones finds equally desirable. For example, indifference curve A contains the points (15 hours leisure, $2800), (50 hours leisure, $900) and (80 hours leisure, $400). Jones is “indifferent” between these three combinations—he will derive the same satisfaction no matter which he chooses. Indifference curves are typically bowed inward toward the origin, as they are here, to represent the notion that people prefer mixes of goods to extremes. If Jones is not working at all, he may be willing to give up an hour of leisure for very little income. But as he works more and more, his free time becoming scarcer and scarcer (and thereby more and more valuable) he will want more money in return. The points in any given indifference curve are equally desirable to Jones, but the indifference curves themselves are not. Jones prefers to have more income and more leisure. That is, he would prefer to move to the northeast in Fig. 2.1. Indifference curve A is the least desirable and C is the most desirable. However, Jones is constrained by his budget line, which defines all the combinations of labor and leisure that are feasible for Jones. Points on indifference curve C are infeasible; Jones would like to reach them, but he is limited to 120 hours to divide between work and leisure. Points on A, on the other hand, are feasible. However, Jones can do better—he can move to the northeast of A until he is on a curve that is tangent to the budget line—that touches the budget line at just one point. This point is on indifference curve B—and here Jones must stop; all indifference curves to the northeast of B fail to intersect the budget line, and are, therefore, infeasible. If we understand Jones’s preferences (given by indifference curves) and the constraints he faces when making the labor-leisure decision (his budget line) we may solve for his optimal combination of the two. Here, the optimum is (60 hours leisure, $3000). Jones divides his time evenly between work and play.4 Now we consider the effect of a tax. Suppose the government levies a 33% tax on income, which Jones bears. This tax has no effect on Jones if

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he chooses not to work; he earns (120 hours leisure, $0) without the tax and (120 hours leisure, $0) with the tax. But what if he chooses to work? The tax means that Jones will receive only two-thirds of the income that he previously did, for any given amount of work. In the extreme case, in which he devotes all his time to work, he earns (0 hours leisure, $4000) rather than (0 hours leisure, $6000). More generally, the tax has the effect of flattening out Jones’s budget line. Points that were feasible when there was no tax no longer are. Consider the situation facing Jones now (see Fig. 2.2). We may see four effects of the tax. The first is the aforementioned flattening of the budget line. If Jones chooses to work at all, then, for any given amount of work, he will earn less than he would if there were no tax. He is now on a budget line that runs from (0 hours leisure, $4000) to (120 hours leisure, $0) rather than (0 hours leisure, $6000) to (120 hours leisure, $0). Second, because the budget line has flattened, indifference curve B is no longer feasible. It is now akin to indifference curve C in Fig. 2.1—out of reach for Jones. So to find Jones’s new choice between labor and leisure we do what we did prior to the tax—find the indifference curve that is

Fig. 2.2  Effect of a 33% tax. (Source: author)

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just tangent to his (new) budget line. This is indifference curve D, and it is tangent to the budget line at (65 hours leisure, ~$1800). This is the most-preferred combination of labor and leisure for Jones under the tax. Third—and this is important—the tax has changed the preferred mixture of labor and leisure for Jones. Prior to the tax he divided his time evenly between the two. Now he trades some labor—five hours’ worth— for leisure. Fourth, the tax has made Jones worse off. He would prefer to be on indifference curve B rather than D; B lies to the northeast of D. But the tax made that impossible, and so Jones finds himself on the less desirable D. We are now at a point to consider the efficiency effects of the tax. If someone else could be made better off—as measured in dollars—as Jones was made worse off by the tax, then there would be no inefficiency. The tax would have a purely distributional effect. Now, it is important to keep in mind that that alone would not make the tax “good”. A perfectly efficient tax that redistributes from virtuous citizens to vicious citizens is bad; an inefficient tax that redistributes from crony bankers to underprivileged children is good. Or so I think. Those are moral judgments which efficiency considerations alone cannot speak to. We have established that, under the tax, Jones will work 55 hours and rest 65 hours. He will thus earn, pre-tax, $50 × 55 ≈ $2700. The government will tax away 33% of this, or $900. We must now determine how much worse off Jones was made by the tax. $900 is the difference between his pre-tax income and his post-tax income, and he certainly has been made worse off by at least that amount. But it does not tell the whole story. It fails to account for the fact that the tax changed the relative prices of labor and leisure for Jones. The tax made labor costlier relative to leisure, inducing Jones to substitute some leisure for labor when, ceteris paribus, he would have preferred to spend those five hours working. This is a real cost, albeit a hidden one, which must be taken into account in our analysis. To calculate the true cost to Jones, including the cost of his leisure-for-­ labor substitution, we use a trick. We imagine that the government levies a tax on Jones that does not change the relative prices of labor and leisure; that is, that has the pure effect of making Jones poorer. Such a tax is

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known as a “lump-sum” tax. In particular, we consider the hypothetical lump-sum tax that harms Jones exactly as much as the actual tax does. This is the lump-sum tax that puts Jones on indifference curve D, and is represented in Fig. 2.3 by a dotted line. Notice that the amount of revenue this lump-sum tax brings in is independent of Jones’s labor/leisure choice. The slope of the original budget line is the same as the slope of the budget line under the lump-sum tax, and so the distance between them is the same for all labor/leisure choices—namely, ~$1100. To reiterate: The actual 33% income tax puts Jones on indifference curve D. A lump-sum tax of $1100 also puts Jones on indifference curve D. From Jones’s point of view, these taxes are equally bad. However, the actual tax only raises $900 in revenue. This difference of $200 between the actual tax and the hypothetical lump-sum tax is the deadweight loss of the actual tax. It is the economic waste which this tax creates. If the government could levy a lump-sum tax, and not distort Jones’s incentive to work, it could raise $1100, which is precisely the amount Jones is harmed by the tax. So there would be no efficiency loss.5 The tax would have a pure distributional effect. But only $900 is actually raised

Fig. 2.3  Effect of a 33% tax (dotted line represents hypothetical lump-sum tax). (Source: author)

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because of Jones’s behavioral response—his substituting of leisure for labor—and so there is inefficiency. The discussion to this point may seem abstract, and it is. But the abstraction helps illuminate the general nature of the problem. Economists and policymakers struggle with the task of achieving a good distributional outcome—making some citizens better off by making others worse off—while avoiding introducing too much inefficiency into the economy. As Arthur Okun (1975) memorably put it, redistribution is akin to carrying water in a leaky bucket. A core problem with EPI is the inefficiency that it would introduce into the economy. We could all be given equal shares of the economic pie—no doubt about it—but only if the pie were made very, very small. Why would EPI be so catastrophic? Because it would eradicate almost any incentive to work. In the above example, the tax diminished Jones’s incentive to work but did not destroy it. In the face of the tax, Jones worked five hours less, was made worse off by $1100, and the government raised $900 in revenue. But under EPI, Jones’s income is independent of his labor/leisure choice! If he works 120 hours a week, or 60 hours a week, or not at all, it does not matter—Jones “earns” the same income. So Jones will elect not to work, and the government will not raise any revenue from him. Jones’s choice not to work is a rational one, and it is made by everybody. That is, no one works—no one produces goods or services—and national income is driven toward $0. In this way, EPI ensures equal pay for all, and poverty for all. I have said that EPI would eradicate “almost” any incentive to work, because there would still be reasons for people to choose labor over leisure. I can think of two. One is boredom—if hobbies, exercise, spending time with family and friends, the arts, and so on fail to occupy a person, he or she may elect to work despite its having no effect on income. In this case, goods and services will be produced and there will be some income to go around. Another is altruism—seeing the deprivations that EPI causes, some people will, nobly, choose to work. For this reason, EPI’s time has not come. For it to be plausible, people’s preferences over leisure and labor would have to radically change. To his credit, Carens recognizes this, arguing that a “logically necessary

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prerequisite” to an EPI-like system is that “individuals … believe they have a social duty to earn as much pre-tax net income as they are capable of earning” and that they “place the same relative value on the satisfactions derived from performing their social duty … as individuals [in contemporary market economies do]” (1981, p.  25). But such a cultural change should only come to pass if EPI is regarded as a just and desirable economic arrangement in the first place. And it is not.

The Empirical Work on Justice EPI is a bad idea apart from any concerns about inefficiency. That is, even if it were possible to redistribute to provide “equal pay for all” without efficiency loss, we would still reject it—on grounds of justice. Put differently, EPI is bad from a distributional point of view. When I say here that EPI is “bad”, I mean that people regard it as bad, which is not exactly the same as saying that it is bad per se. But by my lights, at least, the fact that EPI would be widely rejected—and by people across lines of gender, race, class, and culture—is strong grounds to think that it is morally flawed. As James Konow, an economist who has done extensive research on people’s judgments about justice, puts it, “empirical studies provide almost no support for egalitarianism, understood as equality of outcomes, or for Rawls’s difference principle [Rawls 1971]” (2003, p. 1199). The situation is even worse than that for EPI, since “equality of outcomes” is usually understood to mean “everyone who works receives the same income”. EPI, which gives everyone the same income no matter if they work or not, is much more radical than that. No: We do not believe that everyone should receive the same income. We believe that factors like effort and contribution matter from the point of view of justice. Someone who works hard and makes a significant contribution to our collective economic life should receive more in return than someone who, through indolence, contributes nothing. Some readers will think this obviously true, hardly worth stating, but note that EPI would not allow factors like that—factors that we

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commonly think matter from the point of view of justice—to affect the distribution of income. Owing to limitations of space I cannot give this matter a full treatment here. (I provide a summary of the empirical literature on justice in Mulligan 2018b.) I do want to note that when economic outcomes are unequal, the reason for the inequality matters critically. If two people have unequal incomes because of unequal opportunity—one was born into wealth, and the other, poverty—that inequality of outcome does strike us as unjust. In contrast, economic mobility enables the possibility of just inequality (see, e.g., Shariff et al. 2016; Trump 2020). Similarly, if two people have unequal incomes for “arbitrary” reasons (e.g. racial discrimination, luck) rather that reasons that have to do with their deservingness (effort, contribution), that offends our sense of justice. But when deserts are unequal, justice requires that incomes be unequal as well. Our intuitions about desert, and its relevance for economic distribution, are powerful and broadly shared. Indeed, there is evidence from evolutionary psychology that we are pre-wired to think that economic outcomes should turn on deserts, and that, therefore, EPI and other egalitarian distributive rules are unjust: [T]he deservingness heuristic is rooted in evolved cognitive categories designed to detect and represent “cheaters” and “reciprocators,” respectively. The cross-cultural nature of the present evidence supports the view that these categories are not learned. Rather, they are something we as humans naturally come equipped with. (Petersen 2012, p. 12)

Thus I see no reason to believe that EPI will come to be regarded as just in the future. EPI is a bad idea from the points of view of efficiency and distributive justice. It should not be pursued.

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Notes 1. For this reason, the prevalence of economic rent in contemporary economies is a problem (see Mulligan 2018a). 2. To my mind, “pay” suggests labor income—that is, a salary (a fixed amount of money received, regardless of time spent working) or an hourly wage. “Income” includes salaries and wages, but also: capital gains, dividends, interest, government transfers, alimony, and so on. 3. There is also value created on the producer side, as well. The difference between the market price and the company’s reservation price—the lowest price it would sell a ticket for—is the producer surplus. Total surplus = consumer surplus + producer surplus. 4. Jones’s indifference curves are constant elasticity of substitution (CES), 1

given by U  x,y    x 0.3  y 0.3  0.3 . 5. Lump sum taxes are rare for two reasons. First, it is difficult to design a tax that does not produce some behavioral response. Income taxes disincentivize work, sales taxes disincentivize consumption, and so on. Second, lump-sum taxes are typically regarded as unfair because they put a bigger burden on the poor than on the rich. Consider a “poll tax” of $1000. Every citizen must pay this, without exception. This is a lump-sum tax because it cannot be avoided (by working less, or consuming less, or whatever). It is perfectly efficient, but it is (widely regarded as) unfair, since a $1000 tax on someone making $20,000 a year is a serious burden, while a $1000 tax on a millionaire is nothing. The most (in)famous example of a lump-sum tax was the “Community Charge” implemented in Great Britain in the late 1980s. It was met with broad opposition, was abolished, and was a prime reason for Margaret Thatcher’s resignation in 1990.

References Carens, J. H. (1981). Equality, moral incentives, and the market. Chicago, IL: University of Chicago Press. Konow, J. (2003). Which is the fairest one of all? A positive analysis of justice theories. Journal of Economic Literature, 41(4), 1188–1239. Mulligan, T. (2018a). Do people deserve their economic rents? Erasmus Journal for Philosophy and Economics, 11(2), 163–190.

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Mulligan, T. (2018b). Justice and the meritocratic state. New York: Routledge. Okun, A. (1975). Equality and efficiency: The big tradeoff. Washington, DC: Brookings. Petersen, M. B. (2012). Social welfare as small-scale help: Evolutionary psychology and the deservingness heuristic. American Journal of Political Science, 56(1), 1–16. Rawls, J. (1971). A theory of justice. Cambridge, MA: Belknap Press. Shariff, A. F., Wiwad, D., & Aknin, L. B. (2016). Income mobility breeds tolerance for income inequality: Cross-national and experimental evidence. Perspectives on Psychological Science, 11(3), 373–380. Trump, K.-S. (2020). When and why is economic inequality seen as fair. Current Opinion in Behavioral Sciences, 34(1), 46–51.

3 Universal Equal Pay Wrong-foots the Distribution of Incomes Wiemer Salverda

Wage earnings are at the core of incomes, and incomes are central to the functioning of society. When changing the distribution of wages, the distribution of incomes will change in its wake. Paid employment is also the most important activity, quantitatively, that people undertake in life. Understandably, this lends great weight to the (un)fairness of personal treatment in that sphere. Here fair pay looms large, as the wage is of concern to everyone in employment—be it for its own individual (and perhaps conspicuous) sake or as an instrument for obtaining necessary income for the household. Ultimately, however, fairness in society at large eclipses fairness in paid labor, which constitutes only a part of society after all. Therefore, the fairness of pay, however important, needs to be evaluated not only in its own right but also with regard to its contribution to the fairness in society. As a first step toward examining that contribution I examine here, in an empirical thought experiment, the effects of universal equal pay (UEP) W. Salverda (*) University of Amsterdam, Amsterdam, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_3

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on the distribution of household incomes. UEP will increase the wages of some and decrease those of others, and therewith their contributions to household incomes. A priori, there is no reason to expect an equalization of the income distribution as a result of UEP. There may also be socially more acceptable and economically less disruptive ways to affect that distribution. I look at the (un)fairness of the changes to the income distribution, and not of the distribution as a whole. I conclude that UEP significantly improves the earnings of additional earners in higher-income households, strongly reduces those of high-educated earners at the top of the income distribution, and thrusts into the limelight the inequality of the distribution of hours of employment over individuals and households. The ethics of these effects and also of UEP as an instrument for bringing them about may be questioned. Introducing UEP as the leading principle of wage formation raises fundamental questions of economic behavior in the labor market, in production, in distribution and redistribution, for employees as well as for employers. I leave them for other chapters. It raises also a host of equally important questions that go beyond the economic sphere and affect society at large. Thus, even if equal pay would (initially) leave the economy as it is, the distribution of incomes will be changed as a first-order effect. It is my contention that the moral nature of such an effect shall be taken into account when evaluating the feasibility and desirability of introducing equal pay as debated in this volume. I ignore the second-order feedback of that changed income distribution to the size and structure of employment and production, however important it is, because it is impossible to even make an estimated guess. Fairness in society is at stake not only because it counts in itself and counts as much as fairness in the work place, if not more, but also because it undergoes the effects of equal pay, which are substantial and affect society as a whole. Essentially, this asks whether fairness at work as expressed by equal pay could negatively affect fairness in society. If so, shouldn’t the latter trump the former? An important motivation for scrutinizing the effect on the income distribution is that the relationship between individual pay and household incomes in current society is very different from—and much more complex than—before when the single breadwinner ruled the world. In that world, in a stylized picture, all households had one earner each, who

3  Universal Equal Pay Wrong-foots the Distribution of Incomes 

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were all working similar (full-time) hours. The individual distribution of hourly pay then fundamentally mirrored the individual distribution of annual earnings, which in turn largely equaled the distribution of household annual incomes (excepting persons starting or ending their employment during the year). In other words, UEP then virtually implied equalizing household incomes—gross incomes that is, before redistribution by taxes and benefits and before accounting for the needs of the household due to size and composition of its membership. People may have this outdated situation in mind when thinking about UEP, when the ensuing moral question would seem relatively straightforward. Today, however, three quarters of all employees in the European Union share a household with another employee. This complicates the effects that equal pay would exert on the household income distribution. Likely, this complicates also the moral evaluation of UEP, as the more complex effects may cause moral pros and cons, depending on how precisely the income distribution is affected. This brings the empirics of the relationship between individual wages and household incomes to the fore. I undertake a rather simple exercise as a hypothetical example which I hope can throw some interesting light on the issue of equal pay. The focus is how the existing distributions are amended by the introduction of the UEP. The exercise comes with some important caveats. It is a rough and ready approach that does not pretend to be exact but instead shall be viewed as the sketch of a broad tendency that is shared between many countries. It elaborates on my recent research on the inequality of pay and incomes in 27 countries of the European Union (further EU27) for the year 2014 (Salverda and Haas 2014; Salverda 2015, 2018; Salverda and Rook forthcoming). Though it is a static one-year approach it allows considering some important implications of introducing UEP. The entire discussion relates to gross wages, before taxes and social contributions, and gross incomes, including social transfers but equally before taxation and social contributions. Gross incomes are the currency of the top-incomes literature (Atkinson and Piketty 2007; Atkinson et  al. 2011), while disposable incomes are the currency of anti-poverty policies and associated studies (Nolan and Marx 2009; Salverda forthcoming).

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It exploits the 27-country average of the national, within-country pictures of the relationships between the distributions of individual wages and of household incomes. The within-country relationships are taken relative because of the significant cross-country differences in absolute levels. The average is not weighed for country size to prevent a bias toward the four large countries (France, Germany, Italy and the United Kingdom). Notably, the result does not conceive of the EU as a single entity. The emphasis is on wage earning persons—“earners”—who are members of households who derive most of their income from wages—“labor households”. These individuals are situated along the countries’ overall distributions: wages of all employees and incomes of all households. This leaves aside the self-employed1 as well as the employees who contribute too little to their households to turn those into labor households. The UEP provides the most radical answer imaginable that can be given to the question of fair pay. I assume though that it still accounts for the amount of work performed individually, in terms of hours spent, as otherwise it would conflate equal pay with a basic income or a living wage, which is accorded regardless of the amount of work done. In other words, universal equal pay (further: UEP) concerns hourly pay. I also assume that young workers are attributed the same rate of equal pay. Below I first discuss the distribution of (hourly) wage earnings. This is followed, second, by a discussion of the distribution of household (annual) incomes. Next and third, I examine how the two distributions interlink. Fourth, I consider briefly some important implications from this threefold picture. I conclude with a discussion of the desirability of introducing UEP in the light of these findings.

Distribution of Individual Wages For a start it is important to appreciate that UEP will affect the wages of socioeconomic groups differently and sometimes very drastically. Examining those differences will help to understand the impact on incomes which I discuss next. Currently, the level of wages slopes significantly upward across the wage deciles, which each comprise one tenth of all employee-hours worked (Fig.  3.1a). This is especially visible at the high end of the

41

3  Universal Equal Pay Wrong-foots the Distribution of Incomes  1A Individual hourly-wage distribution

1B Household annual-income distribution 35%

% of all earnings or hours

% of all earnings or hours

35% 30% 25% 20% 15% 10% 5% 0%

1

2

3

4

5

6

7

8

9

30% 25% 20% 15% 10% 5% 0%

10

Deciles of gross hourly wages Current

Equal pay

25% 20% 15% 10% 5% 2

3

4

5

6

Single current Additional current First

7

8

9

10

First current Single Additional

%-point shift current to UEP

%-point shift current to UEP

-1% -4% -7% 4

5

6

7

8

9

10

Deciles of gross wages First - gains First - losses Single - gains

8

9

10

Hours

30% 25% 20% 15% 10% 5% 0%

1

2

3

4

5

6

7

8

9 10

First current Single Additional

1F Wage losses and gains by income deciles

2%

3

7

Equal pay

Single current Additional current First

5%

2

6

Deciles of household gross incomes

1E Wage losses and gains by wage deciles

1

5

35%

Deciles of gross hourly wages

-10%

4

Current

% of all earnings or hours

% of all earnings or hours

30%

1

3

1D Incomes by earner types

35%

0%

2

Deciles of household gross incomes

Hours

1C Wages by earner types

1

Additional - losses Additional - gains Single - losses

5% 2% -1% -4% -7% -10%

1

2

3

4

5

6

7

8

9

10

Deciles of gross household incomes First - gains First - losses Single - gains

Additional - losses Additional - gains Single - losses

Fig. 3.1  Distributions of wages and incomes before and after equal pay, EU27 average, 2014. (Source: Author’s calculations on Eurostat EU-SILC wave 2015 for outcomes of the year 2014)

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distribution where top-decile earners acquire almost one quarter of all wages. By contrast, the bottom decile receives 4% only. The 9:1 decile ratio: the upper boundary of the ninth decile divided by that of the first decile, which is commonly utilized as an indicator of overall wage inequality, equals 3.71 for the average EU country. The incidence of low pay, following the usual definition of payments below two thirds of the median hourly wage, corresponds to 21% of all employees. The effect of introducing UEP on the wage distribution is pretty straightforward, as all wages become strictly the same (Fig. 3.1a). As a result, this distribution becomes entirely flat, all inequality ratios will equal 1, mean and median wage are identical, and the incidence of low pay falls to zero. The logical implication, as also shown in Fig. 3.1, is that, when hourly pay is entirely uniform, the distribution of wages exactly mirrors the distribution of the hours worked—which is flat by definition for the wage distribution as applied here.2 It is interesting to look at the shifts that would arise from the transition from the current distribution to the one with equal pay. The aggregate shift is 0% by assumption, but this equals the balance of equally sized gains and losses of 21% each of the total volume of wages. Evidently the gains and losses are differently distributed over the wage deciles. Gains are experienced up to the sixth decile, with an average increase in wages of 55%. Losses, by contrast, concern the deciles 7–10, where wages fall by 36% on average. The top 10% of earners alone is responsible for two thirds of the total loss, 15% out of 21%, and its wages decline by 61% on average. These are truly stunning transferals. Gains and losses differ significantly between social groups (Table 3.1). Women’s wages gain 16%, men’s lose 6%, shifting 4% of total volume of wages from men to women. Young employees under the age of 25 gain 64%, while the over-24s lose 2%. This would shift only 1% of all wages from older to younger workers, which seems feasible, implying that the main effect may be expected on the behavior of the young. Much more significant is the action at the three usual levels of low, middle and high educational attainment. Wage losses concentrate, unsurprisingly, among the high educated: 15% out of the 22% total, while the middle educated account for 6% and the low educated for 1%. Wage gains are split rather

Women

Men

Low

Mid

High

Youth

A. Aggregate levels Current (%) 100 27 73 12 41 47 2 Equal pay 100 31 69 16 47 37 4 (%) Shifts  Net level 0 4 −4 4 6 −10 1 (%-pt)  Relative 0 16 −6 38 15 −22 64 (%) B. Within wage distribution Increases 21 8 13 5 12 4 2 (%-pt)  Relative 21 29 18 47 28 9 71 (%) Reductions −21 −4 −18 −1 −6 −15 0 (%-pt)  Relative −21 −14 −24 −9 −14 −31 −8 (%) Deciles All increases are found in deciles 1–6, all losses in 7–10 C. Within income distribution Increases 13 5 8 4 8 2 1 (%-pt)  Relative 13 19 11 39 19 3 64 (%) Reductions −13 −1 −12 0 −2 −12 0 (%-pt)

All

Table 3.1  Distributional shifts by social groups

28 28 −1 −3 5 19 −6 −22

5 16 −5

−1 −2 20 20 −21 −22

12 12 −13

Single

98 96

Old

−11

8

3

−28

−12

11

5

−17

−7

43 36

First

(continued)

−1

31

9

−11

−3

40

11

29

8

29 37

Additional

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−3

1–9

3

−13

1–8

9

5

1–8

−17

Men

1

1–9

−1

Low

4

1–9

−4

Mid

3

1–7

−26

High

0

1–10

0

Youth

8

1–8

−14

Old

1

1–6

−19

Single

1

1–8

−25

First

3

1–9

−2

Additional

Note: Splits for incomes do not always add up to the total for all as they do not relate to the same selections of deciles Source: Author’s calculations on Eurostat EU-SILC wave 2015 for outcomes of the year 2014

 Relative (%) Deciles increase D. Hidden in households (%-pt)

Women

All

Table 3.1 (continued)

44  W. Salverda

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differently: only 4% for the high educated, but 12% for the middle educated and 5% for the low educated. On balance, the high educated lose as much (10%) as the low (4%) and middle educated (6%) taken together gain. The wages increase by 38% on average for the low educated and 15% for the middle educated, while those of the high educated fall by 22%. The decline in high-educated employees’ wages coincides largely with that of the top decile (11% out of 15%). These effects clearly put on the table the issue of how to incentivize people’s prolonged pursuit of an education under equal pay. Who will and can pay for the costs of following an education and receiving no income from work in the meantime? Clearly, effects of UEP diverge strongly, and there is good reason to expect effects on the income distribution to be complex.

 istribution of Household Incomes in Relation D to Wages Employees bring their (annual) wages to labor households. Based on their own incomes, those households are assigned to the overall distribution of household incomes, by deciles comprising 10% of all households. Thus we find how the total sum of wages is dispensed over the income distribution as a whole. This situates the effects of UEP squarely in society at large. Wages are not evenly spread over the income deciles but much more skewed toward the top (Fig. 3.1b) than in the wage distribution. Labor households which belong to the top 10% of household incomes currently obtain 34% of all earnings while those in the first decile receive no more than 0.5%. The assumption of an unchanged volume of wages that gets differently distributed due to equal pay keeps the contribution of wage earnings to total incomes unchanged. Again, this zero change results from a balancing of gains and losses: plus and minus 13%. These percentages seem considerably smaller than for wages (21%). Notably, the introduction of equal pay improves the income levels also beyond the sixth decile, where it stopped for wages. The seventh and eighth decile increase modestly and the ninth decile changes very little. A strong decline in the top 10% share

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(12%), however, bears the brunt of the 13% loss. As a result, the new distribution over incomes does remain upwardly skewed but less than the current distribution largely because of that fall at the top. Nonetheless, the income distribution is not flattened as for individual wages, or as it would be in principle for single breadwinners. For households as for individual wages, the equal-pay distribution simply mirrors the distribution of working hours over the households. In contrast with wages, the income distribution remains rather uneven—ranging from a 1.3% share of all hours at the bottom to 22% at the top.3 Once pay has been equalized the unequal household distribution of hours of employment will likely be thrust into the limelight. In line with the smaller aggregate gains and losses for incomes compared to wages, the gains and losses for the social groups—gender, age or education—are also smaller (Table 3.1). They are there, however. The net balances of gains and losses remain the same though: the modest plus and minus 4% for women and men respectively, the very small plus and minus 1% for young and older, and the plus 4% and plus 6% for the low and middle educated against the rather substantial minus 10% for the high educated. Evidently, the actual size of wage gains and losses must be identical for the two distributions, as both comprise exactly the same set of individual employees. So, the seemingly smaller gains and losses found for incomes point to the fact that a sizeable share of both are lost from sight as far as they counterbalance each other within households where employees who gain combine with others who lose. This hides from view 9% of the total 21% shift (Table 3.1, bottom row). The counterbalancing relies on the presence of more than one earner in the household and their diverging spread over the distributions. Figures 3.1(c) and (d) break the aggregate distributions of Figs. 3.1 (a) and (b) down by the positions of employees viewed as earners in the context of their households. Three household-earner positions are distinguished: (i) single earners, (ii) “first” (main) earner in the households with two or more wage earning members and (iii) “additional” (remaining) earners in those more-earner households. The comparison between the wage distribution and the income distribution is illuminating. The lines in both figures indicate the equal-pay wage distributions. These are

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identical to the hours of employment distribution of the three categories on which both the current distribution and the equal-pay distribution are based, by their individual wages on the left and according to their household incomes on the right. Single earners are spread rather evenly over the hours distribution (Fig. 3.1c). The number of first earners, however, expands steadily over the deciles and concentrates toward the higher end. Strikingly, they are often better paid than single earners. This contrasts strongly with the additional earners who show almost the exact opposite: a steady contraction of frequencies toward the higher wage deciles (Fig. 3.1c). The implication is that lower-paid additional earners and higher-paid first earners combine with each other in more-earner households. Thanks partly to their joint earnings those households reach higher up the income distribution (Fig.  3.1d). The household position of additional earners ascertains that most of their gains settle down among higher-income households. Three quarters of all additional earners are paid in the lower wage deciles 1–6, while 87% are members of households in the higher income deciles 7–10. The combination lifts additional earners with one quarter of all wages up from the lower ranks of the wage distribution to the higher ranks of the income distribution. Inversely, higher pay in lower incomes comprises only 4% of all pay. As equal pay raises the level of pay in the lower wage ranks and depresses it in the higher ones, their combination compensates within the household part of the gains and losses and is responsible for the seemingly smaller size of the shifts in the income distribution. The compensation offered by additional earnings is actually found over the entire income distribution with exception of the top decile (Fig. 3.1f ). They add to the increases of first-earner wages up to income decile 8 and compensate for first-earner losses in decile 9. In the top decile, however, additional earners also lose and reinforce the significant losses that are experienced by the first earners (Fig. 3.1f ). Their lower wages make additional earners the big winners of the introduction of equal pay. Their net gain amounts to 8% of all wages and equals the combined net losses of single earners (1%) and first earners (7%) (Table 3.1). Relative to their current wages additional earners gain 29% on average. First earners lose 17%, and single earners 3%. Additional

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earners and first earners taken together as more-earner households seem to gain slightly at the expense of single-earner households but we should not make too much of this given the rough-and-ready nature of the exercise. As most young workers are additional earners 1% of the gain can be attributed to them but all the remaining 7% is obtained by adults. Notably, additional earners obtain lower wages not necessarily because of lower educational attainment but also because of a different use of their education—more than half of the high-educated additional workers actually are lower paid, twice as many as among high-educated single and first earners.

Important Implications There are five important issues that raise questions which I think deserve an answer when contemplating the introduction of UEP: 1. Additional earners in households are the winners of UEP by far (section 4). 2. The distribution of household incomes from earnings remains largely unchanged with the notable exception of a strong decline in the top 10% (section 3). 3. Once wages are settled, fairness likely turns the spotlight to the distribution of hours of employment (sections 3 and 2). 4. Highly significant wage losses are experienced by the high educated (section 2). 5. Low pay disappears from employment (section 2). First and foremost, the strong link between lower pay and higher incomes provided by additional earners calls for a deeper evaluation of the moral nature of UEP. It shows how this interpretation of fairness in wages primarily benefits the category of secondary wage earners and higherincome households in conjunction with each other. Is it an acceptable outcome that employees with, on average and often voluntary, a more marginal attachment to the labor market benefit most? And as far as it is acceptable, is it sufficient to justify the great disturbance that inescapably

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will follow the introduction of UEP? And may, perhaps, something valuable be lost along the way? Many households currently combine lowerand higher-paid jobs and working hours, often but not always decided by their own free will. This combination mitigates hourly wage inequality between the employees involved (but not necessarily compared to other employees, read single earners) (Salverda and Checchi 2015). The possibly free choice and the mitigating effect disappear in the case of UEP. Second, the income distribution shows rather little change up to the ninth decile, partly because the gains of additional earners compensate for the losses of others in the household. This does not change the moral issue raised above. After all, single earners who lose do not have the same opportunity as first earners. By contrast, the tenth income decile suffers a strong decline as average earnings decline by 35%. Note that this is not a trivial collection of employees, as it encompasses 23% of them. The steep decline occurs largely because of the strong overlap with tenth-decile wages, which fall by 61%, especially among first earners (29% are in both deciles) but also because additional earners here also lose themselves— apparently, because their wage levels and working hours are more comparable to those of the first earners, that is, higher paid and higher educated. Behind both is the strong decline in pay for the high educated—to which I come back below. To some extent the decline of the top might seem to provide an answer to the problematic trend of growing income inequality. However, as a policy to reduce the inequality at the top, however desirable, the introduction of UEP seems to raise serious doubts. Increasingly, the broad top 10% of incomes is made up of wage earners (Salverda 2015, 2019), including a significant and steadily growing category of high-educated dual earners. As a policy the lowering of top 10% labor incomes only would be uneven, as it leaves incomes from capital unaffected, which likely concentrate even more at the famous top 1% and top 0.1%. In addition, those who combine top incomes from both labor and capital (Atkinson and Lakner 2017) may seek to escape from the policy by shifting toward capital income. Thus, an important question, both economic and ethical, to ask is whether other means to reach the same downsizing of the top exist that have a more equal and economically less disturbing effect (e.g., Atkinson 2015)? Third, with fully equal hourly pay the distinction between individual as well as household (annual) earnings comes to rest explicitly on the

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distribution of hours of employment. An increase in working hours will be the only instrument available to employees for raising their incomes from paid employment. Though the experience of a longer labor-market career or the attainment of a better education no longer offers higher pay, they might actually become more important for securing employment. Uniform pay likely enhances the role of individual qualifications in the selection of job applicants. The rapid expansion in many places of part-­ time employment and the debate since the mid-1990s on household joblessness, household work intensity and exclusion from the labor market underline the salience that the distribution of hours of employment already has currently (De Graaf-Zijl and Nolan 2011; Ward and Ozdemir 2013; Checchi et al. 2016). The scramble for hours that is behind the platform economy points in the same direction. What if equal pay would come at the cost of a stronger exclusion from employment of the less experienced and less qualified? Fourth, a large price is paid by the high educated, many of whom face a 61% wage decline. Evidently, the UEP may seriously affect the dynamics of educational attainment, as it does away with the perspective of receiving higher pay due to a better education afterward, though their perspective on securing employment may actually improve. Obtaining a higher education comes at a significant cost both of participating in the educational system itself and of providing personal subsistence during the time of participation. The strong increase in youth wages (71%) can only work against this by increasing the opportunity costs of staying longer in education. With UEP, who will and can pay for staying longer in education, or getting that financed by another party as an economic proposition instead of a hobby? It seems that only collective action can solve the problem, possibly implying cost-free participation in education and extension of the UEP by way of subsistence to the student. This in turn implies increased public expenditure—though UEP itself may diminish labor costs in the educational system—and subsequent taxation also of the UEP. In addition, it may create a risk of increased bureaucratic rationing of the access to the system of higher education. Is the net improvement of additional earners’ wages generated by UEP worth this while, economically as well as morally?

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Fifth, with equal pay the segment of low-paid labor disappears by definition. Low-wage labor concentrates strongly in consumer goods and services and vice versa (Lucifora and Salverda 2009; Mason and Salverda 2010; Salverda and Mayhew 2009). These being largely labor intensive activities, the wage increase of between 50% and 60% significantly raises the costs to households and likely constrains consumer demand and stimulates increasing imports, hiring illegal labor and perhaps some productivity growth. The decrease in higher wages may not have sufficient importance for private consumption to compensate for those increased costs in the household budget. How can UEP allow continuing the desired provision of consumer goods and services, and how can it possibly block out international alternatives without introducing a worldwide UEP?

Conclusions It is difficult to imagine a more drastic change in the wage distribution than would be wrought by the deliberate introduction of universal equal pay to secure fairness in pay. This enhances the importance of looking at the income effects. Interpreting UEP as attributing the average hourly wage to all employees, wages increase up to the sixth decile of the wage distribution and decrease in the seventh to the tenth decile. Household incomes from wages, however, increase up to the ninth income decile and fall drastically in the top decile (which many may welcome though as making inroads into rising income inequality). Behind the changes in the income distribution, however, I find, first, that, on balance, the change primarily benefits the wages of additional earners and the incomes of their households, which generally rank in the higher deciles of the income distribution. Is that really what people would have in mind with universally equal wages? This would seem a questionable consequence, to be taken into account when considering the ethics of the UEP. Second, wages shift dramatically away from the high educated toward the low and middle educated. This is primarily responsible for the drastic fall of the top income decile, including for high-educated and high-paid additional earners. This effect seems so predictable that it must be assumed to be

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part and parcel of the UEP concept and to be defended by the underlying view of fair pay. It seems equally predictable, however, that society cannot do without the high educated. UEP takes away the perspective of future earnings that can finance the costs of prolonged participation in education as well as the associated lack of income for subsistence. To fill that two-pronged gap, it seems likely that taxation must be increased, including on employees who gain wages through UEP. This needs to be set against the advantages of introducing UEP. In addition, increased public finance of education may incite a bureaucratic rationing of the access to prolonged educational participation, which would have an obvious ethical implication vis-à-vis the free individual choice of an education currently. The question then is whether other means for reducing income inequality would be defensible, economically and morally, in lieu of UEP—which, notably, leaves high capital incomes unaffected and likely increases their attraction for very-high-wage-earning individuals to shift to from wages. Finally, UEP lays bare the distribution of hours of employment that underlies both the wage distribution and the income distribution. Its inequality—more hours in higher-income households, joblessness or low work intensity in other households—and the corresponding public concern may grow under UEP, as personal characteristics will tend to become a more important determinant of access to employment as differences in wages no longer exist which could serve this allocation. Universal equal pay challenges society way beyond the wage distribution. On its own, it is no panacea for income inequality, and likely no first-best solution to it either, and offers no guarantee for social cohesion, perhaps even to the contrary. Acknowledgments  I am grateful to Veerle Rook for her excellent treatment of the EU-SILC data, and I thank Eurostat for granting access to the data (RPP 158/2018-LFS-EU-SILC-SES).

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Notes 1. Many employees may opt though to become self-employed aiming to avoid the constraints of UEP. 2. In terms of individual employees, it is somewhat skewed toward the bottom, where the frequency of part-time jobs is higher. 3. The distribution could become more unequal at the lower end in the sense that labor households may be lifted up in the lower income deciles and move away from the mass of other households, that depend mainly on transfers and pensions. In the higher deciles there is less scope for a similar but opposite effect of compression, as non-labor households are few.

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Nolan, B., & Marx, I. (2009). Economic inequality, poverty, and social exclusion. In W. Salverda, B. Nolan, & T. Smeeding (Eds.), The Oxford handbook of economic inequality (pp. 315–341). Oxford: Oxford University Press. Salverda, W. (2015). EU policy making and growing inequalities. EU publication series: European Economy. Discussion Paper 008. European Commission ECFIN. https://doi.org/10.2765/693628. Salverda, W. (2018). Household income inequalities and labour market position in the European Union. CES Ifo Forum, 19(2), 35–43. Salverda, W. (2019). Top incomes, income and wealth inequality in the Netherlands: The first 100 Years 1914–2014—What’s next? World Inequality Database (sWID). World Working paper 2/2019. Salverda, W. (forthcoming). Can the Europe Union maintain and improve income inequality? In G. Fischer & R. Strauss (Eds.), Income, wealth, consumption, wellbeing and inequality in Europe. (Chap. 15). Oxford: Oxford University Press. Salverda, W., & Checchi, D. (2015). Labour-market institutions and the dispersion of wage earnings. In A. B. Atkinson & F. Bourguignon (Eds.), Handbook of income distribution (vol. 2B) (pp.  1535–1727). Amsterdam: Elsevier/ North-Holland. Salverda, W., & Haas, C. (2014). Earnings, employment and income inequality. In W. Salverda, B. Nolan, D. Checchi, I. Marx, A. McKnight, I. Tóth, & H. van der Werfhorst (Eds.), Changing inequalities in rich countries: Analytical and comparative perspectives (pp. 49–81). Oxford: Oxford University Press. Salverda, W., & Mayhew, K. (2009). Capitalist economies and wage inequality. Oxford Review of Economic Policy, 25(1), 126–154. Salverda, W., & Rook, V. (forthcoming). Does income inequality reinforce labour market inequality in Europe?. Ward, T., & Ozdemir, E. (2013). Measuring low work intensity: An analysis of the indicator. ImPRovE Working paper 13/09.

4 More Onerous Work Deserves Higher Pay Huub Brouwer and Willem van der Deijl

When asked about whether desert should play a role in determining a person’s income, Milton Friedman answered: I don’t think desert has anything to do with it. Desert is an impossible thing to decide. Who deserves what? Nobody deserves anything. Thank god we don’t get what we deserve! (Friedman 1976)

Friedman’s position on desert is surprising. Many people, after all, believe that some people deserve to be paid more than others, and that it is a good thing if people get paid what they deserve (see, among others, Tinghög et al. 2017; Mollerstrom et al. 2015; Konow and Schwettmann 2016; Goya-Tocchetto et al. 2016; Freiman and Nichols 2011; Mulligan, Chap. 2 in this volume). The verb “to deserve” comes up in discussions

H. Brouwer • W. van der Deijl (*) Philosophy Department, Tilburg School for Humanities and Digital Sciences, Tilburg University, Tilburg, The Netherlands e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_4

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about salaries all the time. We say, for instance, that Rosy deserves a high salary because she works so hard; that Mary deserves to be paid more than others because her work is so unpleasant; and, perhaps somewhat more controversially, that Amia deserves a lower income than others because her job is so enjoyable (the pleasantness of her job is, to some degree, its own reward). Given that desert is frequently used to justify that some get paid more than others, and given that many think so naturally in terms of desert, it seems desert is natural place to start when we are looking for arguments that justify unequal pay. In fact, the notion is sometimes used to justify that people earn very high salaries—a well-known example is Gregory N. Mankiw’s (2013) defense of “the one percent”, in which he develops a desert-based justification of the incomes of the top one percent earners in the United States. This raises the question whether Friedman was right to challenge desert. Is it right that nobody deserves anything, including salaries? To decide this, we must look at Friedman’s challenge to desert in greater detail. His main concern is that desert is undermined by luck (Friedman 1962, pp. 165–166). How hard people work, and how large of a productive contribution they make, Friedman argues, is all a matter of luck. Some people are born into caring and stable families, others are not. Some people are born in good health, others are not. These differences in luck add up. In fact, they are so omnipresent, according to him, that they undermine the desert-based case for unequal pay. Milton Friedman has a rather unlikely ally in his skepticism about desert: John Rawls. Rawls objects to desert as a principle of justice on the very same grounds (Rawls 1971—for an overview of the commonalities between Friedman’s and Rawls’s arguments against desert, see Lister 2018): the omnipresence of luck undermines desert. If a libertarian like Friedman and an egalitarian like Rawls agree that the desert-based argument for unequal pay fails for the very same reason, then chances are there is something to it. In this chapter, we argue that although the luck challenge to desert is a valid objection to some desert-based arguments for unequal pay, it does not apply to all of them. In particular, we defend the claim that people can, in fact, deserve to be paid more than others if they carry out more onerous work than

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others. We call this the “compensatory desert” view. To defend our main claim, we proceed in five steps. In the next section, we examine the luck challenge to desert in greater detail. In the following section, we argue that some work is more onerous than other work, and that those who do more onerous work deserve to be paid more—we also point out that compensatory desert avoids the luck challenge (also discussed by Deranty, Chap. 15 in this volume). In the section thereafter, we reflect on how compensatory desert could be implemented in practice. The next section deals with objections, and the final section of the chapter concludes.

 he Luck Challenge Examined: Deserving T to Deserve Desert has a dubious status in economics and political philosophy, both on the right—with critiques by Milton Friedman (1962), Friedrich von Hayek (1960), and Robert Nozick (1974)—and on the left—with critiques by John Rawls (1999, 2001) and Elizabeth Anderson (1999). John Kleinig was correct when he observed, in 1971, that “the notion of desert seems by and large to have been consigned to the philosophical scrap heap” (Kleinig 1971, p. 71). His observation still rings true today, almost 50 years later, at least for debates about distributive justice. John Rawls is probably the most influential, and certainly the most well-known critic of desert. In A theory of justice (Rawls 1971), he argues that parties in the original position would reject desert as a principle justifying differentials in socio-economic status, because of, among other things, the luck challenge. To understand the luck challenge better, it is helpful to introduce three pieces of received wisdom that have emerged in philosophical discussions about desert (Olsaretti 2003, chapter 1; Feldman and Skow 2016). First, philosophers agree that desert claims are, at the most fundamental level, three-place relations, uniting a person (the desert subject) who is said to deserve something (the desert object), on a certain ground or grounds (the desert basis or bases) (Olsaretti 2003, p. 4). There is a great deal of discussion about what the appropriate subjects, objects, and

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especially bases of desert claims are. The view that Rawls considers is that persons (the desert subject) deserve income (the desert object) on the basis of some morally appraisable characteristic, such as their effort (the desert basis). We call this the “effort desert” view. A second piece of received wisdom philosophers tend to agree on is that desert, if it is to be a principle of justice, must be both preinstitutional and prejusticial (Scheffler 2000; Olsaretti 2003, chapter 1). A desert claim is preinstitutional when its demands cannot fully be reduced to the rules and purposes of institutions. And a desert claim is prejusticial when its demands cannot be fully reduced to the demands of other principles of justice. Many philosophers take the claim that moral exemplars deserve to be happy as both preinstitutional and prejusticial. The reason why desert, if it is to be a principle of justice, must be preinstitutional and prejusticial is that otherwise, it would be no more than a rubber stamp on the claims generated by institutions or other principles of justice. For the purposes of this chapter, we will assume that “effort desert” and “compensatory desert” are both preinstitutional and prejusticial (Feinberg 1970; Wolff 2003). A third piece of received wisdom is that desert claims on the objects of justice come with a responsibility requirement (cf. McLeod 1998; Olsaretti 2008). According to this requirement, if Bill deserves to be rich on the basis of having invented a very popular computer operating system, then Bill must be responsible for having invented this operating system. The reason why philosophers commonly insist on a responsibility requirement on desert claims is to prevent unfairness: it would be unfair if some people received more than others on the basis of factors they cannot be held responsible for. It is the responsibility requirement on desert claims that makes desert vulnerable to the luck challenge. With these three pieces of received wisdom about desert, we are now in a position to consider the luck challenge to desert claims in greater detail. The challenge is this: The luck challenge to desert 1. Effort desert view: When people differentially deserve income, they do so on the basis of morally appraisable characteristics such as their effort.

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2. Responsibility requirement: Income can only be differentially deserved if the desert bases are themselves deserved. 3. Never satisfied: Effort is ultimately determined by innate talents and personality traits, the distribution of which is not itself deserved, but a matter of luck. 4. Conclusion. No one deserves income. Rawls argues that for income to be deserved on the basis of people’s effort, it must be the case that people are responsible for their effort. For him, this means that people must deserve the desert basis (premise 2): they must deserve the factors that allow them to exert more effort than others. Rawls then goes on to claim (premise 3) that, ultimately, how hard people work is determined by their innate talents, and personality traits that were forged by their caretakers and teachers. The distribution of talents and personality traits is not itself deserved: Some people are born into caring and stable families, others are not. Some people are born in good health, others are not. They have done nothing to deserve this. Hence, no one deserves income. Rawls, then, is commonly taken to defend the following principle: Irrelevance of desert: because any desert-base is ultimately undeserved, desert cannot play a role in determining the just wage differentials.

We are sympathetic to premises 1–3. However, we believe irrelevance of desert to be an incorrect derivation from these premises. What follows is not that nobody deserves income. What follows, instead, is that people do not differentially deserve income (which is compatible with them deserving a universal basic income, as defended by Zwolinsky, Chap. 5 in this volume). This difference is crucial, because it leaves open the possibility to defend the following principle: Equal Desert Principe I: if two individuals are equally deserving, they deserve the same income.

This principle, we take it, is quite plausible if we acknowledge that the notion of desert has some intuitive plausibility. If we accept that, in

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addition to the formal equality principle—i.e. equals should be treated equally—, then we seem to have good reason to accept the equal desert principle. That is the first step toward developing a compensatory desert view about pay. The second step is to recognize that a slight revision in the equal desert principle is necessary, to accommodate the fact that the benefits and burdens of work are more than just income.

 ompensatory Desert: Why Responsibility Is C Not Required The jobs that we do have a significant impact on our well-being, how good our life is for us. Not all work is equally pleasant to do. Certain jobs are much better for us than others. Some people end up doing onerous work from which others benefit, while others do work that is inspiring, comfortable, and/or provides space for developing ourselves. Given that incomes cannot be said to be deserved, neither can these differences in benefits. A just wage, we claim, is a wage that compensates individuals for the comparative disbenefits of the work that they do. That leads us to slightly revise Equal Desert Principle I, into the following: Equal Desert Principe II: if two individuals are equally deserving, they deserve the same benefits.

To see this revised principle at work, consider the following examples: Rosy the consultant. Rosy is a business consultant for a big four company. Rosy works a lot, often 60 hours a week. She enjoys her work. The environment is competitive, and it is often stressful, but it also gives her an opportunity to develop herself, and it gives her a sense of self-esteem. Rosy is very well paid. Mary the garbage collector. Mary is a garbage collector. Her work starts early, and is physically demanding. At the end of the day, she is often quite tired, and it takes a significant amount of shampoo to get the smell out of her hair. She has no significant opportunities to develop herself at work. She enjoys her comradery with her co-workers, but is paid below median.

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Amia the office worker. Amia works in the municipality office of a midsize town. Her job is stable, and rarely stressful. She rarely works more than the required hours (40 hours a week), and often enjoys the projects she is involved in. Amia gets paid well, more than Mary, but less than Rosy.

There are numerous considerations that may play a role in determining whether these salary differentials are justified ethically (see McLeod 1996; Feldman 2016, pp. 109–117). For example, Rosy studied hard and was always the top of her class, while Mary dropped out of school early on and spent numerous years without work. Rosy’s salary may motivate her to work as much as she does, and may motivate others to study, and follow a similar career path. Amia has a visible migrant background, which has harmed both her academic and her professional career. If we apply Equal Desert Principle II to Mary and Amia, then we see that something is off. Amia gets more benefits out of her work, even though she cannot be said to deserve more benefits than Mary. This, equal desert principle implies, is unjust. They deserve equal benefits. It would seem to follow from the argument discussed above that Mary and Amia do not deserve to get a different salary. After all, while Amia owes her success to her educational achievements, Amia cannot be said to deserve the talent and upbringing that put her in a position to achieve this. So no pay differential between Amia and Mary seems appropriate. We, however, believe this misses out on an important aspect of Amia and Mary’s work lives: the goods and bads of the work that they do. Amia’s job seems better for her than Mary’s work is for Mary. And, this is only partly due to the difference in pay. What Amia gets out of her jobs compared to Mary is not merely a higher salary, but the work itself is also better, or, to put it negatively, less bad, than Mary’s. In Amia’s office job, there are more opportunities to obtain self-esteem, enjoyment, and, simply more comfort than in Mary’s job. Because we believe this observation is significant for the justification of salary differentials, we defend the following two claims: 1. People’s work comes with different goods and bads, which significantly impact a person’s welfare level. 2. People can choose their career only in a limited sense.

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If both of these claims are true, and our argument in the previous section is correct, certain jobs limit a person’s welfare structurally, while we cannot be said to deserve these positions. We will discuss both in turn.

Does Work Come with Different Goods and Bads? According to a particular view in economics, work should be seen as a pure disutility, after all, if it were not, we would not have to be compensated for it to do it (see Veltman 2016, p. 74 for a discussion, she ascribes the view to Mill). This view is in many ways implausible. For one, work also provides us with many good things. For Rosy, her consultancy job provides her with self-esteem, Mary’s work provides her with a social network, and Amia enjoys her work projects. These goods include, but are not necessarily limited to self-esteem, a social network, the opportunity to achieve excellence, to make a social contribution (Gheaus and Herzog 2016), and sense of meaning. But, even if work were only a disutility, the disutility is not, as a truly competitive market would have it, equal to income. If that were the case, being unemployed or being employed would be almost at par with each other if it comes to welfare. This is not only implausible, but also contrary to evidence from subjective well-being studies, that see unemployment as a significant subjective well-being-limiting factor, to which we only partially adapt (Helliwell and Huang 2014). However, the goods that work offers are highly varied between different types of jobs (see also Deranty, Chap. 15 in this volume). The goods in Amia’s work seem much more pronounced and plentiful than those in Mary’s work. If that is true, we can say that all things considered equal, it may be better for someone to have Amia’s job than to have Mary’s job. An important objection to consider here is that the same type of work does not result in the same level of welfare for all possible individuals who do this work. For someone who enjoys physical work, and would dread the atmosphere at an office, working as a garbage collector is much more beneficial (much less harmful) than someone who thrives at an office and dreads physical labor. So, the claim that job x contains more benefits than job y, cannot be a universal claim. We should instead understand it as a

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claim about average benefits and burden: Mary’s job, on average, contains more benefits than Amia’s job. Some of the burdens and benefits of work may be inherent to work, while others are contingent. For example, it is inherent to the job of garbage collector that a garbage collector collects garbage, but it is not inherent to the work that it is stigmatizing, while in many current societies, it still is. However, because the degree of stigma attached to jobs is not under the control of the employer, we shall, for the remainder of this argument, treat these benefits and disbenefits of jobs equally, and more generally, as fixed.

Do People Choose Their Job? If anyone could freely choose their occupation, it may not be unjust that some choose jobs that are welfare reducing. Above, we have argued that ability to make prudent choices (or choices that benefit one’s welfare) is also itself an undeserved desert-base. However, there are two reasons why choice may nevertheless be an important consideration for desertists. A first reason is that some defenders of desertism, in response to Rawls’s argument, have denied that desert-bases need to be deserved themselves, and suggested that choice itself may be a ground for desert, even if this choice is based on an undeserved imprudent character trait (Mulligan 2017; Mulligan, Chap. 2 in this volume). A second reason is that even if we deny that welfare differences can be deserved, choice may give way to non-desertist moral considerations. For one, even if it is unjust that people do not get what they deserve, people may pursue other values besides their own welfare. And, if they choose a type of work despite the fact that it reduces their welfare compared to other types of work, this lower level of welfare may not be morally relevant for considering what would be a just wage. However, we cannot freely choose our own work. Our choice of career is limited. First, jobs require skill, and not everyone has the same (potential) skill level. Someone who faints at the sight of blood does not have the free choice to become a surgeon. Second, jobs require training that takes a significant amount of time. Most people choose their training

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when they are young, and later only have limited options to go back to school. Consequently, people only have a limited choice of occupation. Depending on our skill level, we can choose to be trained in certain professions when we are young, but we cannot choose our skill level, nor can we easily be re-trained if we find that our chosen occupation does not meet our expectations, or another occupation seems more suitable. If the argument in this section is correct so far, we can conclude that we only partly choose our job, while jobs have inherent bads and goods. More particularly, the lives of some individuals may be structurally worse than that of others as a result of the work that these individuals do. Mary and Amia are one example where this seems plausible.

The Compensatory Desert Principle In light of these considerations, we suggest the following desert-based just wage principle: Compensatory desert principle: if x (undeservedly) does work that reduces their opportunities for welfare compared to work that other individuals do, x deserves to be compensated for this welfare reduction.

There may be several ways in which a person can be compensated for the comparative disbenefits of the work that they do. Salary is one important tool, because while the inherent features of a particular job cannot generally be changed, a person’s salary can be changed. This is one reason why it is important to ask what a just wage is. This brings us to a conception of just wages. Wage differentials people deserve are based on the inherent aggregate of benefits and burdens of jobs: Deserved just wage: a just wage is a wage that compensates someone for their work, such that compared to other work that society requires, a ­person is not structurally worse off (or better off) by doing the work that they do.

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Compensatory Desert in Practice We believe the deserved just wage principle is an important and plausible principle, but it is also a highly abstract principle. Applying it may not be straightforward for one important reason: there is a significant epistemic challenge to implementing this principle. We do not actually know how the benefits and burdens of garbage collection compare to the benefits and burdens of consultancy. This, we think, is not a challenge to the principle itself, but it is a challenge to its implementation. We nevertheless believe that while rough, some evidence is available about the onerousness of different work types (Hessels et al. 2018; Origo and Pagani 2009). Moreover, even if we cannot perfectly implement the deserved wage principle, making salary differentials more sensitive to the onerousness of work would already be an improvement. In other words, the allocation of desert in practice is a project in non-ideal justice, in which our epistemic concerns limit us in its perfect implementation. But, this should not keep us from attempting to get closer to just wages generally. A related concern with the implementation of the principle is that it does not go far enough. It may seem that once we open up to the idea that people should get what they deserve, we should compensate people not only for their job type, but also for their individual welfare levels at work (or, in fact, in life). This indeed fits well the desertist view of justice, and we contend that if someone experiences significant disbenefits outside of their work that are not typical for their work, these benefits are equally undeserved as the disbenefits that are typical for their work. There are nevertheless two reasons why we believe salaries should compensate for the type of work, and not for the individual work experiences. A first reason is again epistemic. It may already be difficult to judge the disbenefits and benefits of work types, it may be even more difficult to determine the disbenefits and benefits of individual work experiences. But, there is also a more fundamental reason for not differentiating individual pay for the same work, namely, that it would violate the following widely accepted principle: Equal work, equal pay: two individuals who do the same type of work should get the same pay.

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Objections We want to briefly consider one important objection to our view: if the compensatory desert principle would be implemented in society, the wrong incentives are put in place. If the market would determine salaries, it incentives labor to move to the places where it is most productive. Our principle would actively remove many such incentives, as there will be no structural benefits to doing certain types of (productive) labor rather than other types of labor. One response to this concern is that we believe that our account is an account of just wages. Justice and efficiency, we believe, may be in conflict. In those cases, we tragically have to balance these two values. A second response is that our principle also has a desirable consequence. According to the principle, if the market cannot provide sufficient salaries that offset the welfare opportunities a person loses by doing the work (compared to other work), the work should not exist. This would allow us to condemn work that is widely thought of as morally problematic, such as sweatshop labor.

Conclusion Milton Friedman famously expressed the idea that it is a good thing that we do not get what we deserve. We argue that desert should play a role in the justification of salary differentials, but one that is different from the more common effort desert view: salaries should compensate workers for the relative reduction of welfare opportunities compared to other types of work that exist in society. Having a particular type of job—and related pay—should not structurally limit the opportunities of workers to obtain welfare. On the compensatory desert view we defend, Rosy deserves a high salary because her job requires her to work very hard; Mary deserves to be paid more than others because her work as a garbage collector is so unpleasant; and Amia deserves a lower income than others because her job in the municipality office is so enjoyable. We may not all deserve equal pay, but we do all deserve equal welfare levels.

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References Anderson, E. S. (1999). What is the point of equality? Ethics, 109(2), 287–337. https://doi.org/10.1086/233897. Feinberg, J. (1970). Doing and deserving: Essays in the theory of responsibility (1st ed.). Princeton, NJ: Princeton University Press. Feldman, F. (2016). Distributive justice: Getting what we deserve from our country. New York: Oxford University Press. Feldman, F., & Skow, B. (2016). Desert. In E. N. Zalta (Ed.), The Stanford encyclopedia of philosophy. Stanford, CA: Metaphysics Research Lab, Stanford University. Retrieved February 19, 2020, from https://plato.stanford.edu/ archives/win2016/entries/desert/. Freiman, C., & Nichols, S. (2011). Is desert in the details? Philosophy and Phenomenological Research, 82(1), 121–133. https://doi. org/10.1111/j.1933-1592.2010.00387.x. Friedman, M. (1962). Capitalism and freedom. Chicago, IL: University of Chicago Press. Friedman, M. (1976). Case against equal pay for equal work. Retrieved February 19, 2020, from https://www.youtube.com/watch?v=hsIpQ7YguGE. Gheaus, A., & Herzog, L. (2016). The goods of work (other than money!). Journal of Social Philosophy, 47(1), 70–89. Goya-Tocchetto, D., Echols, M., & Wright, J. (2016). The lottery of life and moral desert: An empirical investigation. Philosophical Psychology, 29(8), 1112–1127. https://doi.org/10.1080/09515089.2016.1240362. Helliwell, J. F., & Huang, H. (2014). New measures of the costs of unemployment: Evidence from the subjective well-being of 3.3 million Americans. Economic Inquiry, 52(4), 1485–1502. https://doi.org/10.1111/ecin.12093. Hessels, J., Arampatzi, E., van der Zwan, P., & Burger, M. (2018). Life satisfaction and self-employment in different types of occupations. Applied Economics Letters, 25(11), 734–740. https://doi.org/10.1080/13504851.2017.1361003. Kleinig, J. (1971). The concept of desert. American Philosophical Quarterly, 8(1), 71–78. Konow, J., & Schwettmann, L. (2016). The economics of justice. In C. Sabbagh & M.  Schmidtt (Eds.), Handbook of social justice theory and research (pp. 83–106). New York: Springer Verlag. Retrieved February 19, 2020, from https://digitalcommons.lmu.edu/econ_fac/30.

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Lister, A. (2018). Wages, talents, and egalitarianism. Erasmus Journal for Philosophy and Economics, 11(2), 34–56. https://doi.org/10.23941/ejpe. v11i2.332. Mankiw, N.  G. (2013). Defending the one percent. Journal of Economic Perspectives, 27(3), 21–34. https://doi.org/10.1257/jep.27.3.21. McLeod, O. (1996). Desert and wages. Utilitas, 8(2), 205–221. https://doi. org/10.1017/S0953820800004878. McLeod, O. (1998). Contemporary interpretations of desert. In L. P. Pojman & O.  McLeod (Eds.), What do we deserve?: A reader on justice and desert (pp. 61–69). New York: Oxford University Press. Mollerstrom, J., Reme, B.-A., & Sørensen, E. Ø. (2015). Luck, choice and responsibility: An experimental study of fairness views. Journal of Public Economics, 131(Nov), 33–40. https://doi.org/10.1016/j. jpubeco.2015.08.010. Mulligan, T. (2017). Justice and the meritocratic state. Abingdon-on-Thames, UK: Routledge. Nozick, R. (1974). Anarchy, state, and utopia. New York: Basic Books. Olsaretti, S. (Ed.). (2003). Desert and justice (Mind Association Occasional Series). Oxford: Oxford University Press. Olsaretti, S. (2008). Justice, luck, and desert. In J.  Dryzek, B.  Honig, & A.  Philips (Eds.), The Oxford handbook of political theory (pp.  436–449). Oxford: Oxford University Press. https://doi.org/10.1093/oxfor dhb/9780199548439.003.0024. Origo, F., & Pagani, L. (2009). Flexicurity and job satisfaction in Europe: The importance of perceived and actual job stability for well-being at work. Labour Economics, 16(5), 547–555. Rawls, J. (1971). A theory of justice. Cambridge, MA: Belknap Press of Harvard University Press. Rawls, J. (1999). A theory of justice. New York: Oxford University Press. Rawls, J. (2001). Justice as fairness: A restatement. Cambridge, MA: Harvard University Press. Scheffler, S. (2000). Justice and desert in liberal theory. California Law Review, 88(3), 965–990. https://doi.org/10.15779/z38wb16. Tinghög, G., Andersson, D., & Västfjäll, D. (2017). Are individuals luck egalitarians? An experiment on the influence of brute and option luck on social preferences. Frontiers in Psychology, 8, 460. https://doi.org/10.3389/ fpsyg.2017.00460.

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Veltman, A. (2016). Meaningful work. New York: Oxford University Press. von Hayek, F.  A. (1960). The constitution of liberty. London: Routledge, Kegan Paul. Wolff, J. (2003). The dilemma of desert. In S. Olsaretti (Ed.), Desert and justice (pp. 219–232). Oxford: Oxford University Press.

5 Equal Pay for Knowledge Workers in Academia: An Unrealistic Proposition Frode Eika Sandnes

 nowledge Worker, an Idealistic Call or Just K Another Job This chapter argues for unequal pay among knowledge workers in the academic labor market, specifically. The academic labor market is a unique case as knowledge workers are expected to work independently, the academic workforce is highly trained, and some specialized knowledge workers are very hard to recruit. Moreover, academia is predominantly funded by the taxpayers, at least in a Norwegian context, and the use and misuse of taxpayer money is indeed a topic of public interest. The study of pay equity has a long history (Barbezat 2002; Weick 1966). There are convincing arguments for introducing equal pay in general (Deranty, Chap. 15 in this volume; Reilly and Brown, Chap. 10 in this volume) and in academia specifically, as all knowledge workers, at F. E. Sandnes (*) Department of Computer Science, Faculty of Technology Art and Design, Oslo Metropolitan University, Oslo, Norway e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_5

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least on a perceived level, seemingly do the same job. That is, knowledge workers teach students, conduct research, and participate in public debates. Should such jobs not be rewarded in a uniform manner? Many academics do not view their profession as an ordinary job, but rather as a call similar to the call of religious leaders or artists. Many academics express that they are less concerned with pay but place high importance on the content of their work. Some academics describe their jobs as indistinguishable from a personal hobby, as the job allows them to be paid to follow their interests. Clearly, some academics are, according to some measures, more successful than others. Some academics have “the magic touch of Midas”, seemingly making any project they are involved in successful. The dynamics of success in academia is indeed a complex issue, as it is a combination of many factors such as opportunities, timing, and simply luck. Being at the right place at the right time can make all the differences. Rewarding people according to luck does not seem like a meaningful proposal. Clearly, equal pay for all would eliminate much discussed problems associated with gender pay gaps (Arvanitis et al. 2011; Baker 1996; Barbezat and Hughes 2005; Barnard 2008) and other unfair biases (Neumark 1988; Melly 2005). Moreover, perceived pay fairness is a much studied area (Rambo and Pinto 1989; Till and Karren 2011; Rasch and Szypko 2013) and a regime of equal pay would eliminate the disgruntlements and dissatisfaction of individuals who do have their pay rise claims accepted during appraisals. As will be discussed herein, the proposal of equal pay is indeed not as straightforward. This chapter on equal pay in academia starts by discussing the needs for differentiation between knowledge workers by the means of incentives. Incentives are justified as a motivator for the individual, as a control mechanism for the organizations and quantifier of interest in the competition for talent across organizations. Next, various types of incentives in academia are discussed, where non-monetary incentives such as honors and special privileges are contrasted against monetary incentives. It is concluded that unequal pay is the most pragmatic incentive, as it is both operationally feasible for the organization and sustainable as a resource, and may benefit the entire family unit of the knowledge worker.

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Do We Need Incentives? Currently, it is possible to identify a wide range of monetary and non-­ monetary incentives that are actively used in academia, and for good reason. Incentives in academia have also been addressed in the research literature (Hansen and Guidugli 1990; Sandnes 2018). As illustrated in this section, incentives, especially unequal pay, can be viewed from many perspectives, namely for motivating individuals to generate results, as a leadership tool to persuade and change behavior, and to win in the competition for the most talented academics.

Unequal Pay for Individual Motivation A key driving force for individuals is motivation, and much has been written on this topic (Law et al. 2009). Academics indeed report feeling the satisfaction of seeing their students succeed and achieve research breakthroughs. Many academics are intrinsically self-motivated by such achievements. But extrinsic motivations are also important for academics. Receiving praise for good teaching and ground-breaking research, seeing papers being published, getting awards and honors, and pay raises are elements that motivate us. Much has also been written about the perceived fairness resulting from the match or mismatch between pay level and achievements (Rambo and Pinto 1989; Till and Karren 2011; Rasch and Szypko 2013) and compensatory desert (Brouwer and van der Deijl, Chap. 4 in this volume). Also, the perception of moving forward after years of employment, that is, reward for loyal service, should not be underestimated. Extrinsic motivations have also been criticized for often causing pressure (Chang 2003), and some claim that the brain does not perform well under pressure.

Unequal Pay as a Tool for Change Academia is an unusual workplace with strong traditions and values of academic freedom (Altbach 2001) where most knowledge workers are

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very self-driven, self-motivated, and independent (Goode 2007). Some would even argue that academia would survive without leaders. It is also much harder to lead a workforce of very independent workers (Middlehurst 1993), as they are trained to be critical and trust their own judgments as opposed to those of others (Corley and Eades 2004). Instructions, or orders, are easily perceived negatively. Yet, some level of control is unavoidable even in academia due to changing circumstances in society, political signals, political situation, and external factors affecting the funding situations. Incentives are therefore a tool that can be used to impose a change in behavior. Simple examples include getting academics to cover courses due to sickness, colleagues leaving, or increase in student numbers giving them increased workload for a limited period. With increased workload the knowledge worker has less time for his or her own, perhaps more fun, projects. Other additional and time-­ consuming tasks include examinations, committee work, mentoring of colleagues, and so on. A study by Jacobson (1989) showed that pay incentives had a positive effect on attendance and on reducing sick leave. Without incentives, how can we possibly get workers to take on extra work? This question may also be reversed: Why should it not be possible to obtain more pay if a worker has more pressing financial needs? For example, supporting a family with young children can be costly, but the raising of children is an activity that also benefits the entire society. It will probably not be perceived as unfair if someone received a higher pay in compensation for extra work. However, an interesting question is whether colleagues will accept if some colleagues receive more pay than themselves for such well-justified reasons without putting in extra work, that is, pay according to differentiated needs? From a more critical perspective, there is a risk that pay according to differentiated needs could be abused and raise negative and demotivating perceptions among colleagues. Families with young children may of course be compensated through other means such as tax deductions or other government-­ administered financed privileges. This raises the question of whether the responsibility of compensating young families, or families with special needs lies with the employer, the government, or simply the private household. Moreover, the role of the welfare state and its economic sustainability is a topic of much debate (Castles 2002).

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Another strategic application of incentives includes making academics change the content of what they do. For instance, several countries have introduced distinguished teaching fellows rewarded for focusing specifically on quality in education. In Norway, the government has introduced financial incentives for increased publishing in general, and for publishing in certain types of prestigious journals more specifically (Haugen and Sandnes 2016; Sandnes 2018). The official intention was for this to be a group incentive. Most of the large public institutions have utilized the incentive at group level while a handful of smaller private institutions have rewarded individuals directly. Clearly, receiving personal financial rewards for publishing efforts is indeed noticed and appreciated by the individual, while the group incentives may remain invisible to the individual. Some knowledge workers in Norway are even unaware of the publication incentive system. Some productive researchers may even perceive the collective use of such incentives as unfair and demotivating if less productive colleagues in their research group benefit more from the incentives than themselves. These incentives have been much debated and criticized, but undisputedly they have worked as publications have increased nationally as intended since the introduction of the incentive system (Sandnes and Grønli 2018; Sandnes and Brevik 2019).

Competition and Unequal Pay Academic organizations are in constant competition with each other in terms of resources, attention, and talent. Pay is a much-used incentive for attracting employees with attractive academic profiles, and much has been written on the topic of pay and recruitment (Metcalf et al. 2005; Lewis and Durst 1995; Ballou and Podgursky 1996, 1998). In this regard, academia is not much different from other labor markets. One may speculate that academics may be less affected by a prospective pay when considering employment compared to other professions; however, it would be naïve to claim that pay is of no importance. An academic is likely to consider issues such as geography in relation to their family. Especially for academics who have established a family, the work-life has to co-exist with private life. Next, the actual content of a given position is probably

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of high importance to ambitious academics. A position with certain responsibilities and with opportunities to create something new and influence may be appealing to many. Yet, pay is also important, as money is needed to live and set up a home and support a certain lifestyle. Academics have been known for changing employers for the purpose of obtaining higher pay. Some academics develop and become more valuable to the organization over time. Some strike gold in their research and become national or international leading researchers who are also highly attractive collaborators. Such academics generate large streams of income and positive reputation for the organization. It is fundamentally good business practice for an organization to take careful steps to keep such employees in order to maintain the stream of income. Clearly, monetary reward is one pragmatic way of keeping valuable employees. Another interesting case is academics who have served as leaders in the organization. Clearly, leaders generally receive a higher pay than others proportional to their responsibilities and inflexible work situation. Having an inflexible work situation is costly, as one may have to privately choose more expensive options such as traveling during high peak periods. An inspection of pay formation among academics in Norway (Sandnes 2018) reveals that academics who have held leadership positions within the organizations for some time get to keep part of their leadership pay once they return to their ordinary academic position without leadership responsibilities. This is evident when inspecting the pay of former rectors. Why is this so? One explanation for this phenomenon is that academics who have served as leaders expand their competences and skill sets, and this leadership experience is useful for the organization even when the individual no longer is a leader on active duty. Most individuals who have been leaders do change and become more responsible and aware of their surroundings in the organization and get a more complete understanding of the workings of the entire organizations. Such individuals become small support beacons that help their fellow colleagues and local leaders by sharing their experience through advice. Although the pay of former rectors constitutes examples of visible outliers in terms of pay, this phenomenon is more fine grained, as the appraisal systems in Norway rewards a multitude of experiences such as

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committee work, entrepreneurial work, establishing new units, creating new innovative study programs, and so on. Academics can accept various opportunities and responsibilities that lead to valuable experience and insight that are of high value to their own and other organizations. In fact, the academic environment is more diverse in terms of the actual work that needs to be done than one would imagine, and incentives are probably the only way to get this work done. All knowledge workers do not all do the same job.

Pay Versus Other Incentives The discussion so far has identified the diversity of the work needed to be done in the academic environment, and that incentives are probably the most effective means to get these jobs done. Nonetheless, incentives can constitute more than just unequal pay.

Honors Academics are seemingly obsessed with titles and honors, and the allocation of a fancy title can serve as an incentive. Academics worked hard to earn their doctorates and put in much effort to qualify to become full professors. Memberships to journal editorial boards, PhD-supervisor responsibilities, and best paper awards are often flagged as medals on a military uniform. Providing intermediate titles such as coordinators, experts, and chairs motivates individuals, and many are eager to add such titles to their name without remuneration. Fancy titles help in our quest to collect acknowledgment and admiration from our peers. A fancy title that goes with a job announcement may also sway potential job applicants in a positive direction. One drawback of honors is that they are not sustainable and should be used sparingly to avoid losing their perceived value through title-inflation. Publication lists are a curious phenomenon in academia. Publication lists serve as a self-driven extrinsic motivator—the longer the list, the higher the status. Institutions often flag academics’ publishing merits via

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lists. These acknowledgments of achievements serve as a type of incentive even when they are not associated with any monetary reward. Such acknowledgments are indeed also sustainable.

Special Privileges Incentives can be utilized by allocating special privileges such as more flexibility in work conditions, a better office, higher priority in given allocation tasks, or special resources such as equipment. Unlike pay, special privileges cannot usually be brought home from work, but benefit the academic with their work. Increased work flexibility can be crucial for academics with young children or with responsibility with family members who need special care—this may be a strong incentive for a job applicant with young children. Special privileges can indeed be motivating, both practically for academics who for instance want an especially quiet office for increased concentration, and also from a vanity perspective of having the largest office with the best view to impress colleagues. Special privileges may also be used for attracting prospective job applicants and for keeping colleagues with particularly attractive profiles. A challenge with special privileges is that they are not sustainable as their availability is in finite supply. Some special privileges such as attractive offices may be hard to reallocate at short notice making this type of incentive hard to operate and use to solve immediate problems. Special privileges such as equipment may also have a momentary cost.

Differentiated Pay To provide incentives, unequal pay is indeed simple to operationalize assuming one has enough resources. It can provide the employer with much flexibility to handle uneven workloads and sudden challenges or crises. Pay is a sustainable incentive, as it can be maintained over time or even increased. A curious situation in Norway is that academics are not allowed to receive extra pay for extra work on a temporary basis unless they report

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their work on an hourly basis, and few academics do report on an hourly basis due to the dynamic and diverse nature of the academic work. One effect of this is that one temporarily employs academics at other institutions to conduct these jobs, as the limitations do not transfer across organizational borders. Such jobs typically include grading of exams, committee work, and teaching. Although external representation often is formally required with the purpose of serving as a “fresh set of eyes” in committees or national alignment of examinations, institutions often employ external help to simply handle large workloads. The net effect is that most academics get extra pay for extra work, but from secondary employers. Does work done with secondary employers count toward unequal pay when one is in the same academic ecosystem? Most Norwegian academic employers will accept that employees take on paid tasks such as serving on national or international panels and accreditation committees during formal working hours, while in certain countries the income resulting from such tasks goes straight to the employer if this work is done during formal work hours. Such differences may influence an individual’s decision to accept such duties or not. Sometimes accepting such duties leads to learning new things and positive reputation if the duty is of a prestigious nature. Publishing incentives in Norway have been implemented, ranging from benefitting a group, directly allocated as a resource at the workplace, or as an economic bonus in pay. Clearly, incentives that benefit the group may not stimulate an individual to increase their productivity; in fact, it may have the opposite effect. A direct personal reward, being it related to work or via pay, is noticeable and is more likely to have an effect.

Conclusions This chapter has discussed equal pay in academia, especially in a Norwegian context. The chapter has attempted to explain why there is unequal pay and that there is a need to provide incentives and maintain inequality. The academia expects knowledge workers to be independent and self-driven and incentives that stimulate individual motivation to achieve results is therefore important. Despite this independence,

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organizations occasionally have a need to handle sudden situations that require effort and incentives can be an effective persuader. Organizations also compete for the same talent, and the highest bidder will, in many situations, win. Various forms of incentives in academia were discussed. In conclusion incentives in the form of personal pay is deemed the most pragmatic solution, both from an operational perspective of the institution and from the individuals’ perspective, as money is intended as a unit of easily transferrable other services and objects. People have different money needs in their different phases of life, and having the opportunity to earn a pay that matches someone’s actual monetary needs seems rather logical. The discussion herein exemplified the benefits of unequal pay in academia, yet most of the arguments are likely to generalize to a wider segment of the labor market. Academia was chosen as case for the independent nature of the work and the need for highly trained workers. However, most professions require some degree of independence and specialized training. The motivational effect of pay in academia are likely to be quite similar to how pay motivates workers in other professions. Academia is not alone in facing unforeseen situations resulting in periods of larger workload, and arguments for using pay to persuade workers to accept extra work or change behavior is universal. Finally, all professions have workers that become invaluable to the employer. Such workers also become attractive to other employers who must compete for these attractive workers by offering higher pay. Zwolinski (Chap. 6 in this volume) makes the sobering assertion that “Implementing the idea of equal pay would result in an economic and moral catastrophe”. A similar view is echoed by Mohan (Chap. 9 in this volume) who describes equal pay as “a challenging prospect that would be nearly impossible to achieve in the near term”. One may thus conclude that unequal pay to some degree is indeed necessary in all professions. Acknowledgments  The author is grateful for the helpful comments and suggestions provided by Dr. Evelyn Eika.

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References Altbach, P. G. (2001). Academic freedom: International realities and challenges. Higher Education, 41(1/2), 205–219. Arvanitis, S. E., Stamatopoulos, T. V., & Thalassinos, E. J. (2011). Gender wage gap: Evidence from the Hellenic maritime sector 1995–2002. European Research Studies, 14(1), 91–102. Baker, L. C. (1996). Differences in earnings between male and female physicians. New England Journal of Medicine, 334(15), 960–964. Ballou, D., & Podgursky, M. (1996). Teacher pay and teacher quality. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Ballou, D., & Podgursky, M. (1998). Teacher recruitment and retention in public and private schools. Journal of Policy Analysis and Management: The Journal of the Association for Public Policy Analysis and Management, 17(3), 393–417. Barbezat, D.  A. (2002). History of pay equity studies. New Directions for Institutional Research, 2002(115), 9–39. Barbezat, D. A., & Hughes, J. W. (2005). Salary structure effects and the gender pay gap in academia. Research in Higher Education, 46(6), 621–640. Barnard, A. (2008). Modelling the gender pay gap in the UK: 1998 to 2006. Economic & Labour Market Review, 2(8), 18–24. Castles, F.  G. (2002). The future of the welfare state: Crisis myths and crisis realities. International Journal of Health Services, 32(2), 255–277. Chang, E. (2003). Composite effects of extrinsic motivation on work effort: Case of Korean employees. Journal of World Business, 38(1), 70–79. Corley, A., & Eades, E. (2004). “Becoming” critically reflective practitioners: Academics’ and students’ reflections on the issues involved. Human Resource Development International, 7(1), 137–144. Goode, J. (2007). Empowering or disempowering the international Ph. D. student? Constructions of the dependent and independent learner. British Journal of Sociology of Education, 28(5), 589–603. Hansen, W. L., & Guidugli, T. F. (1990). Comparing salary and employment gains for higher education administrators and faculty members. The Journal of Higher Education, 61(2), 142–159. Haugen, K. K., & Sandnes, F. E. (2016). The new Norwegian incentive system for publication: From bad to worse. Scientometrics, 109(2), 1299–1306. Jacobson, S.  L. (1989). The effects of pay incentives on teacher absenteeism. Journal of Human Resources, 24(2), 280–286.

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Law, K. M., Sandnes, F. E., Jian, H. L., & Huang, Y. P. (2009). A comparative study of learning motivation among engineering students in South East Asia and beyond. International Journal of Engineering Education, 25(1), 144–151. Lewis, G. B., & Durst, S. L. (1995). Will locality pay solve recruitment and retention problems in the federal civil service? Public Administration Review, 55(4), 371–380. Melly, B. (2005). Public-private sector wage differentials in Germany: Evidence from quantile regression. Empirical Economics, 30(2), 505–520. Metcalf, H., Rolfe, H., Stevens, P., & Weale, M. (2005). Recruitment and retention of academic staff in higher education. National Institute of Economic and Social Research. Research Report No. 658. Retrieved February 20, 2020, from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.163.1732& rep=rep1&type=pdft. Middlehurst, R. (1993). Leading academics. Buckingham, UK: Open University Press. Neumark, D. (1988). Employers’ discriminatory behavior and the estimation of wage discrimination. Journal of Human Resources, 23(3), 279–295. Rambo, W. W., & Pinto, J. N. (1989). Employees’ perception of pay increases. Journal of Occupational Psychology, 62(2), 135–145. Rasch, R., & Szypko, M. (2013). Perception is reality: The importance of pay fairness to employees and organizations. WorldatWork Journal, Third Quarter, pp. 65–74. Sandnes, F. E. (2018). Do Norwegian academics who publish more earn higher salaries? Scientometrics, 115(1), 263–281. Sandnes, F. E., & Brevik, E. (2019). Twenty-five years of NOKOBIT: A bibliometric study of impact. In Proceedings of the annual NOKOBIT conference. NISK Stiftelsen, BIBSYS Open Journal System, 27(1). Retrieved February 20, 2020, from https://ojs.bibsys.no/index.php/Nokobit/article/view/661. Sandnes, F. E., & Grønli, T. M. (2018). Thirty years of NIK: A bibliometric study of paper impact and changes in publication patterns. In Proceedings of Norsk Informatikkonferanse, NISK Stiftelsen, BIBSYS Open Journal System. Retrieved February 20, 2020, from https://ojs.bibsys.no/index.php/NIK/ article/view/496. Till, R.  E., & Karren, R. (2011). Organizational justice perceptions and pay level satisfaction. Journal of Managerial Psychology, 26(1), 42–57. Weick, K.  E. (1966). The concept of equity in the perception of pay. Administrative Science Quarterly, 11(3), 414–439.

Part II Against Equal Pay for All But for Equal Minimum Income for All

6 Equal Pay: A Floor Not a Ceiling Matt Zwolinski

Almost no philosophers or economists believe that everyone should be paid the exact same salary, regardless of the quality or quantity of their work. And there is good reason for this. Implementing the idea of equal pay would result in an economic and moral catastrophe. Economically, equal pay would destroy the incentive-producing and information-­ conveying role of prices in the labor market, resulting in disastrous misallocations of labor and dire consequences for human welfare. And morally, the proposal would necessitate severe restrictions on human freedom for the sake of an unworthy moral goal. In short, equal pay would not be morally desirable even if it was practically possible, and in fact it is neither. In contrast, a Universal Basic Income (UBI) that ensured that all individuals receive an equal minimum income would be both morally desirable and economically feasible. This chapter will explain the defects of the Equal-Pay Proposal (EPP), and explain why a UBI would achieve whatever is genuinely valuable in that proposal, without the economic and moral costs.

M. Zwolinski (*) Department of Philosophy, University of San Diego, San Diego, CA, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_6

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The Equal-Pay Proposal EPP insists that everyone should receive the exact same salary, no matter what sort of work they do, where in the world they live, or even whether they work at all. Many contemporary philosophers are egalitarians of one sort or another. And so one might expect to find some support for EPP in their writings. However, EPP is neither logically entailed by any of the main contemporary theories of egalitarianism nor, as far as I can tell, endorsed by any of their main proponents.1 The closest approximation to EPP is to be found in the socialist tradition, with the most developed proposal being set forth by Joseph Carens (Carens 1981).2 Carens, in his 1981 book, Equality, Moral Incentives, and the Market, set forth a proposal under which annual after-tax income for consumption would be distributed equally among adult individuals, at least for the most part (Carens 1981, p. 4). Carens’ book is striking for the creativity and care with which this egalitarian proposal is set out and defended. However, there are several features of Carens’ proposal that should give pause to those who would seek to rely on it as a source of support for EPP. First, Carens’ proposal very deliberately aims at equalizing only after-­ tax income, not before-tax income. Indeed, Carens thinks that “it is essential that before-tax income not be distributed equally” (Carens 1981, p. 8, emphasis in original). The reason Carens does not think before-tax income ought to be equalized is that he believes, quite correctly, that inequalities in before-tax income play important informational and incentivizing roles in a market economy. Without significant inequalities in pre-tax income, the market would not be able to fulfill its productive role, with dire consequences for human well-being. I will have more to say about the informational and incentivizing role of prices later in this chapter. Nevertheless, Carens insists that after-tax income can and should be equalized because he believes that the productive role of prices can be separated from their distributional role. In other words, he believes that unequal wages (and a freely functioning price system more generally) can and must guide economic agents to direct resources toward their most productive use, without necessarily leading to inequality of (after-tax) economic outcome.

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This leads us to the second important feature of Carens’ proposal— namely, the extremely unrealistic empirical presuppositions on which it depends. Carens seeks to drive a wedge between the productive and distributional role of prices. But while the two are separable in theory and to a certain degree in practice, they are nevertheless tightly bound up with each other. The same drive for economic gain that leads actors in a market economy to channel resources toward their most productive use also generates inequality in economic returns (whether wages, rent, or profit). The incentive of profit is both the spur to productive economic activity and the cause of economic inequality. Carens is aware of this, and can only achieve his desired separation between production and distribution by stipulating that market actors in his imagined society will be motivated by an extreme form of altruism—by stipulating that they will act in order to maximize their individual returns even though they know that those returns will be taxed at a rate of 100% and redistributed on an equal per capita basis among all members of society (Carens 1981, p. 25). In other words, Carens imagines a society of people who will strive just as hard for profit as people in a capitalist society do, not because of self-­ interest but because of altruistic moral motivation. Such a stipulation might be acceptable for what Carens himself describes as an exercise in “utopian” politico-economic theory. It is, however, a rather fanciful supposition on which to base a recommendation of public policy.

The Economic Functions of Unequal Wages In a world where all income was distributed by a government to its citizens in a purely random manner, showering riches upon some while leaving others stranded in poverty, there would be little to be said in defense of inequality. If money was like manna from heaven, an equal distribution would be the moral default, serving to minimize conflict and signal equal respect for persons (Schmidtz 2006, pp. 109–110; Nozick 1974, p. 198). But if equal distribution is the moral default, it is nevertheless a default from which we can and should choose to deviate when an unequal distribution would serve an important moral purpose. Teachers distribute

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grades unequally because (we believe) it facilitates learning and incentivizes hard work. Organizers of races distribute medals unequally in order to recognize and reward athletic excellence. Likewise, unequal wages serve important economic purposes, both at the level of the firm and at the level of society. The most obvious function is one of providing incentives. Work is hard, and we often have other things we would rather be doing with our time. In order to encourage people to sacrifice the time and effort necessary to perform labor, firms have to offer workers wages or other benefits sufficient to make employment beneficial, on net, despite those sacrifices. Similarly, wages for jobs that require a high level of training incentivize workers to make the sacrifices necessary to acquire that training—sacrifices which, often as in the case of a college degree, involve not only the expenditure of a considerable amounts of money, but also the opportunity cost of years of foregone income. Because the sacrifices involved with different kinds of labor vary—because the opportunity costs of different kinds of labor are different—so too must wages be different if they are to adequately compensate for those costs, and incentivize individuals to bear them.3 But wages do more than merely provide incentives. They also convey information. A “wage” is simply another term for the price of labor, and like all prices in a market economy, wages convey important information to market participants about relative supply and demand (Hayek 1945). When the supply relative to demand of a particular form of labor is low, wages for that type of labor rise. When supply relative to demand is high, they fall. Wages thus not only encourage people to work; they also tell workers how and where to work in order to make the greatest marginal contribution to economic productivity. An example may help to clarify this point. Suppose that Aria has an unusual skill that enables him to create a high-value product, H. Alternatively, Aria, along with many other people, could also engage in the low-skilled labor necessary to create a lower-valued product, L. Because H creates more value for its consumers than L, those consumers will, ceteris paribus, be willing to pay more for H than for L. Because the producer of H can sell it at a higher price, and because there are relatively few laborers such as Aria with the skill to produce H, the producer of H will, again ceteris paribus, be willing to pay a relatively higher wage

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to Aria. This higher wage, of course, will serve as an incentive for Aria to take the job. But put aside the issue of incentive for the moment and focus on the problem of information Aria faces. Even if Aria was perfectly altruistic and was willing to work for free in order to maximize social value, he would have no way of knowing where his marginal contribution would be the greatest without the information conveyed in prices. The wage serves to summarize information about consumer demand, opportunity costs, and relative supply and demand that no individual or organization (including the government) could hope to obtain in any other way. This is why even a socialist like Carens, who assumes a society full of perfectly altruistic individuals, believes that unequal pre-tax wages would still be necessary. Neither pre- nor post-tax income can be equalized without jeopardizing the informational and incentivizing role of wages. If all pre-tax wages were equal, those wages could obviously not convey differential information about the relative supply and demand of different kinds of labor, nor could they provide differential incentives. The informational role of wages can be preserved, as they are in Carens’ proposal, with post-tax income being equalized, but the incentivizing role of prices would be destroyed. From the perspective of a worker’s self-interest, there is no real difference between being paid a high wage for a job which is then taxed away at a rate of 100% and being paid nothing at all for that job in the first place. Both the incentivizing and the informational role of prices depend on the market differentiating between different types of labor, and this differentiation is precisely what EPP destroys.

The Immorality of Equal Pay Even apart from its economic defects, EPP is indefensible on moral grounds. Enforcing EPP would require severe restrictions on human freedom, and do so without advancing any worthwhile moral purpose. This section will present four arguments against the morality of EPP. These arguments supplement, but are largely independent of, the economic criticisms set forth in the previous section.

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EPP Is Not Egalitarian One might suppose that EPP would find its strongest base of support in egalitarian theories of justice. But as we will see, this is a mistake. No major egalitarian theory of justice supports EPP. Indeed, EPP will even in some cases be incompatible with a commitment to egalitarianism. Egalitarian theories hold that it is a matter of fundamental moral importance that all people be treated equally. Not all egalitarians believe that equal treatment is primarily a matter of the way in which economic resources are distributed, but even those who do reject EPP.4 For instance, some egalitarians, like Richard Arneson, believe that justice requires a kind of equality of opportunity, so as to minimize the role of brute luck in people’s lives (Arneson 1989). Equalizing opportunity will require significant transfer of resources from the lucky to the unlucky—inheritance taxes, social insurance systems, and so forth. But it does not require equal pay and is in fact incompatible with equal pay. If Brynn is born with severe physical or mental disabilities, or into an unhealthy family or social environment, while Camilo is more fortunate in both of these respects, then paying Brynn and Camilo the same income will not serve to equalize their previously unequal opportunities. Equality of opportunity requires that Brynn be paid more. Equality of opportunity, in this case, requires inequality of income. For similar reasons, EPP will be rejected by advocates of welfare egalitarianism, resource egalitarianism, and capabilities egalitarianism (Dworkin 1981a, b; Sen 1987—for a helpful overview of the variety of egalitarian theories, see Arneson 2013). Because people have different needs and different baseline capabilities, paying them the same amount of money will not serve to equalize either welfare or capabilities. And because any credible theory of equality of resources must include both internal (e.g. talents) and external resources (such as wealth), merely equalizing pay will not suffice to equalize resources generally—and may, indeed, even exacerbate pre-existing inequalities in some cases.

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EPP Infringes Liberty EPP requires severe restrictions on human liberty. And not merely in the sense that any redistributionist scheme may be said to restrict liberty. One might argue that any time the state taxes A for the benefit of B, A’s liberty is in some way infringed. Taxes are, after all, coercive. And those with strong libertarian inclinations might regard all or almost all such instances of coercion as morally impermissible. But even those without strong libertarian implications are likely to find the coercion necessary to implement EPP impermissible. For EPP requires not merely coercive transfers in order to bring the income of the less fortunate up to some specified minimum, it also requires the prohibition of income above that minimum. EPP specifies both a minimum and a maximum permissible level of income. And, therefore, it must forbid the earning (and keeping) of income above that maximum level. Of course, this does not necessarily require prohibiting (to borrow Nozick’s memorable phrase) “capitalist acts between consenting adults” (Nozick 1974, p. 163). One way to stop Wilt Chamberlain from earning more money than anyone else in his society would be to prevent him from playing extra basketball games on the weekend to supplement his egalitarian share of the national income. But another approach would be to allow him to play the games, and simply tax the proceeds at a rate of 100%. This latter approach, one might argue, leaves Wilt free to play or not to play basketball as he wishes. It does not affect what he can do, one might claim. It only affects his ability to earn income from what he does. And this, one might claim, does not constitute any real limitation on his freedom. But this argument severely underestimates the limitations on freedom required by EPP. For, in a great many cases, people will quite reasonably only be willing to engage in certain kinds of activities if they are able to derive some income from it. Wilt might be willing to demonstrate his basketball talents for a crowd on a Saturday morning if he is paid for it, but not if he has to do it for free. And the crowd might be entirely willing and happy to pay Wilt an amount of money necessary to make it worth his while. But from Wilt’s perspective, a policy that requires him to pay

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100% of his earnings in taxes is equivalent to a policy that forbids him from being paid anything at all. It is thus equivalent to a policy forbidding him to play basketball for pay. Playing basketball for pay is not something Wilt is free to do under EPP. Pointing out that Wilt is still free to play basketball without pay is no more compelling a response than would be telling someone who complains that they have been barred from reading Lolita that they can always read the Bible instead.5

EPP Is Unfair to Sellers The Wilt Chamberlain example suggests a third objection to the morality of EPP as well, one that highlights the unfairness of the proposal. For suppose that Wilt spends his Saturday playing basketball for a crowd for a fee. Or suppose instead that he spends the day at his local farmers’ market selling squash that he has raised in his backyard garden. Under EPP, if these transactions are allowed at all, the income that Wilt derives from them will be taxed at a rate of 100%. So Wilt will lose all of the financial benefit he derives from these transactions. But the people on the other end of those transactions will not lose their benefits. The experience of getting to see Wilt play, or the squash, is theirs to keep. Indeed, not only do they not lose the benefit they derive from the transaction; they even receive back their egalitarian share of the money they (and everyone else) paid to Wilt! The one-sided, unfair nature of EPP once again highlights the unjustifiability of focusing on monetary income alone as the locus of egalitarian policy. The transaction between Wilt and his customers creates an inequality between him and them in terms of money. But customers’ loss of money is arguably offset by their gain of consumer goods and services. Eliminating the resulting inequality in money while leaving the goods and services as they are is unfair to Wilt, and unjustifiable from any reasonable egalitarian perspective.

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EPP Is Self-defeating The fourth argument proceeds by following the logic of the third argument just one further step. If Wilt knows that any money that he earns by playing basketball for a fee will be taxed away at a rate of 100%, why would he do it? Either he will play basketball for free, or he won’t play basketball at all. Playing in exchange for money seems rather pointless, from his perspective. The point here is not merely one about incentives. The point is rather about the worthlessness of money under EPP. For if it is pointless for Wilt to play basketball for money under EPP, it is likewise and for the same reason pointless for anyone to do anything for money under EPP.  No rational person will supply goods and services in exchange for money if that money will be taxed away at a rate of 100%. And if no rational person will supply goods and services in exchange for money, then there will be nothing for anyone to spend money on. EPP is thus, in a peculiar and spectacular way, self-defeating. Presumably, equalizing income is thought to be desirable so as to equalize the things that people can do with their income—to equalize their ability to gain access to the goods and services that improve their lives. But equalizing income actually turns out not to equalize this ability at all. In fact, it utterly destroys it.

An Equal Minimum, Not an Equal Maximum The economic and moral arguments above are directed at the idea of equal pay. More specifically, however, they are directed at the idea of equal maximum pay. The problem with EPP is that it does not allow some to be paid more than others. It is because some cannot be paid more than others that higher wages cannot be used to incentivize market agents, or to convey information about the relative supply and demand of different types of labor. It is because some cannot be paid more than others that EPP requires significant interferences with liberty, treats sellers unfairly, and destroys the value of money. Paradoxically, the fact that

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some cannot be paid more than others even explains why EPP is incompatible with egalitarianism. But none of these arguments poses a challenge to the idea of equal minimum pay. Indeed, I will argue in this section that the idea of an equal minimum income for all—more commonly known as a Universal Basic Income (UBI)—captures all that is genuinely morally attractive about EPP, without any of its crippling drawbacks. The term UBI refers to a family of policies under which the government would provide an unconditional and equal cash transfer to every person (for a recent and comprehensive overview of the Basic Income, see van Parijs and Vanderborght 2017). The UBI is thus a kind of redistributive policy, but one that differs from most traditional redistributive policies in two important respects. First, UBIs propose to give people cash, rather than goods or services like food, housing, or medical care. Second, UBIs are unconditional in the sense that eligibility for the transfer is not dependent on whether one is working, or even whether one is willing to work. UBIs are often said to be unconditional in another sense—namely, that eligibility for the transfer is not dependent on the recipient’s level of income or wealth. But this is somewhat misleading. It is true that some versions of the UBI will issue the grant to all people regardless of their income—rich and poor alike. But these versions of the UBI almost always assume a tax system that would recoup most or all of the grant from people with a high income. Other versions of a UBI—such as a Negative Income Tax—do their means-testing on the front end, issuing the grant only to those whose income falls below a certain threshold. Either way, someone like Bill Gates will not receive any net benefit from a UBI.6 And this is as it should be. In order for a UBI to be both affordable from a social perspective and sufficiently generous to make a real difference in people’s lives, some form of means-testing is a necessity. There is much to be said in support of a UBI, especially in contrast to EPP.  As we have seen, EPP’s focus on ensuring equality in monetary income is problematic in a number of respects. A UBI, in contrast, does not aim at equality but at sufficiency. It aims, in other words, not at ensuring that everyone has the same income, but that everyone has enough.7 It is motivated by the idea that what troubles us is not the mere fact that

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some have more than others, but that some people do not have enough— that some live lives of wealth while others suffer in poverty. Inequality without poverty—imagine inequality on an island where everyone is at least a millionaire—is not necessarily a moral problem at all, and certainly not one that justifies the severe infringements of human liberty that EPP would require. A UBI is also defensible on grounds of individual freedom. Most obviously, one might argue for a UBI on the basis of the idea of positive freedom. A UBI ensures that everyone has at least some access to money in order to live their lives as they wish—whether that means staying home with a new child, investing in additional years of schooling, or working on artistic projects that yield no financial benefit. But a UBI can also be justified on grounds of negative freedom, insofar as it gives people the power to say “no” to the demands of employers and to live their lives in a way that minimizes the kind of interference to which even those in a liberal capitalist society are subject.8 Notice that the realization of neither of these sorts of freedom requires that people have the same income as everybody else. It only requires that they have enough. Of course, specifying exactly what level of income is to count as “enough” is no simple matter. And depending on how we specify the threshold of sufficiency, the size (and cost) of a UBI could vary significantly. My point here is not to defend a fully worked-out UBI proposal, or to explore the great variety of difficult and fascinating questions one would have to face in designing such a policy. Rather, my point is to note that the UBI, in whatever particular form it takes, is much more plausible and defensible on economic and moral grounds than EPP. A UBI allows the market for labor to function freely, with wages serving as incentives and signals to channel labor toward its most productive social use. But it tempers the cold, impersonal logic of the market with a measure of humanity—recognizing that “labor” is not an abstract economic quantity but the work of a human being who deserves to be treated with dignity and respect, and ensuring that each person has access to at least a minimum of material resources necessary to meet her basic needs and maintain some level of independence and freedom in the social world. A UBI leaves individuals free to pursue more than a basic income— to take risks, to develop new skills, to work more diligently. And it does

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so while providing a cushion to temper the pain when a risk goes bad, or an investment fails.

Conclusion There is some merit to the idea of a guaranteed equal income. But that equal income ought to be a floor, not a ceiling. It ought to be a floor that protects individuals from the risk of poverty and desperation, but never a ceiling that limits creativity, freedom, and growth. EPP is indefensible on both economic and moral grounds. But a UBI would realize all that is truly valuable in an EPP without any of its burdensome moral costs. A guarantee of equal minimum pay is thus defensible, even if equal maximum pay is not.

Notes 1. I discuss this point in more detail in a later section. Indeed, there I will argue that EPP is positively incompatible with the major egalitarian theories. 2. A much earlier example of something resembling EPP can be found in chapter 9 of Edward Bellamy’s utopian socialist novel, Looking Backward (Bellamy 2003). 3. Indeed, considerations similar to these led even Karl Marx to reject the idea of equal pay: “[A]s the costs of producing labouring powers of different qualities differ, so must differ the values of the labouring powers employed in different trades. The cry for equality of wages rests, therefore, upon a mistake, is an insane wish never to be fulfilled. It is an offspring of that false and superficial radicalism that accepts premises and tries to evade conclusions” (Marx 1910, pp. 75–76). 4. Relational theories of egalitarianism, for instance, reject the view that equal treatment is primarily a distributional matter (Anderson 1999; Lippert-Rasmussen 2018; see also Schmidtz 2006, pp. 114–119). 5. Of course, any attempt to prohibit people like Wilt from selling their labor, or to tax their income at a rate of 100%, will also lead to substantial rates of non-compliance. Suppressing this non-compliance will require

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extreme police measures of the sort that will surely count as severe restrictions on human liberty on any reasonable construal of that concept. 6. Indeed, a UBI that pays to everyone and then taxes some back, and a Negative Income Tax that only pays to some, can be designed so as to yield precisely equal outcomes in terms of both cost and distribution (see Fleischer and Hemel 2020). 7. The philosophical argument for sufficiency rather than equality is most famously expressed in Frankfurt (1987), but a similar thought also motivates the philosophical perspective of prioritarianism, as expressed most famously in Parfit (1997). 8. For one version of such an argument that draws inspiration from the ideas of Friedrich Hayek, see Zwolinski (2019). Another, quite different sort of argument that draws on the concept of negative liberty can be found in Widerquist (2013).

References Anderson, E. (1999). What is the point of equality? Ethics, 109(2), 287–337. Arneson, R. J. (1989). Equality and equal opportunity for welfare. Philosophical Studies: An International Journal for Philosophy in the Analytic Tradition, 56(1), 77–93. Arneson, R.  J. (2013). Egalitarianism. Stanford Encyclopedia of Philosophy. Retrieved February 28, 2020, from https://plato.stanford.edu/entries/ egalitarianism/. Bellamy, E. (2003). Looking backward: 2000–1887. Peterborough, Canada: Broadview Press. Carens, J. H. (1981). Equality, moral incentives, and the market: An essay in utopian politico-economic theory. Chicago, IL: University of Chicago Press. Dworkin, R. (1981a). What is equality? Part 2: Equality of resources. Philosophy and Public Affairs, 10(3), 283–345. Dworkin, R. (1981b). What is equality? Part 1: Equality of welfare. Philosophy and Public Affairs, 10(4), 185–246. Fleischer, M., & Hemel, D. (2020). The architecture of a basic income. University of Chicago Law Review, 625–710. Frankfurt, H. (1987). Equality as a moral ideal. Ethics, 98(1), 21–43. Hayek, F. A. (1945). The use of knowledge in society. American Economic Review, 35(4), 519–530.

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Lippert-Rasmussen, K. (2018). Relational egalitarianism: Living as equals. Cambridge, MA: Cambridge University Press. Marx, K. (1910). Value, price and profit. Chicago, IL: Charles H.  Kerr & Company. Nozick, R. (1974). Anarchy, state, and utopia. New York: Basic Books. Parfit, D. (1997). Equality and priority. Ratio, 10(3), 202–221. Schmidtz, D. (2006). Elements of justice. Cambridge, MA: Cambridge University Press. Sen, A. (1987). Equality of what. In S. M. Mcmurrin (Ed.), Liberty, equality, and law (pp. 137–162). Salt Lake City, UT: University of Utah Press. van Parijs, P., & Vanderborght, Y. (2017). Basic income: A radical proposal for a free society and a sane economy. Boston, MA: Harvard University Press. Widerquist, K. (2013). Independence, propertylessness, and basic income: A theory of freedom as the power to say no. New York: Palgrave Macmillan. Zwolinski, M. (2019). A Hayekian case for free markets and a basic income. In M.  Cholbi & M.  Weber (Eds.), The future of work, technology, and basic income (pp. 7–26). New York: Routledge.

7 Limiting Insecurity, Not Opportunity Jamie Cooke

Introduction We live in a time of global insecurity. As income inequality soars, social contracts devised in the post-war period fray under the pressure of new economic models of activity. The growth of political populism, rooted in feelings of disconnect from globalization and unequal distribution of economic success and risk, places democratic structures under strain and challenges the global market of trade and diplomacy. All of this happens within the context of the climate emergency, where huge environmental, social, political and economic upheavals lie on the near horizon, and the possibility of the world collaborating to make the changes required seems to recede. In these turbulent spaces, debates are opening up about the very structure of society, and the models we require moving forward. Free market capitalism, virtually unchallenged as the dominant economic system over the past four decades in the Western world, is now up for debate, with J. Cooke (*) Bishopbriggs, UK © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_7

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senior figures in business and politics actively acknowledging that it must evolve or fade. Ideas which have previously been considered in the fringes of political and philosophical discourse are now debated openly, and political parties and leaders scramble to find the concepts which can help shape, and indeed define, success for the future. This chapter will seek to examine the concept of equal pay, the proposal that everyone should receive the same wage regardless of which job they have, in comparison to the current dominant economic paradigm. It will argue that equal pay, while radical, does not offer the type of positive creation of a new system that is required, and will compare it with an alternative policy idea, basic income, which does make this offer.

The Economy Today In exploring ideas such as equal pay, which offer the potential for a new economic paradigm, it is beneficial to start with an analysis of the current economic context, and the historical process that has led to this point. The “three powers” (Taylor 2015) approach to cultural theory offers a method of analyzing the economic trends of recent decades. Rooted in the traditions of cultural theory developed by the anthropologist Mary Douglas and others, it allows for the analysis and comparison of different economic and political systems and structures, in light of the power sources involved. The system highlights three different forms of power which exist in economic, political and social structures: Hierarchy, Solidarity and Individualism. Hierarchy is power working from the top-down, delivering on a vision set at a top level. At their best hierarchies provide decisive leadership and whole system thinking; at their worst they can be paternalistic and resistant to listening to other needs or influences. Simply put, it can be explained as what is required for the good of the national or organizational structure. Solidarity is power which focus on the shared needs and pressures within and across communities. At its best, solidarity stimulates co-­ operation and altruism; at its worst it can promote insularity and

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opposition to those who are from outside the community. Overall, it is the idea of the common good. Individualism is power which focus on the needs and desires for individuals. At its best individualism can lead to dynamic innovation and responses rooted in real needs; at its worst it can embody selfishness and behaviors harmful to others. Fundamentally, it is the idea of the individual good. The most successful systems are those which can harness the best of all three of these powers into their functioning, utilizing them where most appropriate and effective, and recognizing where potential synergies and contradictions might arise. Over recent decades however, we have primarily witnessed a narrowing of the focus in the Western world under the dominant free market capitalist system. Individualism (at least in a narrow sense) has been held up as the primary driver of political and economic systems, with the hierarchal state largely relegated to a position of subservience to the goals of individualism—summed up most memorably in the quote of British Prime Minister Margaret Thatcher: …who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. (Keay 1987)

With free market capitalism’s prioritization of individualism as the primary desirable quality (although it can be debated to what extent it is indeed true liberty for the wider populace considering the economic dominance of a small number of individuals and corporations), other aspects of society have been downplayed or sacrificed. Security has been the main victim of this emphasis, as the labor market has fragmented into a number of precarious roles, as best characterized by the growth of the gig or platform economy (Taylor 2017). While global inequality has fallen as the global middle class has grown (largely fueled by India and China), inequality has increased in the free market economies of the West (Piketty and Goldhammer 2014), alongside a seeming decrease in the middle classes (or at least in the position they hold within the economic distribution of society; Lakner and Milanovic 2016). This inequality has

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been rooted in an overwhelming concentration of money and resources into the control of the small section at the top of the economy (the so-­ called 1%), and a breaking of the traditional proportion of earnings between senior management and frontline workers, challenging the perceptions of justice (e.g. by January 6, 2020, FTSA 100 CEOs had already earned as much as staff on average wages would across the whole year— CIPD 2020). Alongside this, insecurity has increased across the social system, with some researchers proposing a new economic class known as “the Precariat” (Standing 2014). This can be mapped clearly in the experience of the United Kingdom from the mid-twentieth century. The period known as the Post-War Consensus, following the end of World War Two, was marked by a strong commitment across the political spectrum to solidaristic policies (the National Health Service, social security system, etc.) delivered by hierarchal structures. Employment was seen as the best route out of poverty, with careers that could develop over time into higher income and seniority with hard work and dedication (all framed in a labor market where women were still largely relegated to unpaid career roles). The free market capitalist revolution of the 1980s onward in Western countries (e.g. the Thatcher government in the United Kingdom and Reagan administration in the United States) rapidly shifted this emphasis toward an individualistic atomized economic (and social system), where many of the qualities and powers outlined above were sidelined to the overarching ideological vision. At the beginning of the 2020s, public disquiet with the inequities of the system has risen greatly, with even high earning figures indicating that it cannot continue as it is—raising the question of what the next economic period in Western democracies will look like.

Equal Wages It is in response to this disquiet with the inequalities of the current context that challenges to the dominant economic system have started to arise, often in ways which were previously considered implausible. Free market capitalism has held a position of dominance within economic planning on both the left and the right of the political spectrum across

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the Western world; yet now new models of economic activity are being considered, driven by concerns around issues such as ecological sustainability and wellbeing. The idea of equal wages, namely every person receiving the same wage regardless of job, responsibility, seniority, risk or sector, is one policy idea which exists, relating into wider discussions of distributive justice (Maiese 2013) and compensatory justice (i.e. Carens 1985). Distributive justice is the concept that goods in society should be distributed justly to each—if done on the basis of equality, then each individual receives the same amount of goods. Compensatory justice meanwhile relates to the concept that individuals should be compensated for efforts expended or harm experienced. While not all approaches to either of these forms of justice propose equality of wages, they do lend themselves to the idea. Equal wage has most notably been proposed within communist and socialist systems in the past (Sherman 1970), yet still remains a fringe concept rather than a mainstream proposal. However, could it offer a response to the issues of economic insecurity and inequality outlined above? Utilizing the powers framework and analysis of recent economic policy discussed earlier, equal pay can be seen to address some of the negative aspects present in the current economic paradigm. At first glance, equal pay can appear to offer a greater degree of security than the current fragmented labor market. The idea suggests that individuals will know that the level of pay that they will receive every month, and can plan accordingly. In the United Kingdom nearly a third of adults are considered to have low financial resilience, which can mean that relatively small-scale shocks (i.e. a small rise in the cost of their mortgage) could prove unsustainable (FCA 2017). The knowledge that pay will be coming through at the same level every month can help improve this. However, if an equal-pay system was of a minimal level below the required threshold for survival, then insecurity would actually be increased, as individuals would know that they would have an insufficient level of income each month (which to be fair, is a condition for any system focused on income). For an equal-pay proposal to secure popular and political support, it would likely have to offer an increase in earnings for the majority of the population above and beyond any arguments of

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equality or fairness. Such a system, where most lower earners saw more money coming into their account every month, might therefore offer on one level an increased perception of fairness among participants. However, this raises a fundamental question about the very concept of equal pay— is it a policy about equality overall or is it a policy about addressing the issue of low pay and insecurity at the bottom of the earnings scale? Ingrid Robeyns (2019) has written on the concept of limitarianism, the idea of providing an upper limit to earnings, and which challenges the acceptance of the superrich within society (see also Zwarthoed 2018). Others have talked about the need for an economic floor, the idea of what is necessary and sufficient for survival (Casassas and De Wispelaere 2016). Equal pay as a concept in effect brings the two of these areas together, but in doing so has an impact on the potential for social mobility within the system—a floor provides a base which no one can fall below, while a ceiling offers a limit to where an individual can advance, so combining the two creates a more static social system. In turn, this has potential impacts on making the case for fairness. While there is an understandable sense of justice attached to reducing the current wage inequalities which are in place, there is also an intrinsic reaction to what justice looks like in a wider sense. Individuals may feel that a CEO earning a huge amount more than a firefighter or nurse is unfair; but they are also likely to judge the role of the firefighter or nurse against a street cleaner or retail worker. These roles all add something to their communities and the wider economy, however society attaches an importance to each according to perceived contribution, required skills and/or the idea of natural talent. Robert Nozick (1974/1999) proposed his Wilt Chamberlain argument against distributed justice, using the example of the professional basketball player Wilt Chamberlain. Nozick proposed that Chamberlain, as a professional athlete with unique abilities, would deserve to accrue additional wealth if other individuals were willing to pay extra to watch his talents. This would then fatally undermine any system of distribution, particularly in light of the equal-wage policy being discussed in this book. This thought experiment has been critiqued on a number of levels, but it does raise a key challenge of justice (and interlinked liberty) to proponents of equal pay—how do they

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overcome the perception that an equalized system will offer its own form of unfairness to different roles and responsibilities? An equal pay could have an impact on individual liberty within a system, at least from perception. Within the “three powers” analysis equal pay moves from the individualism focus of free market capitalism (i.e. that the drivers and motivations of the individual are central) to a system set and driven by the hierarchy (the State), who identify and enforce the rules and structures around pay. This represents a move from individual choice and agency, to a setting whereby choice and agency is set and potentially constrained by the state. Liberty is rooted in more than simply the ability to accrue wealth and the equal-pay concept does not necessarily force individuals to take a specific job or role; however there is a question about the extent to which a hierarchal system can run into the challenge of restricting individual choice in order to enforce the rules it has created (in the same way that an individualistic system can run into the challenge of weakened social bonds). Equal pay in and of itself does not address this challenge—introducing a system which is primarily focused on one power (that of the hierarchy) does not seek to utilize and enhance the role of the individual and solidarity powers. To respond to the challenges of the twenty-first century, we need a system which can seek to balance the different sources of power and harness each for maximum benefit and impact. Equal pay also impacts on opportunity in the sense that it can limit the space and context for social mobility. Money is not the sole (or even main) driver for most people—as Dan Pink (2010/2018) has outlined, autonomy, mastery and purpose are key to human motivation (as long as basic financial security has been provided). However, income is a critical incentive within the current labor market, and the perception of opportunity for individuals within it. By developing skills and spaces that allow workers to earn more, there is an understanding that risk and responsibility are rewarded financially. Likewise, differences in pay are seen to often reward the specific academic and/or skill requirements for certain jobs. There is a very real question about where the market currently seems to place importance in terms of financial reward; however, equalizing pay between jobs would remove the perception of the inputs required for those roles. Equal pay creates a strange contradiction—in one sense

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maintaining the current fetishization of work (meaning paid employment) as the best indicator of contribution and success in life; while also reducing the recognition of the diversity of what work looks like and means. The reality, as has been seen in previous attempts to introduce this system in the Soviet Union (Petroff 1938) or in the contemporary context of Finland (where increased gender wage equality within professions has not been matched by reduced inequality across professions—Kivinen and Rinne 1996; Finnish Institute for Health and Welfare 2018), is that the differences between roles and social classes are retained in other ways. Even in political and economic systems seemingly devised to foster equalization across society, the push back is seen in two ways—both the introduction of “degrees” of equality where income is equalized across levels or categories, rather than across society as a whole (whether on the basis of contribution to society or difficulty of work), and the use of non-­monetary rewards to perpetuate the inequality (e.g. access to property; the use of social networks to share privilege; access to rights such as travel otherwise restricted by the state—Filtzer 2014). It could be argued that difference in pay is not required for people to choose to become surgeons and that the critical aspect is ensuring that university education is free so that additional income is not required. However, this does not recognize the additional opportunities and barriers which are accrued according to social positioning. In many ways, inequality in monetary recompense is at least easier to document and address—non-monetary inequality is harder to respond to, without increasingly heavy top down approaches which further restrict liberty and which in themselves open up further space for social inequality. The equal-wage proposal falls in that it is a response to one aspect of perceived injustice in the current system (wage inequality), rather than a broader reimaging of our view of work, human activity and motivation. It therefore offers a narrow answer rather than a new, balanced and empowered system. The introduction of an equal-pay system would serve to remove to a large extent the importance of money within the system; while at the same time retaining its place by ensuring that everyone is measured according to its level. This would leave a position where higher income as a positional advantage is removed, while its role in

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consumption is unaffected. It would create its own issues around the reduction of liberty and opportunity within the system, and the creation of new perceptions of injustice. It would replace the current system where individualism is king and drives policy decisions, with one where the hierarchy takes its crown in order to enforce top-down rules on the labor market—failing to harness the different types of power for maximum impact, and potentially undermining the role and opportunity of the individual and communities in society. The societies, and economies, of the future will require new, coherent structures to thrive and survive— structures which can harness all of the powers at play and allow for mobile, aspirational communities. An equal-pay system does not offer that structure.

Basic Income Considering these limitations, another radical idea offers a better opportunity for creative change—basic income. An old idea which has now moved to the center of debate across the world, it is a policy which can offer foundational change, a transformational new structure to build society upon. Basic income is the idea of each eligible citizen or resident receiving a cash payment directly from the State (the definition of eligibility can vary across different policy proposals and in different national contexts). It has certain core characteristics—it is regular and secure; unconditional; individual; and universal (BIEN 2020). Participants have no expectations attached to them in order to receive the payment—it is their right regardless of whether they are in employment or not; or on what they choose to spend the income on. Every eligible person receives the money, offering what Van Parijs (2004) describes as an income floor that all can build (and rely) upon. Those in employment receive the payment on top of their salary, although in most models this would not lead to a financial gain for higher earners, as it would be reclaimed through taxation. However, even for these higher earners the payment would be present, offered to them as an opportunity, and right, to share in the common good of society.

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The arguments for basic income as a policy are clearly laid out in a number of contexts (e.g. Painter et al. 2019; Teer 2020; Yang 2018), and are beyond the remit of this piece. Rather, it is important to compare basic income with equal pay, to demonstrate how it better harnesses the powers and opportunities previously outlined (see Table  7.1). Most clearly, it seeks to balance the “three powers” (individualism, hierarchy and solidarity) in a way which allows for placing value in the role of the State and society, but also celebrating the autonomy of individuals to Table 7.1  A comparison between “equal wages” and “basic income” Aspect of life

Policy impact (compared to current system) Equal wages

Basic income

Increased—due to knowledge that amount will be in account regardless of activity levels Mixed—fairness is increased Fairness Mixed—fairness is increased in by providing a universal, terms of addressing wage unconditional income; but inequality between highest and there can be perceptions of lowest earners; but can be unfairness for money being perceived to be increased by provided without working. equalizing jobs which are not considered to have the same positive impact Increased—an unconditional Liberty Reduced—the perception that income gives individuals economic success is restricted by choice over how they the state can limit choice and improve their lives autonomy Increased—individuals can Opportunity Reduced—the perception that choose to use their income economic progression is not to develop the possible under a static system opportunities in their lives can be seen to undermine opportunity Three Hierarchy—State determines level Hierarchy—the state is required to help provide powers Solidarity—Potentially, if seen as Solidarity—universalism a shared approach means all participate Individual—Reduced Individual—lack of conditions means individuals have autonomy Security

Increased—due to knowledge of same wage being in bank every month if working

Source: Author

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make choices for their own lives and success—something that equal pay as a policy is unable to do. As with equal pay, basic income offers a greater degree of security to recipients than the current economic system. Participants know that they will receive the same payment every month and can plan accordingly—it also allows them to be more resilient for potential life or economic shocks which they may encounter. Residents of the US state of Alaska currently receive an annual dividend related to the exploitation of natural resources within the state. While not a true basic income, analysis of this unconditional cash has shown that recipients use it in a variety of ways, ranging from consumption, to debt reduction, to saving for education (Guettabi 2019). As a basic income is unrelated to other income, those receiving it can move between unemployment and employment with greater ease than the current systems in place (according to research 160,000 people in the United Kingdom would keep less than 10p of each £1 they earned moving into employment from benefits—Adam et al. 2006). In an economy where platform/gig working has increased, this allows these models to continue to offer flexibility to employees and employers who value this; but with an underpinning security that removes some of the current risks inherent in the system. Moreover, in contrast to the equal-pay proposal, basic income recognizes the value of human activity above and beyond paid employment, therefore providing a secure base to other activities that are currently not supported (such as caring responsibilities and community activism and volunteering). This security also ties into greater opportunity for participants in a number of ways. The knowledge that an income will be arriving each month reduces the risk in choosing to try new opportunities in life. This could be in starting a new business, where income generation may be delayed during a start-up period; or in choosing to retrain for a new position, skillset or opportunity. The policies attached to many Western social security systems over recent decades has made them a very complicated or challenging resource to access—this can therefore reduce the incentive or opportunity for people to try new directions. Moreover, the act of surviving (as many people are forced to do in precarious systems) reduces the mental bandwidth available to people, reducing their ability or energy to make positive changes for the long term (Standing 2014).

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Opportunity is also enhanced by the broad understanding of “work” that basic income brings, expanding it beyond the current focus on paid employment. A basic income is paid to all regardless of their employment status—it is a right, based on their very existence. With this ethos, caring responsibilities, volunteering, creativity and leisure are all opportunities which can be experienced equally alongside paid employment, with the knowledge that an income underpins them. Basic income has liberty at its heart, with the built-in belief that individuals can be trusted to make decisions that are of benefit to their lives. Conditionality has become the hallmark of social security systems across Western economies, whether through onerous requirements to be seeking work; enforced placements or training; and restrictions on how support can be spent, particularly through measures such as food stamps (Alston 2018). These systems are rooted in presumptions, both conscious and unconscious, that recipients cannot be trusted to spend or behave “wisely” but must have these dictated to them by all-knowing hierarchal structures. A basic income stands this convention on its head, offering the challenge that placing trust in individuals will see that trust returned. Evidence from across the world of basic income or similar direct cash transfer experiments has shown that recipients spend money on a range of measures, but that perceived “negative” spending on products such as alcohol or narcotics does not generally rise (Owusu-Addo et al. 2018). Fairness is one area in which basic income, as with equal pay, can provoke negative responses from the public. In the case of basic income, it is in the aspect of universality—why would a rich person receive a basic income, when they already have extensive resources? The justice of basic income is that it focuses on the fundamental starting point of each person in society—everyone has that basis to work from. In reality, as Van Parijs (2004) has explored, higher earners in a basic income would not benefit financially from the system due to taxation; however, their connection into wider society would remain, recognizing the bonds which exist through shared spaces and services. Arguably, the current economic system of free market capitalism places individualistic power above all else; while the equal-pay proposal seeks to elevate hierarchal power into its place. Basic income, however, seeks to balance the “three powers” as much as possible. A basic income offers the

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individual the trust and liberty to use their income as is best for their lives and families; values the power and resources of the hierarchal state to deliver the program; and roots it all in the solidarity of a shared endeavor which can only occur because individuals are part of something bigger than just themselves. This is not to pretend that it is a perfect policy, or a panacea for all the world’s ills. Rather, in contrast to equal pay, it is a foundational idea which allows other policies to flourish and which can help to usher in new social and economic structures fit for the challenges and opportunities of the coming decades.

Conclusion As outlined above, the increased interest in the idea of equal pay across all jobs is understandable in a context where inequality has increased, and where a small section of society benefits at a vastly disproportionate rate to the rest of the populace. At first glance, it seems to offer a way to remove these differences, and to downplay the importance of money in our lives. Yet, as analyzed through the economic qualities and “three powers” outlined in this chapter, it is a policy which, while radical and utopian on one level, fails to offer profound foundational change to society. It is a response to a problem, rather than the creation of a new paradigm, and as such is limited by its own drive to limit rather than create. In addition, it is to a large extent a thought exercise rather than a policy being realistically considered and thus, while interesting, runs the risk of distracting energy and action from plausible policies. In contrast, basic income, which seeks to harness hierarchal and individualistic powers for the greater good and is a source of vibrant and realistic debate and experimentation in various contexts across the world, offers a far more positive and transformative opportunity. As the labor market changes, technology advances and free market capitalism struggles under some of its self-created shortcomings and inequities, the world needs positive new ideas to rise to the challenges and opportunities ahead. Equal wages might be an interesting and provocative conversation, but they will not be the solution that we need or deserve.

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Van Parijs, P. (2004). Basic income: A simple and powerful idea for the twenty-­ first century. Politics & Society, 32(1), 7–39. https://doi. org/10.1177/0032329203261095. Yang, A. (2018). The war on normal people: The truth about America’s disappearing jobs and why universal basic income is our future. New York: Hachette Books. Zwarthoed, D. (2018). Autonomy-based reasons for limitarianism. Ethical Theory and Moral Practice, 21(5), 1181–1204. https://doi.org/10.1007/ s10677-018-9958-7.

Part III Toward Increased Pay Equality

8 A “Middle Way” Between the Free Market and Full Equality: A Pay Ratio Peter Dorey

The twenty-first century thus far has heard increasing concern expressed about the exponential growth in inequality of incomes and the concomitant widening gap between the top 1% and the rest of society. More specifically, critical attention has been focused on the vast discrepancy between the senior corporate salaries on the one hand, and the earnings of ordinary workers on the other. While millions of the latter, particularly in the United Kingdom and the United States, have endured a decade of stagnant wages and associated financial hardship following the 2008 global financial crash, corporate remuneration soared to stratospheric levels. Nor is it just the traditional working class which is being left behind economically; much of the middle class has also begun to experience pay stagnation, coupled with loss of autonomy in the workplace, and increasing job insecurity due to relentless cost-cutting (to boost profitability or “balance the books”), automation, and outsourcing. The salariat is morphing into the precariat; growing inequality is accompanied by increasing insecurity.

P. Dorey (*) School of Law and Politics, Cardiff University, Cardiff, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_8

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This recent surge in inequality has even caused consternation among some Conservatives, for while they are strongly in favor of the market economy, and insist that inequality is an unavoidable fact of life, ultimately deriving from human nature itself, there has been a recognition that too much (albeit not defined) threatens to loosen social bonds and cohesion, weaken faith in Capitalism, and undermine the legitimacy of liberal democracy (although a market economy could be maintained under an authoritarian political regime). However, criticism of excessive salaries and enormous inequalities in earnings between the boardroom and the factory- or shop-floor does not mean that we should thus strive for complete equality of wages and salaries, with everyone paid exactly the same, regardless of occupation, profession, responsibilities, or seniority. While we consider the current levels of inequality and corporate remuneration to be utterly excessive and morally indefensible, we believe that seeking to enforce total equality of pay would be both draconian and impracticable. Stipulating that everyone should receive exactly the same salary, regardless of their occupation, responsibility, or seniority, would simply replace one set of injustices with another. What we wish to see is greater equality, but not absolute equality. Or to express it another way, much less inequality. As such, we reject as bogus the either/or binary choice between unlimited inequality or total equality of earnings, as if there is no intermediary option. Yet such an option is precisely what we advocate, in the form of a “pay ratio”, whereby differentials are still permitted, but with a much narrower scale or limit than currently. This is rather different to a universal salary cap or national maximum income, which we reject as being too inflexible and stringent.

The Scale of Pay Inequality Although the gap between the highest- and lowest-paid incomes has, in many countries, been growing exponentially since the late 1980s, it is during the last decade or so that it has become much more widely recognized as a public policy problem, and thus moved onto the political agenda. It is not solely the scale of incomes inequality which a growing number of commentators now consider to be immoral and indefensible,

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but that boardroom remuneration has continued to increase significantly in an era of austerity, when millions of ordinary workers have experienced a decade of stagnant wages, thereby further fueling the gulf between corporate bosses and front-line or customer-facing staff. Indeed, millions of UK workers are now in poverty, even though Conservatives insist that poverty is usually a consequence of laziness or feckless lifestyles, for which work is the only remedy (Elliot 2020). In the United Kingdom, for example, among the major companies listed on the Financial Times Stock Exchange, the average pay of CEOs had increased from about 60 times that of their average-paid employees in 2000 to nearly 150 times as much by 2017, as illustrated by Fig. 8.1. Put another way, average CEO remuneration had risen from £1.23 million in 2000 to £5.66 million in 2017, whereas during the same period, average pay for ordinary workers had increased from £18,848 to £28,758 (Hildyard 2019, p. 17, table 1; Chartered Institute of Personnel and Development/High Pay Centre 2018, p. 7, table 5, and p. 25, table 6). Meanwhile, as Fig. 8.2 indicates, the United States has witnessed an even greater disparity in earnings, with top CEOs (in 2017) receiving

Fig. 8.1  CEO pay compared to workers’ pay in the United Kingdom, 2000–2014. (Source: UK Parliament/House of Commons, Business, Energy and Industrial Strategy Committee, Corporate Governance, Fourth Report of Session 2016–2017, 30 March 2017, p. 35, Figure 7)

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Fig. 8.2  Pay ratio of average CEOs to average workers in the United States. (Source: Mishel and Wolfe 2019)

average remuneration packages of $13.9 (£10.9) million, which was 361 times more than the average pay of US workers. As these were average figures, they concealed some much larger individual disparities; for example, the CEO of toy manufacturer Mattel was paid $31.2 (£23.8) million, while the company’s average workers’ pay was just $6271—a pay ratio of 4987. At the same time, McDonalds had a pay ratio of 3101, while the pay ratio of high-street clothing retailer Gap was 2900:1 (Anderson 2019, p. 21; see also Helmore 2018; Mohan, Chap. 9 in this volume). Thus has Thomas Piketty argued that “the primary reason for increased income inequality in recent decades is the rise of the super-­ manager” (Piketty 2014, p. 315). Indeed, in many instances, the vast gulf between senior executive remuneration and the pay of front-line workers has widened further due to a decline in some employees’ wages since 2008. For example in the United Kingdom, wages in 2014 were almost 10% lower than they had

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been in 2007, just before the financial crash (Romei 2017; see also Blanchflower and Machin 2014), while various reports have similarly alluded to declining wages in the United States (Rios-Avila 2015; Stein and Van Dam 2018). Furthermore, not only has corporate remuneration increased at a vastly higher and faster rate than workers’ pay, it has often greatly exceeded any discernible improvement in the performance or profitability of the companies or organizations in which the recipients of such generous largesse are employed. Research undertaken in the United States, under the auspices of the Economic Policy Institute, revealed that from 1978 to 2015, inflation-adjusted CEO compensation increased 940.9%, 73% faster than stock market growth, and substantially greater than the painfully slow 10.3% growth in a typical worker’s annual compensation over the same period (Mishel and Schieder 2016; see also The Observer 2018). This rather undermines a common Conservative or neoliberal defense of high pay in the boardroom, namely that enormous salaries and bonuses are a deserved reward for delivering corporate success, yet there is often little correlation between the remuneration enjoyed by CEOs, and the economic performance and commercial success of their company in terms of higher profits, stock-market valuation, or market share. Conversely, even when a company is highly successful in terms of improved profitability or market value, the trajectory of wages in recent years would suggest that the workers themselves are not sharing in the firm’s success. Yet one of the oft-repeated maxims of the political Right and Capitalist ideology is that the only way to improve wages and living standards is though harder work and higher profits; that wealth cannot be shared unless and until it has been created, as we will now briefly note.

The Right’s Rejection of Egalitarianism Criticisms of the growing levels of inequality, and thus the gulf between the highest salaries and lowest wages, are invariably derailed by those who are ideologically opposed to policies which seek to reduce the incomes and earnings’ gap. For the political Right, inequality is innate, inherent and intrinsic to any society, deriving ultimately from human nature,

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entailing immutable differences in attributes such as ability, intelligence, skill, talent, and so on (see, e.g., The Conservative Party 1976, pp. 17–18; Hume 1777/1975, p.  194; Joseph and Sumption 1979, pp.  30, 51; Patten 1983, p. 12; Raison 1964, p. 38; Willetts 1992, pp. 111–112). Consequently, any policies to promote equality will be doomed to fail, while causing misery, if not tyranny, in the process (for an analysis of the centrality of inequality to Conservative philosophy and politics in Britain especially, see Dorey 2010). As such, before advancing the case for a “pay ratio”, we need to pre-­ empt some of the standard objections to policies for reducing inequality, because these will inevitably be targeted against our proposal for narrowing the growing gulf between the highest and lowest paid.

The Either/Or Dichotomy One ruse favored by Conservatives and neoliberals is to reframe the issue, and thus eradicate alternative policy options, by invoking a binary, either/ or, discourse: either society accepts that economic inequality is inevitable and unavoidable—due both to human nature, and the natural operation of “the market”—or society foolishly (dangerously) pursues total equality, whereby everyone is automatically paid the same, but in the process, destroys the very wealth-creation and entrepreneurship upon which prosperity and progress depend (see, e.g., Benn 1925, passim; Dicey 1885, pp. 467, 105–106; Powell 1969, p. 18; Scruton 1984, p. 95). However, this is a disingenuous straw-(wo)man argument, because criticism of exorbitant salaries and excessive inequality does not ipso facto mean advocacy of total equality of wages and salaries. Yet this intellectual sleight of hand is very popular with the Right, because it enables them to respond to absolutely any proposal for reducing inequality by accusing their opponents of wanting to “make everyone the same”. This false allegation is sometimes supplemented by the rhetorical question: “What about the Soviet Union/Cuba/Venezuela?” Such a question is not normally asked with a genuine desire for an answer, but because the mere mention of these countries, and the awful regimes they are widely associated with, is intended to provoke fear among the population that the

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United Kingdom or the United States will soon resemble these tyrannies if any serious and systematic effort is made to reduce inequality.

Greater Equality Entails State Control Following on from this last point, Conservatives and neoliberals associate the pursuit of (greater) equality with comprehensive State control, and thus the suppression of individual liberty: what Hayek termed “the road to serfdom” (Hayek 1944, passim; see also Friedman 1962, p. 195; Hume 1777/1975, p.  194; Joseph and Sumption 1979, p.  99; Nozick 1974, passim; Willetts 1992, p. 117). Yet those who vehemently denounce the State intervention which egalitarianism entails seem perfectly happy to invoke the power of the State to curb trade (labor) unions, workers’ rights and welfare provision, while cutting taxes for the rich, or awarding lucrative government contracts (ultimately funded by the taxpayer) to private companies. It only seems to be State intervention and subsidies intended to benefit workers and/or the poor which Conservatives deem objectionable and oppressive.

The Rich Are Wealth Creators The Right and neoliberals also defend huge incomes and associated inequalities by eulogizing the rich as “wealth creators” whose enormous salaries are depicted as their thoroughly deserved reward for generating the profits and prosperity on which everyone else’s employment and earnings heavily depend (see, e.g., Hayek 1960, p.  44; Joseph and Sumption 1979, p. 22; Willetts 1992, p. 112). This has become a key component of the discourse of neoliberalism and its intrinsic individualism: economic success and social status are attributed to the avowedly superior characteristics and qualities of unique individuals, who are thus key progenitors of socio-economic innovation, progress and prosperity; the “masters of the universe” depicted in Tom Wolfe’s novel The Bonfire of the Vanities (Wolfe 1987).

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Yet this veneration of supposedly heroic entrepreneurs overlooks or downplays the manner in which (and extent to which) wealth is actually created by ordinary working people on the factory- or shop-floor, or in other customer-facing roles. Without their staff, these “wealth creators” would create nothing, unless they literally performed every task and role single-handedly, from concept, to construction, to completion. As such, any commercial enterprise should be viewed as a joint venture, a team effort, whose success depends both on the business acumen and leadership skills of owners and/or managers, and on the roles and tasks performed by the employees. Of course the employees are heavily dependent on the management or business owners for their jobs and earnings, in terms of investment and business acumen, but the managers and owners are, in turn, heavily dependent on their staff in order to ensure the success of their company or industry; it is a relationship of mutual dependency and reciprocity. This, though, renders it morally repugnant and intellectually indefensible that some senior managers and CEOs in the United Kingdom are paid 150 times more (and in the United States, much more than this) than the front-line staff who are actually doing the work, and inter alia creating the wealth, by manufacturing or marketing the products, or providing and selling services.

Pursuing Equality Will Cause the Rich to Emigrate Another argument—or warning—frequently advanced by the Right is that any policies to curb allegedly excessive pay will prompt an exodus of the best entrepreneurs and business leaders, the implication being that these apparent ubermensch will decamp to the United States: “the more inequality is striven for … the larger the exodus will become” (Gilmour 1978, p. 179). Yet this rather assumes that American companies are eager to recruit disgruntled British corporate titans whose greed and egotism seemingly exceeds their patriotism. Studies have shown that in many instances, senior vacancies in major companies are usually filled either via internal promotion, or by recruiting someone in a similar industry or sector—someone who is already “known” to those making the

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appointment, and/or is familiar with the company’s corporate culture, or the sector’s modus operandi (Hildyard 2013, p. 3; Marsland 2015, p. 45; Schawbel 2012; Schwartz 2013). The appointment of a foreign CEO or other overseas business leader is the exception, not the norm. As to the British companies which these emigres have left behind, the vacancies thus created could almost certainly be filled by internal promotion, as existing employees were provided with a welcome opportunity to acquire a more senior position, and the associated status. To give one example, albeit concerning the public sector. In 2018, a university in southern England attracted negative national headlines when it was revealed that its Vice-Chancellor (VC) enjoyed a total remuneration package of £468,000 (Adams 2017; Embury-Dennis 2018). This was predictably justified on the grounds that only by paying such high salaries—invariably described as “competitive”—could the best people be recruited and retained for such senior posts, and the onerous responsibilities these entailed (not withstanding that many of these responsibilities are delegated to a growing cadre of senior managers and educrats). Yet when this Vice-Chancellor, in response to the widespread criticism which ensued, took early retirement, their successor accepted a salary of £266,000—about £200,000 less than that previously paid (BBC 2018). It seemed that the new VC was attracted to the job per se, in terms of prestige or challenge, and the potential to “make a difference”, rather than a huge salary. Perhaps we need a “culture shift”, whereby anyone who is attracted to a job primarily or solely because of the (exorbitant) salary is not the right person to appoint in the first place.

The Case for a “Pay Ratio” The case for a “pay ratio” (or “earnings multiplier”, as it is sometimes referred to) has gained some traction in the last decade, in the context of the issues identified above: revulsion at the exorbitant salaries paid to some CEOs, especially during an era of austerity and stagnant/poverty wages for millions of ordinary workers, while rejecting the options of either complete equality of incomes, or a blanket cap on top salaries, whereby no-one would be permitted to earn above a specified amount.

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Instead, what is proposed is a middle way between excess and equality—a form of bounded inequality. This would decree that the highest salaries in an enterprise or profession could not be x times those of the lowest-paid employees in the organization. Of course, agreement would need to be reached on what exactly x should be, but some writers have previously offered suggestions. For example, in the 1940s, George Orwell (1941/1982, p. 104) proposed a model whereby the highest paid did not receive a salary of more than ten times the lowest paid—a pay ratio of 10:1. Rather more recently, Ferdinand Mount, a former adviser to the staunchly anti-egalitarian Margaret Thatcher, conceded that inequality in Britain since the 1980s had become excessive and unacceptable, and therefore suggested pay ratios of 20:1 in a medium-sized company and 40:1 in a large company, coupled with strict limits on bonuses (Mount 2012, p. 213). A pay ratio of 20:1 had also been proposed, in the mid-1970s, by the management consultant and writer Peter Drucker (1977, p.  20), and, much more recently, the British Labour Party, in its 2017 election manifesto (The Labour Party 2017, pp. 15, 47). We agree with the principle of a 20:1 pay ratio, considering it to constitute a good compromise between Orwell’s lower limit and Mount’s upper limit. Crucially, it would still permit generous remuneration for the most senior managers and CEOs, but would strongly reign-in the recent excesses, and thereby greatly reverse and reduce the growing level of incomes’ inequality. For example, if the lowest-paid (full-time) employee in an enterprise was paid £20,000, then the highest-paid would receive £400,000—no trifling sum. Apart from giving practical effect to the principles of fairness and transparency, a “pay ratio” would offer two other advantages, particularly in comparison to the alternative of a universal salary cap. First, by applying the “pay ratio” to individual enterprises, rather than across the whole economy in a one-size-fits-all approach, firms would be permitted to set their own salary levels, provided that the 20:1 ratio was adhered to within the company or sector. In other words, greatly reducing inequality but not imposing uniformity. Second, but following directly on from this last point, a pay ratio applied to firms, rather than to the whole economy, would allow

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companies to increase the salaries of their senior staff, provided that the 20:1 ratio was adhered to: if enterprise A wanted to pay a higher salary to its management team or CEO than enterprise B, it would be wholly free to do so, provided that the lowest-paid worker in enterprise A also received a correspondingly higher wage or salary. The objective would not be to impose a maximum salary which no company was permitted to exceed, but to ensure that whenever the remuneration of senior staff was increased, so too was the pay of other staff in the enterprise, especially those on the lowest salaries. This would ensure that the rewards for success would be enjoyed by all employees, rather than being confined (as hitherto) solely to the CEOs or other senior managers, while the rest of their staff—who had (presumably) significantly contributed to the improved performance or results—remained on the same wage or salary regardless. A novel aspect of a pay ratio to reduce inequality in the workplace, and inter alia wider society, is that it constitutes a form of “predistribution”, rather than relying solely on more obvious or orthodox mechanisms of redistribution via high taxes and welfarism (Pizzigati 2018, pp. 40–41, 49). In accordance with the maxim that “prevention is better than cure”, a “predistributive” pay ratio would seek to prevent excessive inequalities of earnings and salaries in the first place, rather than aiming to recoup some of the “excess” monies after they had been awarded, by which time, creative accounting or innovative investments might have placed the sums beyond the reach of the Treasury.

A “Pay Ratio”: An Idea Whose Time Has Come? The principle of a pay ratio has moved onto the political agenda in several countries in the last decade, reflecting growing concern over boardroom excess and widening inequalities, both within companies and in society beyond (see Reilly and Brown, Chap. 10 in this volume). This concern has been encouraged or exacerbated by two other relatively recent phenomena. First, the austerity endured by many citizens because of the 2008 global financial crash, which precipitated a decade of stagnant wages, job losses, cuts in welfare support (especially in the

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United Kingdom), and decimated public services. Yet the corporate elites and mega-rich did not seem to be affected by this austerity: on the contrary, they continued to enjoy huge increases in their salaries and bonuses, and inter alia their share of national wealth, thereby further fueling the scale of inequality. This wealth, in turn, has imbued the corporate elite and big business with excessive influence over governments, and the ability to blackmail elected politicians with threats about the consequences of not acceding to corporate demands or prioritizing their economic interests (Monbiot 2018). This concern—anger, even—also partly explains the growing support for Right-wing populist leaders and parties, which have directed simmering discontent among the impoverished “left behind” toward “liberal elites”, immigrants and external bodies (most obviously, in the United Kingdom’s case, the European Union). In so doing, such populists have been able to divert the public’s attention away from the central role of corporate elites in fueling inequality and poverty, even though many of these populist leaders emanate from business backgrounds, are themselves extremely wealthy, and usually strongly supportive of the very same neoliberalism which has done so much to fuel exorbitant senior salaries and inequality during the last 30–40 years. The second factor which has encouraged or exacerbated growing concern about the sheer scale of inequality during the last decade or so, is evidence concerning the negative socio-psychological consequences of vast differences in incomes and increasing poverty. Research has highlighted that growing inequality and poverty are not only deeply detrimental to individual health and well-being, but have a detrimental impact on wider society, due to increases in illnesses (mental and physical), lower educational attainment and reduced social mobility, more dysfunctional families and marital breakdown, and increased crime and juvenile delinquency. These findings have been neatly encapsulated in Wilkinson and Pickett’s (2010, chapters 4–12) book The Spirit Level: Why Equality Is Better for Everyone, and reaffirmed by academics such as Dorling (2011, 2014), and research undertaken under the auspices of charities like the Joseph Rowntree Foundation (Bramley et al. 2016). In practical terms, growing concern about the scale of inequality has prompted some governments to enact legislation requiring large

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companies to publish the salaries of their highest- and lowest-paid staff. Although this falls far short of a “pay ratio” per se—no limit is being imposed on the highest salaries vis-à-vis a company’s lowest-paid staff—it does reflect growing political recognition (even among some Conservatives) that earnings and incomes disparities have become excessive during the last decade, and increasingly difficult to defend morally or politically; the hitherto justificatory references to the natural and neutral role of “the market” or “commercial criteria” in determining senior salaries have largely ceased to suffice or convince. In the United States, 2010 heralded the Dodd-Frank Wall Street and Consumer Protection Act, whose provisions included a statutory requirement for large companies annually to publish the ratio between the salaries of their CEOs and the earnings of their “median” staff—although actual implementation was delayed for five years due to predictable corporate lobbying against the alleged bureaucratic burden this would place on companies (McGee 2015). Opponents also alleged that such information would present a simplistic, and thus misleading, snapshot of pay disparities within companies, without giving due attention to specific factors or reasons. These critics also complained that it was likely to foster public resentment (the “politics of envy” argument), and maybe a media witch-hunt, against supposedly “over-paid” CEOs. Meanwhile, in the United Kingdom, when Theresa May became Conservative Party leader and Prime Minister in the summer of 2016, she indicated that growing inequality and corporate excess needed to be addressed, and portrayed herself as being on the side of the millions of ordinary citizens who were financially “just about managing” (“the jams”, as they became commonly known). Her Government thus published a Green Paper—a consultative document to which the public is invited to respond and make suggestions in advance of legislation—on Corporate Governance, which mooted the principle of requiring large companies to publish pay ratios, to highlight the disparity between the remuneration of their CEOs and their workers (Department for Business, Energy & Industrial Strategy 2016, pp. 13, 29–31). This proposal was subsequently enshrined in the statutory 2018 Companies (Miscellaneous Reporting) Regulations, which decreed that, from 2020, companies with more than 250 employees would be legally required to disclose, on an annual basis,

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the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees. Like the Dodds-Frank Act in the United States, the United Kingdom’s 2018 Regulations did not stipulate a pay ratio, but tacitly expected public opinion, via consumers, to exert pressure on companies either to desist from paying their CEOs exorbitant salaries, or significantly to increase the salaries of their staff—either response would then yield a reduction in their pay ratio. The assumption was that if enough consumers ceased to buy the products or services of companies which were deemed to have excessive pay ratios, this would result in declining sales, diminishing market share, and ultimately lower profits, whereupon the company would recalibrate its pay policy, in order to win back alienated customers, and thus restore its profitability. In effect, consumer sovereignty would foster greater responsibility and fairness in corporate remuneration and rewards, and thus spare the Government itself from having to impose statutory curbs on high pay, or explicitly specify a pay ratio. One country where a specific pay ratio was proposed, a few year ago, is Switzerland. In 2013, a referendum was conducted on whether to introduce a 12:1 pay ratio, meaning that the highest salaries in an enterprise would not be permitted to exceed 12 times the amount paid to the lowest-paid employees. Or to put in another way, a senior manager could not earn more in one year than any of his/her workers earned in one-­ month. This proposal was ultimately rejected by 66-34  in the referendum, following an intensive (and well-funded) advertising campaign against it by business leaders, coupled with customary dire warnings about the “flight of capital” which would ensue if such curbs were placed on boardroom pay, and thus the ensuing loss of jobs which Swiss workers would suffer (Lichfield 2013; Pizzigati 2018).

Conclusion What was most remarkable about the Swiss referendum was not the result itself, but that the issue of a pay ratio was the subject of a national vote at all. Concern about the scale of inequality and corporate excess has been growing in recent years, even among some pro-Capitalist Conservatives

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and business leaders. There has been growing cognizance that in some instances, the sheer scale of remuneration and concomitant inequality is morally and politically indefensible, as well as out of proportion to the economic success (in terms of profits or the stock-market value) of the company concerned. Indeed, some CEOs, particularly in the United States, have become concerned that corporate excess is damaging to the credibility and legitimacy of Capitalism itself, and lends credence to those who wish to replace it with Socialism (Edgecliffe-Johnson 2019). In effect, therefore, some more enlightened business leaders now recognize that free-market Capitalism needs to be rescued from itself. After all, back in the 1990s, Ian Gilmour, a former (One Nation, or paternalistic) Conservative politician and intellectual, warned: Those who are effectively excluded from the benefits of society can not be expected to remain passive indefinitely … A true Conservative state should … mitigate the operation of market forces. (Gilmour 1992, pp. 276, 277)

True, Gilmour was not, at that time, explicitly advocating a pay ratio, but he was expressing concern about the growing scale of inequality in Britain in the early 1990s, which he feared would weaken Britain’s social fabric and undermine the legitimacy both of Capitalism and parliamentary democracy. This inequality has significantly deepened since then, as corporate remuneration has soared further, while workers’ wages have generally stagnated. The time and circumstances have never been more propitious for introducing a pay ratio, and thereby restoring fairness—and sanity— to the workplace and the wider economy.

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9 Closing the Gap: The Benefits of Lowering Pay Ratios Bhavya Mohan

Introduction Having the exact same compensation for all people, particularly in market-­driven capitalistic societies, is a challenging prospect that would be nearly impossible to achieve in the near term. However, this chapter argues that such societies would benefit from actively working to lessen the gap between those who are paid the most and those who are paid the least. There are many metrics used to measure inequity in income, but this chapter will focus on one measure of policy interest around the world— chief executive officer (CEO)-to-worker pay ratios—and current initiatives to bring these gaps closer to parity. The increase in chief executive officer (CEO) compensation compared with that of the average worker has directly contributed to increased income inequality (Kim et  al. 2015; Mishel and Wolfe 2019; Dorey, Chap. 8 in this volume). Even amid record high economic growth and B. Mohan (*) School of Management, University of San Francisco, San Francisco, CA, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_9

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low unemployment rates, average workers have gained very little in recent decades compared to firm executives (Gould 2019). While average CEO compensation at large American firms has grown an estimated 53% in the last decade, the average worker in those firms has seen wage growth of only 5% (Mishel and Wolfe 2019). In 1978, the average American CEO made $1.5 million dollars annually compared to an average annual salary of $17.2 million dollars in 2018 after adjusting for inflation—an increase of over 1000% (Mishel and Wolfe 2019). During this same period of time, the average worker’s wages increased by merely 11.9% (Mishel and Wolfe 2019). The wages of CEOs increased significantly even when compared to other executives and high-wage earners, directly contributing to the concentration of income at the top 0.1% of society (Mishel and Wolfe 2019). The rise in CEO pay is not limited to the United States, even though most available research focuses on American firms (Bognanno 2019). In 2018, the United States was the country with the highest gap between CEO and worker pay; by one estimate, for every US dollar an average worker earned, the average CEO earned 265 US dollars, for a pay ratio of 265:1 (Statista 2019). However, India, the United Kingdom, South Africa, and the Netherlands, the next four countries with the highest average CEO pay relative to average workers, had pay ratios of 229:1, 201:1, 180:1, and 171:1 respectively (Statista 2019). American CEOs earn approximately double the wages of foreign CEOs in developed countries—a premium that declines when factoring for attributes such as firm size (Fernandes et al. 2013). The pay differential between CEOs in the United States and those in other developed countries narrowed substantially during the 2000s (Bognanno 2019). Research has identified several causes of increased CEO pay, including the power CEOs exercise over their boards, poor governance, and peer effects (Bertrand and Mullainathan 2001; Bebchuk and Fried 2004; Kim et al. 2015). Research suggests that the fast rise in CEO pay is not the result of a tight market for talent—rather, CEOs have the power to demand concessions when their pay is being determined (Bivens and Mishel 2013). Increased CEO pay has not been linked to significantly better firm performance; research suggests that CEO pay is not related to the CEO’s contribution to a firm’s value (Carpenter and Sanders 2002;

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Chang et al. 2010). CEO pay increased a third more quickly than the US stock market between 1978 and 2018 (Mishel and Wolfe 2019). Indeed, research shows that when a CEO is paid a higher “pay slice” relative to the rest of the executive team, there can actually be a negative impact on firm performance (Bebchuk et al. 2011). For this reason, comparisons of CEO to average worker pay have long been a question of interest to both employees and investors. Management theorist Peter Drucker, for example, argued that the ratio of a CEO’s salary to an average worker’s salary should be capped at 20:1, and that greater disparity would lead to employee resentment and decreased morale, negatively affecting company performance (McGregor 2013). Prior research suggests that widely dispersed incomes within a given organization can lead to diminished collaboration and team performance (Siegel and Hambrick 2005; Peters et al. 2019). This chapter, however, will review the effects of high pay ratios from a different perspective: that of the broader public, beyond investors and employees. Specifically, this chapter will examine the ways that people, as consumers of a given firms’ products, demand change. A natural experiment offers initial evidence that pay ratios are of high interest to people beyond their roles as investors or employees. On August 5, 2015, the United States Securities and Exchange Commission (SEC) adopted Section 953(b) of the Dodd-Frank Act, a federal law that overhauled the financial regulatory system, as a formal rule (United States Securities and Exchange Commission 2015). As a result, starting in 2018, public companies in the United States began to disclose the ratio of the total compensation of the CEO to the average annual compensation of all other employees in registration statements, proxy statements, and annual reports (United States Securities and Exchange Commission 2015). Two years prior to the finalized rule, the SEC posted a request for public comment on the proposed pay ratio disclosure rule. Over 60 days, the SEC received thousands of public comments, which were classified as eight letter types and posted online (Comments on Pay Ratio Disclosure 2013). Comment Letter Type A, for instance, contained the following text: “Knowing which corporations heap riches upon their executives while squeezing struggling employees also will be a useful factor for me when considering which businesses to support with my consumer and

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investment dollars” (Comments on Pay Ratio Disclosure 2013) Notably, this letter explicitly includes the term “consumer” in addition to the term “investor”. Based on the posted letter counts for the eight comment letter types, of 126,861 initial comment letters sent in response to the proposed pay ratio disclosure rule, over a quarter—32,899—used the term “consumer”. This evidence motivates the argument that knowledge of CEO-to-­ worker pay ratios might influence public attitudes toward firms more broadly. Next, this chapter examines the concept of fairness in the context of pay ratio disclosures, and what the general public considers to be ideal when it comes to CEO compensation.

Fairness, Pay Ratios, and Public Expectations Behavior is shaped by perceptions of fairness; broadly speaking, individuals prefer equitable to inequitable distributions of outcomes (Adams 1965). Narrowing possession gaps to create more fair distributions can increase individual satisfaction and reduce envy (Ordabayeva and Chandon 2011). Fairness increases individuals’ happiness (Tabibnia et al. 2008) and reduces negative affect (Sanfey et al. 2003). Prior literature has examined fairness in relation to the distribution of profits between buyers and sellers (Darke and Dahl 2003; Huppertz and Arenson 1978; Oliver and Swan 1989). When consumers believe that a firm is making an unfairly large profit relative to an expected prior reference price, they perceive prices as less fair, and in turn are less willing to buy (Kahneman et  al. 1986; Campbell 1999; Bolton et  al. 2003; Xia et al. 2004). Research on price fairness shows that cueing total labor costs incurred by a firm can increase perceptions of fairness, but that some wage-related costs are perceived as unfair, such as “educating consumers about the large bonuses paid to a firm’s senior executive” (Bolton et al. 2003, p. 486). This work is based on the principle of dual entitlement (Kahneman et al. 1986), which contends that although consumers believe that firms are entitled to make a profit, they also feel personally entitled to a reasonable price. When consumers perceive a firm as making unreasonably large profits, they tend to view its prices as unfair relative to their

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expectations; this expectation disconfirmation leads to decreased willingness to buy (Bazerman 1985; Kőszegi and Rabin 2015) and has been shown to relate to fairness considerations (Maxwell et al. 1999). Principles of fairness can influence behavior even when direct welfare is unaffected. Research examining the effects of an ethical supply chain suggests that consumers evaluate and respond to fairness between firms and third parties (their workers); at least a subset of consumers are willing to pay a premium to ensure the fair treatment of a firm’s workers (Creyer and Ross 1996; Hiscox et al. 2011; Paharia et al. 2013; Peloza et al. 2013; Prasad et al. 2004). For instance, in one study, consumers were willing to pay a 23% premium for coffee labeled “Fair Trade” (Hiscox et al. 2011), and signage ensuring good working conditions leads some consumers to pay up to 40% more for these labeled products (Prasad et al. 2004). Importantly, however, individual-specific factors influence whether company initiatives in the context of corporate social responsibility affect consumer purchase behavior (Sen and Bhattacharya 2001). Political ideology is an important individual-specific factor: for instance, liberal Americans are more likely to support increases in the minimum wage than conservative Americans (Kuziemko et al. 2015). Liberal consumers are more likely to file complaints with government organizations like the Federal Communications Commission than conservative consumers (Jung et al. 2017). Political ideology plays a central role in consumption (Crockett and Wallendorf 2004; Hirschman 1993); different persuasive messages have different appeal to different political affiliations (Kidwell et al. 2013; Winterich et al. 2012). Despite these differences, research suggests that there is some broad global consensus regarding an “ideal” level of CEO pay—that is, what is considered by society to be a “fair” gap between executive and low-wage worker pay (Kiatpongsan and Norton 2014). Previous survey research spanning 40 countries and over 55,000 participants shows that globally, people believe CEO pay ratios are far lower than they actually are (Kiatpongsan and Norton 2014). In the United States, the estimated ratio of CEO pay to average unskilled worker pay is 30:1, far lower than the actual average pay ratio across US firms, which is estimated to be around 287:1 (AFL-CIO 2019). Moreover, in the United States, the “ideal” ratio of CEO pay to unskilled worker pay is 7:1; this value is

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slightly higher than the global ideal ratio of 4.6:1 (Kiatpongsan and Norton 2014). Estimated pay ratios ranged from 3.7 (in Denmark) to 41.7 (in South Korea), whereas ideal ratios ranged from 2.0 (in Denmark) to 20.0 (in Taiwan); regardless of country, however, the pairwise differences between the estimated and ideal pay ratios of CEOs to unskilled workers were significant (Kiatpongsan and Norton 2014). Moreover, for the 16 countries where estimates of the pay of CEOs and the pay of average workers are available, the estimated pay ratio was always lower than actual pay ratios (Kiatpongsan and Norton 2014). Notably, regardless of country, the public does not demand, on average, the absence of a wage gap all together, or that every citizen is paid the same as the chief executive. Rather, the ideal gap between executives and low-wage workers is one that is significantly smaller than what currently exists. In the United States, even large firms operating and competing in the same industry have dramatically different estimated pay ratios, including all cash and stock compensation during any given year: for instance, in 2014, Gap Inc.’s pay ratio was estimated to be close to 705:1, compared to VF Corporation at 292:1 and Urban Outfitters at 3:1 (Chamberlain 2015). That same year, at the high end of the spectrum, an investigation conducted by the New York Times estimated that the pay ratio of total CEO compensation to median employee wage at one American public company, the Walt Disney Company, was as high as 2238:1 in 2014 (Morgensen 2015). At the low end of the spectrum, the CEO of Symantec received $376,364 in compensation in 2014, for a pay ratio of 3:1 (Chamberlain 2015). When it comes to executive compensation, there is a clear mismatch between the ideals of the general public and reality. Next, this chapter reviews recent policy initiatives to both disclose and cap pay ratios around the world. Moreover, the chapter presents evidence which suggests that knowledge of CEO-to-worker pay ratios might influence both public attitudes and purchase behavior.

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Examining Policy Initiatives There have been a number of recent policy initiatives to both disclose and cap pay ratios around the world. Following the CEO pay ratio disclosure rule that was mandated in the United States, both the United Kingdom and India have adopted similar disclosure rules (Bank and Georgiev 2019). Another policy initiative is setting higher corporate tax rates for firms with high CEO pay ratios—establishing, for instance, a salary cap and taxing companies who pay over the cap (Clifford 2017). In 2016, the city of Portland, Oregon adopted a tax penalty imposing a 10% surcharge on companies that pay their CEO more than 100 times their median worker pay; lawmakers in seven other US states have introduced legislation similar to this tax (Andersen 2018). Other proposed policies include reforming tax rates and corporate governance structures—for instance, by having greater worker representation on corporate boards (Baker et al. 2019). The longer-term effects of these efforts to lower CEO to worker pay ratios are yet to be determined. A firm’s pay gap, upon disclosure, could ostensibly be publicized by the news media, activist groups, politicians, and competitors. Thus, consumer-facing firms with pay gaps could directly lose equity as a result of greater customer awareness. Recent research on the effects of pay transparency suggests that the disclosure of a large pay gap between CEO and the median worker can dampen perceptions of wage fairness and decrease consumer purchase intention from companies with high pay ratios (Benedetti and Chen 2018; Mohan et al. 2018). Mohan et al. (2018) examine the effects of publicity around mandated pay ratio caps in a pilot study. In 2009, Swiss citizens started a public initiative aiming to hold a referendum for a legally mandated pay ratio cap in Switzerland, limiting the salary of CEOs to 12 times that of the lowest paid worker (Hooper 2013). This initiative was accepted for a public referendum in mid-2011 (Schweizerische Bundeskanzlei 2011). About 2.8 million Swiss citizens (53% of the eligible voters) voted on this legislation at the end of 2013. While the referendum did not pass, nearly 35% of Swiss voters voted for the cap. Mohan et al. (2018) use this data

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as a preliminary investigation into how increased public awareness regarding CEO-to-worker pay ratios might influence how consumers choose between firms with relatively higher and lower ratios. Using CEO-to-­ worker pay ratios and sales of 27 Swiss companies for the period between 2004 and 2014, they examine several measures to capture public awareness of the referendum. These measures include the number of articles referencing the pay ratio initiative published in the top three Swiss newspapers, the data of the public Facebook profile of the referendum (e.g., number of comments, likes, and posts), and the number of yearly Google search results for the initiative. In their analysis, Mohan et al. (2018) use the companies’ sales as the dependent variable, the CEO-to-worker pay ratio as the independent variable, and the number of newspaper articles published on the initiative (as a proxy for public awareness) as the moderator. The results suggest that companies with a low pay ratio performed significantly better than companies with a high pay ratio when more newspapers published more articles about the referendum. This correlational study provides preliminary evidence that a high CEO-to-worker pay ratio may negatively impact company sales—especially when such information is publicized and thus more salient to consumers. Furthermore, Mohan et al. (2018) test the effects of pay ratio disclosure using experimental methodologies. A field study examines whether revealing a high CEO pay ratio affects consumers in a realistic, incentive-­ compatible online context designed to minimize demand effects. Study participants learned that they can choose between $50 gift cards offered by two different retailers. They were then randomly assigned to one of two conditions in the between-subjects field experiment, where CEO-to-­ worker pay ratio was either revealed or not revealed. Regardless of condition, consumers saw information about two American clothing retailers, GAP Inc. and Urban Outfitters. However, in the “revealed” condition, consumers were shown information about the retailers’ pay ratios in the form of article snapshots. The article snapshots were directly informed by information presented in news articles about estimated CEO pay ratios (Adams 2014; Huhman 2015; Smith 2015). The snapshots revealed that the CEO of Urban Outfitters makes three times the salary of their average employee, while the CEO of GAP Inc. makes 705 times the salary of their average employee. In the “not revealed” condition, participants only

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saw screenshots of general information available on both retailers’ websites. A logistic regression with the choice of the low pay ratio gift card (i.e., the gift card to Urban Outfitters) shows that participants in the condition where pay ratios were revealed were significantly more likely to choose the gift card to the retailer with the low CEO-to-worker pay ratio than those in the condition where pay ratios were not revealed. This field experiment provides evidence that revealing a high CEO-to-worker pay ratio can negatively affect real consumers’ choices. This suggests that firms who disclose a relatively fair pay ratio compared to their competitors may be better off in the long run, particularly as disclosure becomes mandatory on a global scale.

Conclusion This chapter argued that while having the exact same compensation for all people is an unrealistic goal that would be nearly impossible to achieve in the near-term, societies around the world would benefit from actively working to lessen the gap between those who are paid the most and those who are paid the least. Thus, this chapter focused on one measure of much relevance around the world—CEO-to-worker pay ratios—and initiatives to narrow these gaps. First, this chapter discussed how the rise in executive pay compared with that of the average worker has directly contributed to increased income inequality (Kim et al. 2015; Mishel and Wolfe 2019). Then, this chapter reviewed research which suggests that increased executive pay relative to that of the average worker is not linked to significantly better firm performance (Carpenter and Sanders 2002; Chang et  al. 2010; McGregor 2013). The chapter subsequently explored the idea of “ideal” inequality—that is, what is considered by society to be a “fair” gap between executive and low-wage worker pay (Kiatpongsan and Norton 2014). Notably, regardless of country examined, the public does not demand, on average, the absence of a wage gap all together, or that every citizen is paid the same as the chief executive. Rather, the ideal gap between executives and low-wage workers is one that is significantly

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smaller than what currently exists. Finally, the chapter reviewed recent policy initiatives to both disclose and cap pay ratios around the world, and the possible repercussions of such policy decisions. Pay ratio disclosure may be one way to reduce income inequality, particularly if consumers put pressure on firms to reduce extreme income inequality within their own ranks. When companies with high pay ratios are penalized, this not only has marketplace consequences, but broader societal consequences for attenuating income inequality.

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10 How Fair Is Equal Pay? The Need for a More Balanced Perspective Peter Reilly and Duncan Brown

Introduction Cycling around Cuba on a recent holiday, one of the authors asked the mountain bike guide what he had done before this job. He said that he had been a senior lecturer in a university. He was paid exactly the same $45 per month for both jobs. He said he far preferred bike guiding as he loved working outdoors keeping him fit and healthy. Whatever reward managers might say that the two jobs are not equal in job evaluation terms, or economists that he had moved to lower “value-­ added” work with negative consequences for Cuban GDP, he seemed very happy with his choice. The other author had a more mixed Cuban experience. His taxi driver to Havana airport was a finance manager in a previous life. He too was paid the same for both roles, but he was less satisfied. He found it hard to

P. Reilly (*) • D. Brown The Institute for Employment Studies, Brighton, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_10

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refuse the large tips or expensive cigars from American customers and deny himself extra reward for his efforts. This illustrates the dilemma that pay equality presents. In the first example, the benefits of common pay levels to the ex-academic’s own welfare and motivation, and to economic job flexibility and mobility, are obvious (although the apparently low pay level might set the alarm bells ringing for some readers). In the second illustration, there is frustration at the lack of incentives and recompense for superior customer service. These practical issues have to be seen against a background where social inequality and “unfair” and unequal pay levels are under heavy assault in the UK as with other western free market economies. This is partly due to the lasting effects of the financial crash, the widespread adoption of flexible staffing and contracting models in the “gig” economy and the consequential lowering of job security and loss of rights (Taylor et al. 2017). But criticism is also due to the fact that not everyone has suffered equally. Just look at the home page of the High Pay Centre’s website (High Pay Centre 2020) and the escalating FTSE 100 CEO median pay dial on the right-hand side of the screen (on £3.8 million for 2018) to illustrate the point. If totally equal Cuban-style pay is not on the political agenda, nonetheless a move to less unequal rewards certainly is. The UK government has taken some action. The amelioration of the deleterious contractual effects of the gig economy (Taylor et al. 2017) and drives for greater gender pay equality are in train, albeit slowly (Office of National Statistics 2019). There has also been an attempt to reduce the escalating salary differentials. From 2020 large quoted companies are required to publish in their annual report and accounts the internal pay ratio of their highest earning executive, expressed as a multiple of their average earner. According to the then Business Secretary, “these new regulations are a key part of the wider package of corporate governance upgrades we are bringing forward…to help build a stronger, fairer economy that works for businesses and workers” (Clark 2019). Employers have generally not reacted swiftly to this changing context, with HR and reward managers continuing business as usual executive incentivization, while responding to government regulation to the minimum extent necessary.

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So, the aim of this chapter is to widen the debate for employers by considering the proposition that there should be pay equality (or perhaps more realistically, more equal pay) for all their employees, irrespective of role or responsibility. The chapter does not consider ethical or societal issues raised by the notion of pay equality, as these will be covered by other chapters. Instead, our contribution will review for employers the advantages and benefits compared with disadvantages and challenges of pay equality.

Arguments for Pay Equality What Are the Benefits? In the UK and in the places where the Anglo-Saxon approach to capitalism dominates, organizational leaders would likely reject the idea of total pay equality out of hand as contrary to their business ethos. They seem wedded to: market-determining pay levels (for the understandable reasons that this permits easier staff recruitment and retention); to the use of cash incentives to raise productivity levels; to reward high performers and punish poorer performers financially; to use techniques such as job evaluation to rank jobs in order to discriminate fairly between them, such that those posts with greater responsibility/challenge/expertise receive a higher salary. These orthodoxies are well entrenched, irrespective of the lack of research evidence in support of them (Pfeffer 1998, calls them evidence-­ free and dangerous “myths”); and companies tend to avoid the risk of deviating from these “vanilla” practices (Lawler 1990) because innovations may fail. As Arrowsmith and Sisson (1999) put it, companies tend to form sectoral “convoys”, finding protection in all following the leader and never going off course. It is not as if there have not been objections to these “me-too” practices. The spurious nature of the market has been challenged by Brown et al. (2017), among others, particularly the supposed global shortage of and market for executive talent (High Pay Centre 2012). The

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ineffectiveness of performance-related pay was highlighted by Pfeffer (1998) and savaged by Kohn (1993). There have been many criticisms of the false objectivity of job evaluation and the fallacies of “extreme market pricing” (Brown and Armstrong 2018). And, particularly important in the context of this chapter, research does not support the notion that executives have the most significant effect on company performance (High Pay Centre 2015). These criticisms do not seem to have made much difference to organizational behavior, not least because they often take insufficient account of context and why employers do not evaluate the effectiveness of their current reward practices. Nonetheless, there are strong arguments in favor of greater pay equality in business terms which we will now look at: • Pay equality facilitates flexible deployment to meet variable demand patterns by encouraging multi-skilling because it removes trade/occupational boundaries/differentials, enabling cross organizational sharing of resources. This situation permits much faster transfer of staff because there is less need for negotiation and arguments about compensation. These challenges may be all the greater when we face the Artificial Intelligence revolution with job de-skilling and resource allocation problems, an urgent priority for CEOs and their HR directors according to McKinsey (2018). Removing pay from the list of contentious issues would be a real bonus. • Organizational change is thereby easier where staff can be more interchangeably assigned. For example, cross organizational working in the UK public sector has been inhibited by pay differences between organizations in the same sector but with subtly different terms and conditions. The same challenge might apply where companies vary pay across business units but wish to move jobs/people across them. A major UK outsourcing company let each of its divisions operating in different businesses pay at their own levels in their own market. However, a stronger focus on talent management and developing senior leaders has seen them introduce a common pay structure for management and professional staff, aligning pay levels across the company and permitting greater cross-business movement.

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• Innovation flourishes where there are few impediments (such as wage differentials and over-individualized reward) to trialing new ideas. If job autonomy, collaboration (especially sharing of ideas and knowledge) and building capability are some of the drivers of innovation (Reilly and Sheehan 2017) then rewards need to be supportive rather than antagonistic to the development of such a culture. This point is particularly important where the organization relies more on intrinsic motivation than extrinsic—a commoner situation in the public rather than the private sector (Bos-Nehles et al. 2017).

US online clothing-rental company Rent the Runway discovered that individual bonuses were getting in the way of honest peer feedback. Employees were not giving each other constructive criticism for fear of the negative financial consequences it would bring to colleagues. This was handicapping the adoption of the sought-after values of learning and knowledge sharing. DigitalOcean redesigned its rewards to promote a culture of collaboration because it was aware of the challenges posed to this aspiration from having an overly competitive environment. Part of its approach was to achieve a more equitable treatment of employees in pay terms by narrowing differences in pay for equivalent work, though there is still performance pay. Instead, the company is emphasizing collaboration, purpose and creativity in its internal brand image, and using nonfinancial rewards and “meaningful” gifts to support this positioning. Bonuses are based on company performance rather than individual contribution (Cappelli and Tavis 2018).

• Pay equality can remove the demotivational effects of pay variability. Research (Mulvey et al. 2002) suggests that clarity and transparency in reward provide real benefit. Thus, complicated job evaluation or incentive pay systems, or complex and frequent change, often mystify staff and lead to dissatisfaction rather than engagement. Yet a Chartered Institute of Personnel and Development (CIPD) survey (CIPD 2017) highlights the ineffectiveness of UK employers’ reward communications. • Performance-related pay (PRP), which is the source of most of this pay variability and the efficacy of which is generally not well supported by evidence (Toynbee 2013), can be avoided.

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• Pay equality helps to engage all employees behind the strategy and performance goals of the organization. CIPD (2015) research ­highlights that high executive pay levels are demotivating to seven out of ten workers.

John Lewis Partners, which has the highest customer service ratings of any UK employer, seems to secure employee support with a common profit-­ sharing scheme delivering an equal percentage of pay to all employees each year, and no executive incentives (Wood 2012).

• Administrative costs are reduced in a world of pay equality through the removal of most of the reward infrastructure (grading, job evaluation, pay ranges etc.). This mainly HR administrative cost may seem small, but, if time costs money, much management time (senior and direct line) is consumed in the cumbersome business of setting and varying pay in an organizationally and employee acceptable way. • Just as Henry Ford recognized that workers need sufficient pay to afford his cars, today’s employers need to do the same to create a well-­ functioning economy. Pickett and Wilkinson (2009) present considerable evidence on how high national inequality damages social cohesion thru its negative effects.

Where Pay Equality Might Work? Greater pay equality, we would argue, would benefit many organizations, but we accept that it is more achievable in certain sorts of organization than others. We next explore characteristics of this sort of context. These include sectors where the focus is on social benefit rather than profit maximization. Those where the purpose of the organization centers on public good and the efforts of staff are directed toward this goal rather than to their own material gain are likely to facilitate equality for all. The preferred culture is thus one of cooperation rather than competition. This is especially true of charities which have been set up to achieve a societal goal (e.g. health or environmental improvement).

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Similarly, you might expect co-operative type of companies to favor pay equality again because they generally have a clear purpose—making a product, providing a service, selling an experience. This leads them to have a strong emphasis on team-working in a collaborative culture. Suma and Unicorn Grocery have one rate of pay for all staff. As has Calverts design and print co-operative which has the same rate of pay for all since 1977 arguing that all roles have an equal impact on business performance and that market differences are a “myth”. Essential Trading Co-operative’s pay scale is based on length of service and no account is taken on role type or responsibility (e.g. sitting on the management committee or strategy committee or being team coordinators) (Whittle 2013).

In general, smaller companies probably find it easier to manage pay equality than large organizations. They are more likely to use functional flexibility in that job descriptions are typically less precise with staff expected to “muck in” as needed. Secondly, there is often a greater degree of social control (i.e. peer pressure) for staff to perform to a set standard: you can call out slackers and set a common rhythm. This means that financial punishments and rewards are less necessary. Such an approach is more difficult for large employers. Countries where there is strong state control and a more egalitarian ethic, like Cuba and to a lesser extent China and Russia, can enforce pay equality. The UK government (and others influenced by a neo liberal economic philosophy) has until recently attempted to do the reverse in the public sector by introducing private sector management systems and stronger incentives (including performance-related reward), even though the concept of “fairness” is strong (Reilly 2003). These have generally failed (Foley et al. 2014) and produced a backlash in favor of further narrowing pay ranges and differentials and, where possible, abandoning PRP, without espousing complete pay equality. Management practice and remuneration processes affect organizational ability to deliver pay equality. Indeed, the UK’s Corporate Governance Code (Financial Reporting Council 2018) instructs boards to create a culture aligning company strategy with purpose and values, and

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assessing how they preserve value over the long term. It explicitly requires Remuneration Committees to review pay across the wider workforce and, when setting executive pay, explain in their annual reports how pay policies are appropriate, using internal and external measures, including pay ratios. This sort of transparency is probably a pre-condition for pay equality as seen in the boxed examples and is often found in SME companies such as GrantTree and Smarkets. However, this can work in any low hierarchy organization with self-managing teams because this obviates some of the need for reward differentials. Encouragement for self-development as an end in itself rather than to justify extra remuneration is also helpful to pay equality: GrantTree, UK Government funding experts, allows all its 45 staff to set and review their own salary. This does not in fact lead employees to pay themselves the same, but that is possible, if that was their preference (BBC 2019). London based Pimlico Plumbers also experimented with pay transparency as covered in a UK television program. The Managing Director Charlie Mullins asked staff to share details of their pay to work towards a fairer reward system. Staff tested the validity of their current arrangements through debate and experience of taking on different jobs. A new, “fairer” approach was proposed and staff were asked to vote on its acceptability (Pimlico Plumbers 2012).

The type of reward used is another management practice that makes achieving pay equality easier or more difficult. Reward mechanisms antipathetic to pay equality usually involve individual incentives offered to encourage certain behaviors and deliver certain outcomes. Executive incentives are the most widely provided example, despite evidence that they do not motivate participants (CIPD 2019). Conversely, collective rewards, like profit sharing and gainsharing,1 despite being less instrumental than individual PRP, can, nonetheless, be shown to raise organizational performance. The research literature suggests that a greater presence and breadth of collective variable pay schemes coincides with better site performance (Eurofound 2015). Lucifora and Origo (2015) also reported the positive

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productivity-effects of collective cash-based collective schemes (including profit and gainsharing)—ranging from 2 to 10%, depending on the (mostly European) study. Benson and Sajjadiani (2018) indicate that several manufacturing plants have achieved performance improvements following the adoption of gainsharing, and plants that use these programs tend to perform better (higher productivity and quality) than those that do not. So, gainsharing, in particular, can be used instead of individual PRP with the triple advantage that the rewards are potentially more evenly spread; are far easier to set up and manage; and actually have a positive impact on performance.

Arguments Against Pay Equality Having made the arguments in favor of greater and even full pay equality, the authors accept that there are several objections to it. These include: • Does the same pay level apply irrespective of number of working hours, shift system, unsocial times? It would seem “fairer” to have pay equality calculated at an hourly rate. Nevertheless, most organizations would give extra pay for working on a shift rota (especially if it included evening or night work) and being on-call because of the resulting lifestyle restrictions. • Pay equality fails to acknowledge real differences in what people bring to work (knowledge, skills and experience), the responsibilities they take on, the conditions under which they labor and so on. These differences are typically taken into consideration in job evaluation through points awarded for factors such as job complexity, accountability and know-how. • Without reward for assuming management responsibilities there is neither financial encouragement nor recompense for taking on additional tasks despite the fact that these are likely to involve extra (perceived) effort and stress. • Similarly, with pay equality there is no incentive or recognition for growth in skills and competence; no personal return on learning (time

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spent and fees paid); no organizational or social benefit. This is despite the fact that skills-based pay has a strong research record (Lawler et al. 1993) and is now widely advocated to address low pay and poor pay and career progression in a situation of declining social and pay mobility (Institute for Employment Studies 2019). • The net result is that the concept of career progression has to be redefined. Instead of staff moving through the organizational hierarchy “vertically” by taking on greater management responsibility or having to undertake more complex tasks, employees will see development only in terms of added experience and job challenge. Lateral career moves however are encouraged and facilitated. Reward will only be intrinsic (personal satisfaction) not extrinsic (financial recognition). • Doing without financial incentives might lead to reduced productivity/performance. While we noted earlier the objections to individual performance-related pay, there is evidence that well-­ deployed incentives can work (Tamkin 2005). This point is evident in relation to –– sectors (e.g. financial services) and occupations (e.g. sales) where the link between individual effort and performance is obvious and can be “objectively” defined, and where staff are motivated by money. In these settings, differential pay is the norm. There may well be an argument for narrowing inequalities, but their complete removal might threaten the delivery of results by discouraging the relevant behaviors, including risk taking. Moreover, management can point to the fact that top sales staff (and the same may apply to traders and investors) apparently outperform the average to a considerable degree (Aguinis and O’Boyle 2012); and –– well-directed individual PRP can also encourage innovation (Cooke and Saini 2010). It does so, it is thought, because of expectancy theory and the effort/reward bargain, and the signaling of the importance of innovation such that employees give it their attention (Bos-Nehles et al. 2017).

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The Cuban economy is hardly the best advertisement for the benefits of a flat rate common national wage, and its government has recently announced the introduction of bonuses to try to improve productivity. The Chinese communist government in the 1950s presaged this development by differentiating wage increases according to social worth and productivity. For example, in agriculture, “Not only were payment systems expected to reflect the quality and quantity of work … but the inventing and innovating efforts of individuals were rewarded” (Hoffmann 1964, p. 98). You might expect co-operative companies to establish pay equality but that is not generally true (Whittle 2013). Indeed, there have been criticisms within the UK of co-operative companies failing to pay the living wage as well as specific criticism of pay practices of individual companies or in their supply chain (Coop News 2014, 2015). Similarly, despite the fact that Mondragon is workforce-owned and “equality is embedded in working practices” it does not have pay equality, rather a ratio between lowest and highest paid of a maximum of 1:9—lauded because it beats the 1:129 FTSE average (Young Foundation 2017).

• Genuine market variations do exist, even if some of the claims are bogus and used to justify extra remuneration, especially at executive levels. Jobs where the labor supply often fails to meet demand tend to be better remunerated (e.g. nuclear engineering in the UK). Airline pilots are paid a market premium for the fact that they are responsible for the safety of their passengers. There is still a premium, even if it is declining (Higher Education Statistics Agency 2019), for jobs requiring post school education. Some labor intensive sectors (e.g. food and drink) pay less than richer, capital intensive industries (e.g. oil and gas) or more profitable activities (investment banking), which can afford to pay more.

 esolving These Arguments and the Way Forward R for a Modern, Progressive Economy As we have seen, there are arguments for greater pay equality from an organizational perspective, but there are also serious objections. Past experience suggests that companies will only change their management

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practices if they are forced to by government regulation or by unlikely competitive behavior: there is no compelling economic reason for them to change otherwise. So, genuine pay equality would only be possible if it is seen to be socially and politically desirable. Interestingly, many supporters of the prevailing business models in the UK and US are calling for “caring capitalism” and for corporations to be held more accountable for addressing the interests of all of their stakeholders, notably employees and customers, and not just shareholders (e.g. Palladino and Karlsson 2019). In terms of reward, as proposed by Dorey (Chap. 8 in this volume) and Mohan (Chap. 9 in this volume), that might mean exploring pay ratios again. Plato advocated a top to bottom pay differential of no greater than five times, while the UK government investigated moving public sector employers to a maximum of 20 times shortly after the financial crash (Hutton 2011). However, for the foreseeable future UK government focus is likely to be on greater transparency and the prevention of outright discrimination. We would argue that the next step would be to reduce inequalities and restrict them to those that are necessary to facilitate a functioning, well-­ motivated and productive economy, one in which we collectively share the risks and rewards of being a member of any particular organization or society. We would therefore argue that government legislate against unproductive exploitation and the abuse of market power by and inside organizations. This means we agree with Professor Elizabeth Anderson who believes that there can be justification for some people to earn more than others but not for exploitation and excessive differentiation: [I]f you’re a brilliant potter, and people want to pay you more than the next guy for your pottery, great! The problem isn’t that talent and income are distributed in unequal parcels. The problem is that Jeff Bezos earns more than a hundred thousand dollars a minute, while Amazon warehouse employees, many talented and hardworking, have reportedly resorted to urinating in bottles in lieu of a bathroom break. That circumstance reflects some structure of hierarchical oppression … and it’s increasingly the norm. (Heller 2019)

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These “necessary inequalities” might include extra rewards for higher levels of responsibility for resources/projects and so on; the need to deploy knowledge and skills above a basic norm; some recognition of experience, though this can be problematic as it might simply become recognition of age and time served in the company/role; and self-funded and generated rewards for higher levels of collective performance, delivered through all employee share and profit and gainsharing plans (which is presumably why the French authorities mandate them). The question of incentives is difficult to address. This is because they are ill-suited to work where intrinsic motivation is the driver and they can work too well if they over-incentivize people to take ill-judged risks, mislead customers, bribe officials and such like (as seen in the mis-selling of pension schemes, mortgages etc.). However, it will take a lot of persuasion to convince those who value extra financial rewards that they can be just as productive without them. One approach to greater pay equality would be to severely reduce base pay differentials (reflecting skill/responsibility), but vary other remuneration with performance (as under profit sharing or gainsharing) and according to working conditions/environment. Organizations would be discouraged/prevented (depending on how dirigiste the governance model was) from varying pay according to the “market” as reflected in supply problems. Organizations would then be forced to compete on other aspects of their brand. Thus, we would argue that employers, politicians and wider society should work toward more equal incomes to achieve an Aristotelian “balance” between the extremes of total equality and increasingly high rates of inequality.

Note 1. Gainsharing is based on a specific formula that allows employees to share in any financial gains and efficiency savings made as a result of improved performance. The formula determines how the gains are to be distributed between the company and its workforce.

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11 Are There Moral Limits to Wage Inequality? Kory P. Schaff

Income inequality in democratic societies with market economies is sizeable and growing. One reason for this growth can be traced to unequal forms of compensation that employers pay their workers. The most common form is wages per hour or salary per  annum, but increasingly bonuses, profit sharing, and stock options are common forms of compensation as well. The gap between top and bottom earners has widened over the last three decades as a result. The top 10% earners have on average 10 times more income than the bottom 90%, the top 1% make 39 times more, and the top 0.01% earn a stunning 188 times more (Saez 2019). Looking strictly at wage inequality, the paychecks of top earners grew exponentially from 1979 to 2017, while the bottom 90% saw a rather meager growth of 22% despite an increase in productivity of 138% in the same period (Mishel and Kassa 2019). A key driver of this growing inequality has been executive compensation. For example, the K. P. Schaff (*) Department of Philosophy & Ethics in Engineering Program, California State University, Los Angeles, Los Angeles, CA, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_11

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CEO-to-worker pay gap was nine times larger in 2017 than 1980, while the average CEO was paid $13.94 million compared to just $38,613 for average workers (Anderson and Pizzigati 2019). Based on these data, it appears the labor power of a small minority of top earners is increasingly more valuable than everyone else combined. One way that democratic societies have tackled this problem is to enforce a standard for wages that all workers are paid regardless of education, skills, or contribution. The aim of this policy is to regulate labor markets so that workers receive a minimum amount of compensation. There is also a growing movement to establish a “living wage” that is sufficient for workers to cover basic needs such as food, housing, and health care. Even with this standard in place, however, wage inequality would still exist because it places no caps on the wages of more educated and skilled workers. Perhaps this standard might constrain the growth of inequality, but it will not by itself reduce inequality. This raises a novel question: Should there be equal pay for all workers? To answer this question, we need to investigate some of the factors that are relevant to the conditions in which wage offers are made. By clarifying these factors, we can determine whether wage inequality is morally permissible. If it is not, then a case might be made to pay all workers the same wages regardless of their education, skills, or contribution. Even if we conclude it is permissible, another question worth considering here is whether there are limits to how much inequality is acceptable. The argument proceeds along the following lines. To begin, I summarize the economic and non-economic factors that determine the value of wages in labor markets. This will help us understand the causes of wage inequality and why it tends to be an inevitable outcome of market transactions between employers and workers. Next, I examine a particular moral problem that concerns labor markets and the unequal conditions of power and authority in which wage offers are made. The issue is whether offers made under these conditions are coercive because they restrict alternatives or otherwise include threats to the welfare of workers. If there are doubts about whether these unequal conditions can ensure that offers are voluntary all things considered, then we have good reasons to establish a wage standard that improves them so they are more voluntary. Finally, I claim that establishing this standard will require increasing

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the value of low-wage work. Doing so will not only expand the alternatives that are available to these workers, it will also diminish the potential threat to their welfare. There are two arguments for improving the conditions of employment along these lines. The first entails a critical inspection of the “compensatory” value of low-wage work. Paying workers lower wages tends to be justified by claiming their labor contributes less in terms of output, but there are many features of such work that are unsatisfactory and unhealthy. Since these features are endemic and adversely affect the welfare of workers, there are reasonable grounds for increasing the compensatory value of wages for these kinds of jobs. The second argument is that some wage inequality is permissible, but there are moral limits to how much we ought to accept. These limits can be established by a living wage that aims to ensure all workers, especially those in low-wage jobs, can achieve a sufficient standard of living that is consistent with democratic values.

Wage Inequality in Labor Markets In market economies the price of a commodity is determined by three factors: the cost of materials to produce it, supply, and relative demand for its consumption. Given that labor is also a commodity, economists measure the value of wages according to supply and demand, skills and education, and marginal contribution to the product of labor. So skilled workers who are in short supply and high demand will be able to claim higher wages than less skilled workers in great supply and low demand. Since wage inequality is measured by the difference in size of paychecks, wages and salaries will be treated here as equivalents. First, the price of wages is determined by intersecting curves of supply and demand where the quantity of labor demanded is equal to the quantity of labor supplied. There are many factors that affect the supply and demand of labor of course, but all such changes merely shift the direction of the curve one way or the other depending on the circumstances of change. When there is little demand for roofing contractors in a region with severe winters, there will be a low supply of workers looking for roofing jobs in those months. Once the weather improves, the curve will

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shift as demand for roofing jobs rises. In addition, there are “contributory” and “compensatory” factors that determine the value of wages. The former is the value that workers contribute to the production of goods and services with the performance of their skills, while the latter is just compensation that includes costs they incur from this performance. For these reasons, skilled workers command higher wages because the contribution of their performance significantly adds to the value of products or services that requires the use of such skills. Moreover, acquisition of these skills typically requires more education and training, as well as a significant amount of time that it takes to pursue a degree or become proficient with advanced skills, so the compensatory part of their wages tends to be greater as well. Less skilled workers supposedly add less value and incur lower costs with their performance, so the value of their wages tends to be lower for both parts as well. Finally, the development of social capital in terms of education and specialized skills also determines the value of wages because acquiring these can be time consuming and costly. So wages tend to rise with the level of education and training workers bring with them to labor markets or they acquire from job experience. In addition, the value of wages is determined by other factors that are not relevant to the performance of the skills required for the job. Such non-economic, or non-wage, factors as they are sometimes called, may include benefits, prestige and geography, all of which effect changes in the curve of supply and demand. Consider so-called “dirty work” such as sanitation regarding these non-economic factors. Jobs that have working conditions considered debasing or hazardous tend to compensate workers more than would be necessary in the absence of such conditions. Working in sanitation is not only “dirty”, it is also dangerous, so wages for these jobs are greater than the performance of those skills contributes to output (Walzer 1983, pp. 175–176). There are other non-wage factors that are more insidious and have an impact on the value of wages as well. For example, irrational preferences may cause changes in the price of wages, ranging from benign reactions concerning a potential employee’s character during an interview to unjust forms of discrimination based on gender or race. We shall return to examine this part of wage valuation more critically in the third section.

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Given that the value of wages is determined by all these factors (and more), it is apparent why wage inequality is an inevitable outcome of markets in labor. Economists for the most part do not claim that such inequality is wrong, though they do claim there is a benefit. The price of wages acts as a signal to coordinate both individual behavior and social cooperation. So good-paying jobs that require special skills can provide individuals with incentives to acquire those skills through education or training in order to demand higher wages for their labor. In this respect, wage inequality is supposed to act as an incentive for individuals to develop their social capital. This is beneficial to individuals because it helps them realize their preferred skills and improves their welfare, and it can benefit the economy as a whole by spurring innovation and promoting growth.

Freedom, Coercion, and Wage Offers There is currently no consensus among philosophers whether there is any single objective standard for determining what is right or good. There is significant disagreement whether acting according to self-interest, virtue, duty, or consequences offers the appropriate standard for evaluating our intentions and actions. Nevertheless, it is worth noting that the purpose of ethical theory in general is to guide our actions on the basis of rational principles. So different normative claims can be made about work in this regard. By way of example, consider ethical egoism. As a theory, it purports to show that individuals should act on their self-interest because doing so is mutually advantageous and encourages the efficient allocation of resources (Rachels 2003, p. 83). Based on this principle, wage inequality would be especially permissible because it is beneficial to market economies. A different line of argument might be taken by virtue theory, however. Living a “good life” requires having the traits of a good character that are acquired through reflection and habit (Rachels 2003, p. 173). On this view, gainful employment can promote a variety of such traits. The slogan “an honest day’s wage for an honest day’s work” reflects the idea that working diligently promotes self-sufficiency and cultivates honesty, reliability, and punctuality.

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The point here is not that any particular theory is the right one for answering the question whether wage inequality should be permitted. Although most economists claim that markets are morally “neutral” in some sense of the term, there are many places where morality and markets do intersect. Even though the models found in positive economics aim to describe and predict what happens in market economies under various conditions, the reality is that markets are actually determined by human behavior and decision-making. For this reason, there are always concerns about the ways in which human behavior and choices in real market conditions can affect our morally relevant interests. In the case of wage inequality, these interests are directly implicated because the satisfaction of welfare depends on having sufficient wages. In addition, the welfare of individuals is interdependent in markets, such that enforcing wage standards can improve the welfare of all. Conversely, the failure to enforce standards can diminish welfare. “Allowing some people to work for whatever salary (e.g. having no minimum wage) affects the wages that other people are able to command” (Hausman et al. 2017, p. 100). Since wages do have a direct effect on the satisfaction of welfare, we have compelling reasons to consider whether there are moral problems with this form of compensation and how these ought to be addressed. One longstanding concern about modern work focuses on its relationship to freedom. Most of us take for granted that employment is voluntary, so questions about whether there is a moral problem with it rarely, if ever, arise. Given that sellers of their own labor-power are free to accept or reject the terms of employment, it appears that this relationship respects the value of freedom. The voluntariness of this relationship, however, depends on a variety of conditions that may include factors that limit or subvert freedom. First, there are vastly unequal relations of power and authority within the relationship between employers and workers. These inequities weaken the bargaining power of the latter from the outset. Workers are at a disadvantage because they need work to satisfy their welfare (and that of their dependents), while employers are free to choose from many candidates for the job. Second, there are social and political forces beyond the scope of this relationship proper that also have on outsize influence on hiring, promotions, and compensation. Consider the legacy of racism and its effects on hiring in employment. Research shows

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that racial biases can determine whether job candidates are selected for interviews on the basis of stereotyping about their names during the application process (Levitt and Dubner 2005, p. 188). The fact that such factors do influence the conditions of the employment relationship does raise doubts that it is exclusively voluntary, at least in the sense that the value of freedom is realized equally and effectively for all parties concerned. We can begin by asking whether the conditions in which wage offers take place are sufficiently equalized, so that no one is disadvantaged or limited in their freedom. Many philosophers claim this cannot be the case with wage labor because there are unequal relations of power and authority between employers and workers from the start. For example, part of Marx’s critique of capitalism is that wage labor “is not voluntary, but coerced, forced labor” (Marx 1994, p. 62). He claims there are significant political differences between the modes of production found in slavery, serfdom and wage labor, but coercion still remains in what otherwise appear to be voluntary transactions in labor markets. This is due to the structure of property relations found in capitalism where a small class of owners maintains control over the means of production, while a large class of producers must sell their labor to them in order to satisfy their welfare. In the employment relationship, the latter start out from the disadvantage of necessity. They are compelled to work for the former since the alternative of unemployment remains a perpetual threat to their welfare. Marx’s claim is that workers are forced to accept the wages that employers offer, or risk an alternative that makes them worse off. Therefore, unequal relations of power and authority confer an obvious advantage on employers that undermine the conditions of voluntariness for workers. The concern that various kinds of inequalities can lead to coercion is also the topic of a recent debate. In a classic paper, Robert Nozick claims that “coercion” must meet certain conditions in order to be accurately described as such (Nozick 1969). He claims that a proposal between P and Q is coercive if and only if it includes a threat so that accepting other alternatives will make Q worse off than if the latter were to accept the proposal. Nozick’s conception is narrow in the sense that the threat must be effective and the proposal accepted in order for a transaction to be coercive. There can be no potential coercion in his view, because it only

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takes place when the threat is sufficient to compel the desired outcome. Q would be free to accept or reject P’s offer in the absence of a threat. There is no such thing as coercive offers, then, because there are usually no threats involved in making offers. Nozick’s definition of coercion here is too restrictive. It seems at odds with our ordinary judgment that proposals can be coercive without necessarily achieving the outcome that is demanded by a threat. Let us consider the possibility of coercion in employment relations without dehumanizing the respective parties as variables in an equation. Instead of P and Q, suppose Sherri makes a proposal to Terri that relies on a threat to compel the latter to do her bidding. Sherri claims that either Terri does her work for her, or she will tell their supervisor that she is not doing her own work. In this situation, we do not normally conclude that Sherri’s attempt to coerce Terri is unproblematic as long as it is does not work. The former’s actions are plainly wrong because it is pernicious to use coercion as a method to get the latter to do her bidding. What this example shows is that threats are morally impermissible whether they are successful or not. Now let us return to the question whether wage offers are coercive because they depend on threats. We typically think of offers and threats as entirely different sorts of proposals. Offers are accepted or rejected without consequences, while a threat aims to compel a particular choice with the force of its consequences. So what, if any, threat is there in making a wage offer? The political philosopher Hillel Steiner first used the notion of a “throffer” to talk about the ways in which offers may include threats that are implicit or indirect (Steiner 1974–1975). With respect to wage labor, the implicit threat appears to be that workers will be worse off if they do not accept an offer. In response to Nozick’s conclusion, David Zimmerman claims that wage offers in capitalism are coercive because: “(1) an alternative pre-proposal situation workers would strongly prefer to the actual one is technologically and economically feasible when the offer is made, and (2) workers are prevented from having at least one of these feasible alternative pre-proposal situations” (Zimmerman 1981, pp. 144–145). In this way, wage offers restrict the freedom of workers when there are feasible alternatives and they are prevented from opting for at least one of these. There can be no doubt that all workers prefer a

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pre-proposal situation where they enjoy better wages and working conditions. Yet they are prevented from these by the limited choice they are faced with whether to accept an offer or reject it. Where is the threat here? Suppose Rod offers Todd a low-wage and menial job. On Zimmerman’s view, the offer will be coercive if there are alternatives that Todd would prefer that are feasible at the time and he is prevented from opting for at least one of these. Clearly, he prefers a meaningful job that pays more. The fact that this alternative is not available to him is determined, in part, by the structure of property relations found in capitalism and the contingency of labor markets entailed by it. If Todd is prevented from opting for better employment conditions in this respect, it does not necessarily arise from a threat. Perhaps there is “social forcing” happening here insofar as he is prevented from selecting that alternative or it is altogether suppressed from consideration (Ezorsky 2007, pp. 16–17). There is also a threat that he will be worse off, however, if he does not accept Rod’s offer. What makes Todd “worse off” precisely? Without having gainful employment, he cannot satisfy his own welfare (or that of his dependents), so the threat lies in rejecting the offer. The choice Todd has to accept or reject it entails very different outcomes. The difference is between not having an option one might prefer to begin with, versus facing an option that is not preferable at all. For example, Todd may not have the option of joining a union that will ensure higher wages because he lives in a “right-to-work” state. While that certainly limits his freedom to choose a preferred alternative, it is not on the basis of what we typically call a threat. If Todd rejects the offer though, he will almost certainly be worse off for not having a job. So there is a “threat” implicit in the conditions in which this offer is made. While he may be formally free to reject the offer, it will likely come at a cost to Todd’s welfare (and also that of his dependents). The threat need not be made explicit by Rod because it is, in effect, always already part of the conditions in which wage offers are made to workers. There is a standard objection to the argument here that wage offers can be coercive, which appeals to a formal conception of freedom. The claim is made that workers are always free to make a choice whether they are made worse off by one or more of the alternatives. Consider an offer that Crazy makes to Lazy for little compensation in an unrewarding job (Van

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Parijs 1991). As an employer, the former estimates the value of this work based on the marginal product of labor whereby adding the latter as an additional unit of labor will increase output. So Crazy makes an offer that is determined on the basis that Lazy’s contribution is likely to be consistent with his namesake. In short, limited contribution justifies meager wages. Lazy accepts the offer despite the pay and unattractive qualities of the job. Surely, he will be better off than he would be without the job (assuming he is unemployed, or has a job that pays even less). Since Lazy is just as free either to reject or to accept the offer, his choice appears to be entirely voluntary. This conception of freedom holds the view that all choices may present limits, but none of these limits compel Lazy to make any particular choice one way or the other. Therefore, Crazy’s wage offer cannot be coercive in any meaningful sense of that term. Whether Lazy has at least one other opportunity here, or whether he can get better wages for it, is irrelevant to his ability to make a choice based on the options before him. Nevertheless, what this formal conception of freedom fails to appreciate is that unequal relations of power and authority do have significant influence over the employment choices that we make (Anderson 2017, pp. 41–42). The claim that all wage offers are voluntary ignores considerations about whether the right conditions are in place for freedom to be realized equitably. Todd’s dilemma reveals that the choices and welfare of workers are restricted or threatened, especially in less regulated labor markets where wage offers are made. Like everyone, he prefers higher wages and more satisfying work. To the extent his preferred alternatives are restricted by such conditions, he is less free than he might otherwise be. There is also an implicit threat hovering in the background of Rod’s offer as well. If Todd rejects the offer, the alternative of unemployment surely poses a real risk to his welfare. Perhaps the choice confronting him is a choice, but he is still compelled to take the job in order to satisfy his needs. In effect, he is forced to accept the offer because he is threatened with a reduction of his welfare.

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Moral Limits to Wage Inequality If we accept that freedom is valuable to everyone, then democratic societies have an obligation to create and ensure conditions that practically realize it for all workers, no matter their education, skills, or contribution. In practice, this means that they should have the option of rejecting employment that is excessively restrictive without threats to their welfare looming over their choices. Are there any means available for improving these conditions in democratic societies? Consideration of this question must begin with the recognition that unequal relations of power and authority in employment are not inevitable. They can be altered to improve the choices of workers while diminishing the coercive aspects of wage offers. Whether we find Rod’s offer morally permissible, therefore, depends on whether those factors that restrict Todd’s options or threaten him with a worse alternative can be changed for the better. One radical approach was suggested at the outset: to pay everyone the same regardless of education, skills, or contribution. This would certainly have the effect of immediately equalizing power and authority in employment relations by eliminating wage inequality altogether. However, the effects of this approach would appear to be mixed at best. While a policy of “equal pay for all” could expand alternatives and diminish threats to welfare for less skilled workers, it might also diminish opportunities for skilled workers and reduce demand for improving social capital in terms of education and training. Perhaps there is a less disruptive way of expanding choices, minimizing threats to welfare, and realizing freedom more equitably. Does the achievement of these goals require paying all workers the same wages? Or can employment conditions be improved for all without enforcing equal compensation? I shall now consider two arguments for improving the conditions of work by establishing a standard that is sufficient for all workers to achieve a decent level of welfare. First, a critical inspection of the compensatory value of wages reveals there are some factors associated with low-wage work that justify increasing its value on this basis. There are many non-­ economic factors that can affect the value of wages, and these range widely from weather to occupational safety. As discussed earlier, weather

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affects the price of wages for roofing contractors because the supply and demand curve shifts significantly in regions with extreme seasons. One might claim that weather is a material fact that we cannot control. While that may be true, there are other relevant factors of compensation affecting wages that can be altered. We can look to the example of sanitation work again, which has higher rates of compensation in order to attract and keep workers. These jobs are inherently debasing and dangerous, even though they can be made safer by establishing rules, investing in training, and cultivating workplace culture. Dangerous workplaces that take safety and training seriously, then, can be more productive and have less down time due to injuries. Since making these kinds of changes can positively affect the value of wages, a case can be made for altering other such factors as well. Consider several of the negative factors endemic to low-wage work. These jobs are typically unsatisfactory because of meager compensation, restricted autonomy, limited opportunities for advancement, and insecure employment. They also tend to lead to unhealthy outcomes for workers who are trapped in them. For example, a growing body of research shows that individuals in low-wage work suffer serious health effects including higher rates of disease and even decreased life expectancy (Chetty et  al. 2016). None of these factors are immutable and therefore can be changed for the better. So we have reasonable grounds for improving them by increasing the compensation value of low-wage work, despite the limited contribution that workers in such jobs supposedly make. Second, a living wage can ensure that all workers have an income that is sufficient to attain a decent standard of living consistent with democratic values. Enforcing this standard also establishes limits for how much wage inequality is acceptable. From the moral point of view, all persons have an equal worth that obligates others to respect and fulfill their relevant interests. These interests include access to subsistence, security, self-­ respect, and community. In principle, a minimum wage standard should aim to secure and protect these interests as well. Yet the concept of “minimum” has historically been disconnected from the actual costs associated with a decent standard of living in many democratic societies with market economies. By emphasizing the concept of “living” in establishing a

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wage standard, advocates have rightly drawn attention to the fact that there is a baseline that must be respected. This baseline is determined by the cost of basic needs for clean water, nutrition, housing, and health care. No one can survive, let alone flourish, without having their needs satisfied at this level, so everyone has a morally relevant interest in ensuring they have access to resources for fulfilling them. Since paid employment in labor markets is the fulcrum on which this access pivots, the value of wages for all workers should be determined by what it costs to ensure that a decent standard of living is equitably distributed. The purpose of a living wage is to set this standard high enough so that workers can satisfy their needs, but also have more choices with respect to employment and less worry that rejecting any job offer is a risk to their welfare. As a practical matter, recognizing that many jobs are unsatisfactory, unhealthy or both, and establishing a wage standard to improve these factors, can strengthen the relative position of all workers. The effect of this policy will not only expand choices but also reduce the coercive aspects of wage offers. The question whether wage inequality is morally permissible, then, turns out to be one that is not based on an “either/or” binary, but on a spectrum wherein those relevant conditions can be altered to enhance the prospects of freedom for all. If wage offers are acceptable insofar as we set a standard to improve the conditions under which they are made, then some wage inequality will be permissible as long as those standards are met for everyone. So paying workers differently for different kinds of work is not intrinsically wrong. In this respect, the proposal of “equal pay for all” shoots past the mark so to speak. The problem it aims to correct is that many workers are worse off in labor markets where they are forced to accept offers under conditions of seriously unequal relations of power and authority. As a result, their choices are restricted and welfare threatened given the choices that they do have. While enforcing a standard of equal compensation might appear to resolve this problem, its effects would likely undermine it as a solution. These effects include limiting the capacity of markets in labor to allocate resources efficiently, as well as eroding incentives for workers to improve social capital. Although such a policy might be incompatible with market economies, its intention to correct the problem of inequality is appropriate. There is an intermediary step that can be made, however,

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to constrain the problem of unequal relations of power and authority between employers and workers. By establishing a living wage standard instead, the unrestricted conditions of wage inequality can be improved in ways that expand choices for workers and minimize the coercive aspects of wage offers. Thus, freedom can be practically realized not just for the increasingly well-off few, but also for the growing many who are less well off. Acknowledgments  Special thanks to Richard Arneson, Michael Cholbi, Anders Örtenblad, David Schweickart, and Mark D.  White for commenting on this chapter. Although I have not incorporated all their recommendations here, my views on the moral limits of wage inequality have certainly been improved by them.

References Anderson, E. (2017). Private government: How employers rule our lives (and why we don’t talk about it). Princeton, NJ: Princeton University Press. Anderson, S., & Pizzigati, S. (2019). Executive excess 2019. 26th Annual Report. Washington, DC: Institute for Policy Studies. Chetty, R., Stepner, M., Abraham, S., Lin, S., Scuderi, B., Turner, N., Bergeron, A., & Cutler, D. (2016). The association between income and life expectancy in the United States, 2001–2014. Journal of the American Medical Association, 315(16), 1750–1766. Ezorsky, G. (2007). Freedom in the workplace? Ithaca, NY: Cornell University Press. Hausman, D., McPherson, M., & Satz, D. (2017). Economic analysis, moral philosophy, and public policy (3rd ed.). Cambridge, UK: Cambridge University Press. Levitt, S., & Dubner, S. (2005). Freakonomics: A rogue economist explores the hidden side of everything. New York: HarperCollins. Marx, K. (1994). Selected writings: The economic and philosophical manuscripts of 1844. Indianapolis, IN: Hackett Publishing. Mishel, L., & Kassa, M. (2019, December 18). Top 1% of earners see wages up 157.8% since 1979. Economic Policy Institute: Working Economics Blog. Retrieved January 31, 2020, from https://www.epi.org/blog/top-1-0-ofearners-see-wages-up-157-8-since-1979/.

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Nozick, R. (1969). Coercion. In S.  Morgenbesser, P.  Suppes, & M.  White (Eds.), Philosophy, science, and method: Essays in honor of Ernest Nagel (pp. 440–472). New York: St. Martin’s Press. Rachels, J. (2003). The elements of moral philosophy (4th ed.). New  York: McGraw-Hill. Saez, E. (2019). Striking it richer: The evolution of top incomes in the United States. Pathways Magazine. Stanford Center for the Study of Poverty and Inequality. Retrieved January 31, 2020, from https://eml.berkeley.edu/~saez/ saez-UStopincomes-2018.pdf. Steiner, H. (1974–1975). Individual liberty. In Proceedings of the Aristotelian Society (Vol. 75, pp. 33–50). Oxford: Oxford University Press. Van Parijs, P. (1991). Why surfers should be fed: The liberal case for an unconditional basic income. Philosophy and Public Affairs, 20(2), 101–131. Walzer, M. (1983). Spheres of justice: A defense of pluralism and equality. New York: Basic Books. Zimmerman, D. (1981). Coercive wage offers. Philosophy and Public Affairs, 10(2), 122–145.

12 Equal Pay for a Green Future Harald Knudsen

Introduction The question of equal pay for all, regardless of profession, organizational role and responsibility, or location, raises the question of absolute equality versus more equality. Universally equal pay for all is difficult to comprehend, among others, because it is difficult to define a precise income level and which forms of income to include (Schurman, Chap. 13 in this volume; Bøhn, Chap. 17 in this volume). The purchasing power of a dollar differs widely among and even within societies, and a target of equal pay would also mean to control for other sources of incomes and losses, which in a liberal society would make an equality assessment impossible, and implementation would call for severe limitations of freedom. In George Orwell’s Animal Farm (1945/2008), the pig leader, named Napoleon, states: “All animals are equal, but some animals are more equal

H. Knudsen (*) University of Agder, Kristiansand, Norway e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_12

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than others”. On a global scale it would be difficult to define equality, whereas we all know what inequality is. It is argued in the present chapter that while equal pay for all may be an ideal worth holding on to, in a complex and endangered world, a high ideal should not be the enemy of a good alternative. More specifically, I feel that the question of being pro or against equal pay cannot be answered with a simple “yes” or “no” response. The answer should be qualified according to time and context. For the reasons mentioned, I do not believe equal pay is even practically feasible at present, and I do not believe our world is ideologically ready for an equal pay direct transformation of the economy. I also believe that attempts to introduce equal pay by revolutionary action would be doomed to fail. I believe that the old conservative argument against revolutionary change of the political economy, dating back mainly to Edmund Burke (1729–1797), still holds. Burke is recognized as the philosophical founder of modern conservatism, and a strong critic of the French Revolution, his argument being mainly that societies are extremely complex. What holds them together are rules and regulations and informal bonds and expectations, that cannot be easily substituted or improved by a revolutionary authority. I believe that the introduction of equal pay in our present-day economy would involve revolutionary change of “Burkesian” proportions, beyond what can be smoothly implemented. I am afraid that very bad things might result. On the other hand, present income and wealth inequalities are clearly destructive at a large scale, undermining social contracts of societies and being a source of distrust, hatred, and violence around the world (Mohar, Chap. 9 in this volume). I believe in progressive income- and wealth taxation as means to reduce the gaps, starting at the top. And I also believe in a universal minimum income reform, reducing the gaps from below, complementing and to some extent replacing elements of present welfare states (Frederking, Chap. 14 in this volume; Cooke, Chap. 7 in this volume). I also believe that in order to cope with the consequences of a rapidly evolving climate and environment crisis, a universal minimum income reform will be necessary in order to give people a basic economic security, and also a political economic platform for solidary, and for mitigative and adaptive global action. I further believe that the emergence of

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an artificial intelligence (AI)–driven economy will force both elites and workers to seriously re-examine the concepts of work and pay. At such a stage, which may be less than 50 years from now, the political economic context may be ripe for equalizing the universal minimum income level with a level of equal pay—as argued in the present chapter. Given the prospects for extreme climate mitigation and adaptation, in a world also to be dramatically changed by artificial intelligence-driven unemployment, the labor market, as we know it today will be largely replaced by other political-economic forms. Such trends point toward equal pay in the form of a guaranteed minimum income, that will include more and more people, combined with strong taxation of wealth and high incomes, until basically equal pay is in place. In a “Star Wars” type of organizational context, where no human input is required for the production of necessities, pay inequality becomes increasingly meaningless, whereas the creation of value beyond necessities, such as art, care and culture, can be left largely to voluntarism. There is no blueprint for such a new agenda, but on the way toward an equal pay economy, some basic ingredients can be suggested, including a guaranteed minimum income, inequality-reducing tax policies, environment- and climate-damage mitigation, “polluter pay” taxation and damage compensation, and regulation of corporate-level wage gaps. Two lenses are suggested to help us envision a new order: (1) taking a Leibnizian “argumentum ad absurdum” view of job losses caused by artificial intelligence (AI), and (2) bringing a “dugnad” perspective of voluntarism to bear on the concept of economic growth and employment. An overview of the argumentation is shown in Fig. 12.1.

Income Gaps and Job Losses According to the “World Inequality Report” (Alvaredo et al. 2018) income inequality has recently increased in nearly all parts of the world. It is generally assumed that the main policy instruments for reducing global and intra-national inequality are tax policies, including progressive income taxes and taxes on inheritance and wealth, as well as the closing

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Neo-liberal tax cuts, deregulation, and privatization Corporate level wage gaps

Globalization Digitalization, AI

Environmental (“overshoot”) degradation Climate change

All-time high inequality Job creating stagnation Social and health consequences Corporate level de-motivation Political unrest Growing hatred

Political tension Need for fundamental reform

Growth limitation Damage, mitigation, adaptation

Change of perspective: Leibniz type “argumentum ad absurdum” for economic transfer and basic income

A new agenda: Basic income guarantee Environmental regulation Taxation Wage gap regulation

Freedom from meaningless work Engagement in arts, care, education, research, culture, green innovation, green services

Change of perspective: “Dugnad” economy principles for work

Fig. 12.1  Analytical framework for a new agenda. (Source: Author)

of tax evasion loopholes and tax havens (Alvaredo et al. 2018). We shall add that the gap may also be closed by raising the bottom income. Gaps in income and wealth do not directly transfer to employment levels and terms of job contracts. Nevertheless, according to data provided by the International Labor Office (ILO 2019), there is still a persistently high global level of unemployment and underemployment, with a steady decline in labor force participation over the last 25 years, and with many new jobs in emerging economies coming without job protection and a livable income. While much inequality can be ascribed to local and national traditions, cultural differences, and political systems, there is little doubt that the increase of inequality in modern societies is mainly a result of neoliberal tax reforms since the Reagan/Thatcher era. “Market

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fundamentalism” suggested that taxes on business and on the wealthy, as well as public regulation of markets, should be minimized in order to stimulate private investments, job creation and prosperity for all through “trickle-down economics”—re-named “supply-side” economics by President Reagan’s budget director, David Stockman (Dabla-Norris et al. 2015; Frank 2007). Recent research demonstrates to the contrary that job creation is mainly driven by tax cuts for the 90% lower-income groups, and that tax cuts for the top 10% income groups tend to have a minimal impact on overall employment (Zidar 2018). In addition to neoliberal reforms, corporate policies have reinforced inequality trends by widening the gap between top management and workers’ pay—even to an extent that undermines motivation, performance and loyalty (Bloom 1999; Kiatpongsan and Norton 2014; see also Dorey, Chap. 8 in this volume). The inequality impact has been dramatic, particularly in the US, with CEO compensation according to a recent source having grown 940% since 1978 compared to 12% for typical workers (Mishel and Wolfe 2019). Generally, level of inequality is much more important for the well-­ being of citizens than level of national income per head. Inequality reduction is more important than economic growth. This holds for just about every indicator of well-being. Life expectancy, child well-being, education, health, crime, trust and belongingness, drug abuse, mental problems, social mobility, and inter-generational income mobility—all seem to worsen with inequality (Pickett and Wilkinson 2010).

Globalization and Technology Unemployment Globalization is justified, in trade theory terms, by claims of better human and material resource utilization and greater consumer satisfaction. The downside is that when production is spread through multinational direct investments or offshore outsourcing, jobs are lost at home, leaving behind rust belts, unemployment and social distress. For the host country, investments and outsourcing tend to create job opportunities and wage rises, but in countries with an abundance of “free labor” and lack of organized labor traditions, starvation wages and worker harassment is often the

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result. For the home country, import of cheap consumer goods is an immediate benefit, but that does not always help workers who have lost good manufacturing jobs. With increasing work robotization, some companies are already reversing their outsourcing policies, bringing production home. This may hurt developing countries more than developed ones, with a high percentage of outsourced jobs at risk of automation-competition from rich countries (United Nations 2018). The marginal price of robot production will increasingly replace the marginal price of labor in less developed countries as determinants of wage levels in developed economies. The technological unemployment issue has been with us since the early years of industrialization (and debated since Aristotle). Until the present age, technological unemployment has been what Mincer and Danninger (2000) called “a myth”, with innovation-driven job creation dominating over job loss. However, since the beginning of the twenty-­ first century, the pessimists’ side seem to have gained new ground. Industrial automation and robotization is today widely perceived as a threat to manufacturing jobs—and with future artificial intelligence (AI) a threat to nearly all kinds of jobs. While globalization and automation of production have hit blue collar workers hard, white collar work, service jobs, and even professional jobs are increasingly at threat of becoming “rationalized” away with the coming of AI (Autor and Dorn 2013; Beaudry et al. 2016; Katz and Margo 2014). Estimates of short term future job losses in developed countries range from less than 10% according to Forrester Research (Gownder et al. 2017), more than 40% (Frey and Osborne 2017), and on a longer scale close to a 100% (Khosla 2012; Kook 2018; Krakovsky 2017). Whatever the estimates, a new consensus seems to be emerging, that technological unemployment is here to stay—captured in Martin Ford’s (2015) award-winning Rise of the Robots: Technology and the Threat of a Jobless Future. Also, we may notice that technological unemployment, like all unemployment, concern both the loss of income, the loss of value of “work for its own sake”, and the loss of job belongingness as a basic, stabilizing political institution in society.

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Climate and the Natural Environment In much of Europe, the threats of a global temperature rise and dramatic climate change is now ranked as political issue number one. Seventeen of the warmest 18 years since 1880 have been observed after the year 2000. Nine of the ten warmest months of July since 1880 have been registered after the year 2005. The “merchants of doubt” have all the time been producing denial literature (Hamilton 2010; Hoggan and Littlemore 2009; Michaels 2008; Oreskes and Conway 2010), but as evidence of man-made emissions, a warming Earth and more extreme weather is becoming manifest, we can no longer make economic predictions as if the problem didn’t exist (Nordhaus 2015). According to the Paris agreement, and the supporting fifth IPCC report (IPCC 2014) global emissions have to be reduced 50% by 2030 and near 100% by 2050 in order to avoid catastrophic and irreversible temperature rise. Targets are set at 1.5–2.0 °C temperature rise, whereas according to updated projections we are heading for a 3.0–4.0 °C temperature rise by 2100. While the IPCC reports state their case in a scientific, extremely conservative language, a much more vivid and scary exposition can be found in David Wallace-Wells’ thought-provoking book, The Uninhabitable Earth (2019). The outlook for climate change and mitigation are indeed bleak. Still more scary than present trends and outlooks for extreme weather and damage, are the outlooks for tipping points and “second generation”, domino-type cascading, leading to dramatic change of earth trajectory, with natural system positive feedback mechanism taking over—leaving very little room for (man-made) mitigation. What is man-made, is also up to a certain “tipping point” man-reversible. Of particular relevance to the present chapter, The Fourth National Climate Assessment report to the US president by the Global Change Research Program (2018), underscores that the consequences of global warming will hit poor and marginalized communities most negatively, stating that risks are often highest for the most vulnerable, and that climate change threatens to exacerbate existing inequalities. If inequality

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impact holds for internal US consequences, it is likely to be even more pronounced globally. In addition to direct warming effects, there are non-climate consequences of man-made interference with the natural environment. To measure global overload of the environment, an “Earth Overshoot Day” is calculated every year by the Global Footprint Network (2019). The Overshoot Day marks the time of the year when humanity’s resource consumption exceeds Earth’s carrying capacity, dividing the world’s biocapacity by its ecological footprint—or the day of the year when we start consuming what should be left to our descendants. Globally, Earth Overshoot Day in 2019 was the 29th of July. Whereas the wealthiest countries had Overshoot Days in early spring, the poorest countries had an Overshoot Day in December. The Overshoot Day calculations can never be fully precise, but they add to the visibility of the environmental crisis. We realize that the climatic and environmental crises ahead are not so much about specific pollutants, such as rising sea water, but about the totality of global production and consumption, and about a long range of consequences striking unequally and unfairly at many fronts. Ironically, we also realize that the costs of mitigation and the need for severe regulations of markets will increase more the longer action is delayed—contradicting the efforts of neoliberals to resist regulations and taxation. As ironically noted by Oreskes and Conway (2010) the costs will be higher and the consequences worse, the longer national leaders listen to the “merchants of doubt”.

Toward a New Agenda At the organizational level, high inequality tends to foster a culture of de-motivation and low trust and loyalty, undermining innovation and efficiency. At the political level, by undermining the well-being of people, economic inequality breeds political antagonism and unrest, adds to hatred, and provides breeding grounds for political extremism and violence (Mishra 2017).

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We have listed a number of material reasons for change of course. Moral grounds for a change of priorities are recounted by Pope-Francis in his encyclical letter “Laudato Si” (2015), and by environmentalists, church leaders and lay people around the world. We need to restrain the deadly sins of greed and gluttony and start sharing with fellow citizens and caring for future generations. But we may legitimately ask critically what will happen to employment and equality if we all stop buying things, going instead for repairing, re-cycling, and shopping in second-­ hand stores? A reformed political economy has to be capable of supporting moral action, add to greater equality and to growth in non-material and green sectors, including the arts and cultural activities, education and scientific work, caregiving and non-material and green service provision. In order to open up our eyes to the magnitude of reforms and also the positive promises offered by the needed reforms, two far-out lenses are suggested in the following paragraphs.

An Absurdity Perspective The philosopher Gottfried Wilhelm von Leibniz (1646–1716) suggested a form of logical proof called “reductio ad absurdum” or “argumentum ad absurdum”, with roots in Socratic and pre-socratic Greek philosophy, meaning to bring an argument to an extreme or absurd conclusion (Ferguson and Priest 2016). In the actual case of automation and AI we may state as an extreme (absurd) premise that all jobs in the future are lost to the robots: what would be the consequences for the market economy? If we also make the assumption that there is no built-in welfare system for transferring money from the “haves” to the “have-nots”, the demand curve in market-economic equilibrium models would simply disappear. With no jobs, there would be no income from work, no purchasing power, and no demand—and no earnings to the owners of means of production. In order to sustain a market, and for producers to earn a profit, money would have to be transferred to consumers through some form of taxation/welfare transfer system (or by lottery). It seems logical that in

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order to maintain a market and some level of order and cohesion in society, the social contract thus established ought to premise a high-enough level of equality and a high-enough level of transferred income to let individuals flourish—consuming their share of robot-made output.

A “Dugnad” Perspective There is a specific Norwegian word for dedicated, voluntary work, “dugnad”. Most translations simply point to “voluntary work”—in general. It is admitted that a “dugnad” may sometimes be felt like a burden by members of local sport clubs or resident’s associations, but the essence of the dugnad tradition is the coming together to do a job for someone in the family, for a group of friends or for a neighborhood. The motivation lies in the will to help and the fun of working together—such as for a young couple moving into their first home. What if we replaced the fundamentalist doctrine of economic growth (and the built-in assumption of material growth as necessary for employment, and employment as necessary for political survival), with a concept of a “dugnad economy”, where we all, according to capacity and talent, do what is needed to get a job done, and thereafter relax and let creative powers take over? A “dugnad economy” would do away with much of the stress and meaninglessness of many jobs, and favor “work for its own sake” and for the sake of social togetherness. Perhaps it is time to consider a global dugnad alternative (Haugestad 2003).

Ingredients of a New Agenda It is impossible to specify a full package for equality, climate and environmental mitigation and adaptation, overall economic security, and well-­ being. Strategies will have to be tailor-made for countries or regions according to cultural traditions and business structure. What is needed in Scandinavia is not the same as in Mali.

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It is possible, however, to deliver on a list of relevant policy options. Some of these have been proven by experience, while some need to be developed experimentally and gradually.

Taxation for Inequality Nearly all experts on inequality point to well-proven progressive taxation of income and wealth, in order to reduce large economic gaps in society and to finance welfare. The closing of tax loopholes, corruption and tax havens is also needed, in order to make fiscal instruments work in real life. Ideally, such measures should be internationally coordinated. Companies may also voluntarily adopt governance rules for maximal wage gaps between top and bottom in the organization, as part of their CSR (corporate social responsibility) policies, relating to both wage level and bonus systems. But national law-makers may also impose such rules on business firms, adapted to company size.

Taxation for Climate and Environment Mitigation Climate change mitigation calls first of all for greenhouse gas taxes—on carbon oxide, methane, and nitrous oxide. Some countries have adopted taxation of CO2 emissions, but generally such taxes are too low to really hurt. And even fewer have implemented taxation of other greenhouse gases—notably methane (CH4), a gas that is more than 30 times as potent as CO2, accounting for some 16% of the greenhouse effect, nearly all stemming from meat production—from enteric fermentation in ruminants (Ripple et al. 2014; The Lancet Commission 2019). Worse than the absence of taxation of emissions is the fact that major nations instead have huge subsidies for fossil energy (Coady et al. 2017). Also, dealing with the more general environmental “Overshoot Day” type of problem, there also needs to be taxation of overall material consumption, unless footprint analysis clearly documents that the product is truly “green”. Incomes from such taxation should be redistributed to

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consumers in the form of subsidies for “clean” products and non-­polluting growth sectors.

Helplessness, Security and Flourishing The sum total of present inequalities and threats to future living is likely to cause both denial, pessimism and hopelessness, and also widespread dissent and rebellion. The overriding loss of economic security has to be countered with measures for increased security and some form of basic income. Local workplace solutions to downscaling and unemployment include temporary sharing of jobs, reduced work weeks, retraining for other jobs, and in-sourcing as opposed to outsourcing. Generally, local compensatory initiatives are short-lived, unevenly spread, offering only modest security to those affected. At the other end of the scale, modern comprehensive welfare systems, offering direct public money support to unemployed and needy people, on the one hand tend to be robust and provide basic security, while on the other hand tending to come with bureaucratic strings that are both costly to society and difficult to maneuver for the needy. It seems that the time now is ripe for a total overhaul of both welfare ideology and neoliberal market thinking. And we need to seek solutions to many challenges at the same time (Klein 2019). The vision for a Green New Deal, brings this lesson to the forefront. Green movements with similar ambitions are at work in most parts of Europe and elsewhere around the world. At the core of our combined challenges is to come up with a system of income distribution that will be robust and enduring in the wake of joblessness, climatic and social strains. In October 2016, toward the end of his presidency, US President Barack Obama in an interview with Scott Dadich and Joi Ito stated that “unconditional free money for everyone” would be debated within the next 10–20 years, due to the artificial intelligence revolution (Javelosa 2016). In fact, the President wouldn’t have to wait for 10–20 years for such a debate. Already at the World Economic Forum in Davos, January 2019, Dutch historian Rutger Bregman, author

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of Utopia for Realists: And How We Can Get There (2016), an expert on guaranteed basic income, was invited to speak on wealth inequality and used his time to confront wealthy attendants about their failure to pay taxes. A guaranteed basic income comes with many names meaning basically the same—“civiele lonen”/”Zivil Löhne”/”borgerlønn”, “basic income”, “unconditional cash”, “social cash transfers”, “just giving money” and “negative income tax”. It is beyond the format of this chapter to review the many experiments, examples, and economic theories in favor of a guaranteed basic income, but it is worth noting that an extremely diverse assembly of economist and prominent thinkers have backed the idea— from Thomas More, to Thomas Paine, John Stuart Mill, Herbert George Wells, George Bernhard Shaw, John Kenneth Galbraith, Paul Samuelson, Jan Tinbergen, Martin Luther King and Bertrand Russel. Perhaps even more interesting and striking is that neoliberal market promoters Friedrich Hayek and Milton Friedman have supported the negative income-tax version of a basic income, while not necessarily going for a universal basic income (Rallo 2019, 2019–2020). It is also worth being reminded that President Nixon in 1971 launched a welfare reform program with a basic income/negative income tax as a centerpiece (Bregman 2016; Passell and Ross 1973). Unfortunately, the proposal was not approved by congress, and Bregman (2016) reveals an interesting story of “spreading doubt” behind the rejection, by falsifying historical experience (at least Congress in 1971 approved of a greatly revised version, guaranteeing a basic income for the elderly and disabled under the Supplemental Security Income Act). We presently see a growing interest in the basic income discourse (Dillow and Rainwater 2017; Estlund 2019; Fouksman and Klein 2019; Kifmann and Roeder 2019; MacNeill and Vibert 2019; Melkevik 2017; Sharratt 2019; van der Veen 2019).

Concluding Remarks Present levels of inequality of income and wealth are unprecedented, and they are expected to increase—unless radical legislation is introduced to counter the trend. Also, a future of automation and AI, climate change

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and environmental degradation will add to inequality, if we continue to stay on the same political-economic trajectory. This all add up to prospects for suffering, resentment and instability. We need to envision an alternative future, in this chapter inspired by Leibnizian absurdity-logic and the Norwegian “dugnad” principle. Beyond specific policies, regulations and tax measures to reduce inequality and help climate mitigation, the introduction of some form of a universal guaranteed basic income appears to be the best guard both against a climate impasse and against equality stagnation. A guaranteed basic income for all would serve several purposes: bringing people who are not reached by existing welfare scheme out of poverty; providing security and reduce reasons for fear, anger and rebellion at a time when great change is needed; limiting bureaucracy and getting more out of public welfare money; freeing people to choose among job activities, seeking education or engaging in forms of activity that they personally find meaningful—such as arts and culture, outdoor activities and sports, self-development and care, conversation and reflection, green product invention, or whatever they prefer that is worthwhile to them. In the context of this book, it may also serve as a bridge toward a society of equal pay. Common wisdom tells us that strategic timing is important in making changes. Shakespeare supposedly originated the expression “time is ripe”, in Henry IV (I:3): “Letters shall direct your course when time is ripe”. Time may work for or against a good cause. At present, and over the next few years, time is increasingly ripe for a reduction of inequality and an increase of solidarity behind New Green Deal type of movements and United Nations sustainability goals (United Nations 2015). With climate and environmental disaster lurching, resource exploitation at present scales will become increasingly meaningless and unethical, and with jobs being taken over by digital machines, time will be increasingly ripe for basing pay on a notion of global membership, rather than performance or competence. At that stage there is hardly any moral grounds for unequal pay.

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k+and+Wages%2C+Trickle-Down+Theories+Don%27t+Hold+Up.&rlz=1 C1GGRV_enNO751NO753&oq=In+the+Real+Wo. Frey, C. B., & Osborne, M. A. (2017). The future of employment: How susceptible are jobs to computerisation? Technological Forecasting and Social Change, 114(Jan.), 254–280. Global Change Research Program. (2018). The fourth national climate assessment report (NCA4). Washington, DC: Global Change Research Program (USGCRP). Global Footprint Network. (2019). Earth overshoot day. Retrieved January 21, 2020, from https://www.overshootday.org/. Gownder, J.  P., Koetzle, L., Condon, C., McNabb, K., Voce, C., Bartels, A., Goetz, M., Hoar, A., Garberg, C., & Lynch, D. (2017). The future of jobs, 2027: Working side by side with robots: Automation won’t destroy all the jobs, but it will transform the workforce—Including yours. Cambridge, MA: Forrester Research. Hamilton, C. (2010). Requiem for a species: Why we resist the truth about climate change. London: Taylor & Francis. Haugestad, A. K. (2003). The dugnad: Sustainable development and sustainable consumption in Norway. Paper presented at the 6th Nordic Conference on Environmental Social Sciences (NESS), working group 2: “Limits to growth today”, Turku/Åbo, Finland. Hoggan, J., & Littlemore, R. (2009). Climate cover-up: The crusade to deny global warming. Vancouver, BC: Greystone Books. ILO. (2019). World employment and social outlook: Trends 2019. Geneva, Switzerland: International Labor Office. IPCC. (2014). Climate change 2014: Synthesis report, fifth assessment report. Geneva, Switzerland: IPCC Secretariat, World Meteorological Organization. Javelosa, J. (2016, October 13). Obama: In the age of autonomy, universal basic income will enter our debates—Could a UBI be the answer to AI-caused unemployment? Retrieved January 21, 2020, from https://futurism.com/ obama-in-the-age-of-autonomy-universal-basic-income-will-enterour-debates. Katz, L. F., & Margo, R. A. (2014). Technical change and the relative demand for skilled labor: The United States in historical perspective. In L. P. Boustan, C. Frydman, & R. A. Margo (Eds.), Human capital in history: The American record (pp. 15–57). Chicago, IL: University of Chicago Press. Khosla, V. (2012). Do we need doctors or algorithms? Tech Crunch. Retrieved January 21, 2020, from https://techcrunch.com/2012/01/10/doctors-oralgorithms/.

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Kiatpongsan, S., & Norton, M.  I. (2014). How much (more) should CEOs make? A universal desire for more equal pay. Perspectives on Psychological Science, 9(6), 587–593. Kifmann, M., & Roeder, K. (2019). The political sustainability of a basic income scheme and social health insurance. Journal of Public Economic Theory, 21(6), 971–990. Klein, N. (2019). On fire: The burning case for a green new deal. London: Allen Lane, Penguin Books. Kook, A. (2018, April 12). Half of all jobs can today be automated: And within 50 years, all of them can be. Retrieved January 21, 2020, from https://www. marketwatch.com/story/half-of-all-jobs-can-today-be-automated-andwithin-50-years-all-of-them-can-be-2018-04-11. Krakovsky, M. (2017). The new jobs. Communications of the ACM, 61(1), 21–23. MacNeill, T., & Vibert, A. (2019). Universal basic income and the natural environment: Theory and policy. Basic Income Studies, 14(1). Retrieved January 21, 2020, from https://www.degruyter.com/view/j/bis.2019.14.issue-1/ bis-2018-0026/bis-2018-0026.xml?lang=en. Melkevik, Å. (2017). No Malibu surfer left behind: Three tales about market coercion. Business Ethics Quarterly, 27(3), 335–351. Michaels, D. (2008). Doubt is their product: How industry’s assault on science threatens your health. New York: Oxford University Press Inc. Mincer, J., & Danninger, S. (2000). Technology, unemployment, and inflation. Cambridge, MA: National Bureau of Economic Research. Mishel, L., & Wolfe, J. (2019). CEO compensation has grown 940% since 1978: Typical worker compensation has risen only 12% during that time. Washington, DC: Economic Policy Institute. Mishra, P. (2017). Age of anger: History of the present. London: Allen Lane. Nordhaus, W. D. (2015). Climate casino: Risk, uncertainty, and economics for a warming world. New Haven, CT: Yale University Press. Oreskes, N., & Conway, E. M. (2010). Merchants of doubt: How a handful of scientists obscured the truth on issues from tobacco smoke to global warming. New York: Bloomsbury Press. Orwell, G. (1945/2008). Animal farm. London: Penguin Books. Passell, P., & Ross, L. (1973, January 14). Daniel Moyniham and President-elect Nixon: How charity didn’t begin at home. New York Times. Retrieved January 20, 2020, from http://movies2.nytimes.com/books/98/10/04/specials/ moynihan-income.html.

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Pickett, K., & Wilkinson, R. (2010). The spirit level: Why equality is better for everyone. London: Penguin Books. Pope-Francis. (2015). Laudate Si’: On care for our common home. London: Catholic Truth Society. Rallo, J. R. (2019). Libertarianism and basic-income guarantee: Friends or foes? Journal of Business Ethics, 157(1), 65–74. Rallo, J.  R. (2019–2020). Hayek did not embrace a universal basic income. Independent Review, 24(3), 347–359. Ripple, W. J., Smith, P., Haberl, H., Montzka, S. A., McAlpine, C., & Boucher, D. H. (2014). Ruminants, climate change and climate policy. Nature Climate Change, 4(1), 2–5. Sharratt, G. M. (2019). Free at work, free from work: Nondomination, unions, and basic income. Journal of Labor & Society, 22(3), 607–620. The Lancet Commission. (2019). Food in the Anthropocene: The EAT-Lancet commission on healthy diets from sustainable food systems. Retrieved January 21, 2020, from https://doi.org/10.1016/S0140-6736(18)31788-4. United Nations. (2015). Sustainable development goals. New York: United Nations. United Nations. (2018). Robots will replace two-thirds of all workers in the developing world. New York: United Nations. van der Veen, R. (2019). Basic income experiments in the Netherlands? Basic Income Studies, 14(1). Retrieved January 21, 2020, from https://www. degruyter.com/view/j/bis.2019.14.issue-1/bis-2018-0023/bis-2018-0023. xml?lang=en. Wallace-Wells, D. (2019). The uninhabitable earth: Life after warming. New York: Tim Duggan Book. Zidar, O. (2018). Tax cuts for whom? Heterogeneous effects of income tax changes on growth and employment. Journal of Political Economy, 127(3), 1437–1472.

Part IV For Equal Pay for All

13 Can a Honduran Have What a Norwegian Has? Equal Pay for All Countries: An Exploration Jur Schuurman

At the time of writing (late 2019), several countries in Latin America were in turmoil. Massive demonstrations in Chile and Colombia against corruption, favoritism and inequality virtually paralyzed both countries. Thinking also of the yellow vests movement in France and the demonstrations in Iraq, it is clear that (perceived) inequality is an issue across the globe. The massive migration from poor to rich regions is another symptom, as is the growing attention devoted to the problem; one need only think of the Oxfam reports and the fact that one of the Sustainable Development Goals (#10) is about inequality, as is the most recent Human Development Report (UNDP—United Nations Development Programme 2019). Likewise, academic research on the subject, especially with the work of Piketty and Milanovic, has evolved from a suspect discipline to a mainstream one, according to Argentinian economist Nora

J. Schuurman (*) Escuela de Ciencias Geográficas, Universidad Nacional, Heredia, Costa Rica e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_13

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Lustig (interviewed in Fariza 2019): not just out of moral concerns, but also because of inequality’s negative impact on economic and human development, as Stiglitz (2016) has argued. In other words, and in analogy to what Amartya Sen (1999) says about the expansion of freedom, inequality reduction is both the primary end and the principal means of development. The matter is relevant here because when discussing “equal pay”, we implicitly address inequality and the ethical question whether it is a problem: the question of justice. What is a fair degree of (in)equality? And what to do if it is deemed unfair? To deal with these questions, this chapter is informed by ideas about distributive justice (see a later section)— but in a way that goes beyond the “minimalist” (Armstrong 2012) inequality debate, in the sense that we will be looking not at inequality between individuals, but at the income distribution between societies, that is, countries. This choice will be justified after discussing some facts and figures. Subsequently, we report on an experiment, and the chapter concludes with thoughts on the way forward.

Two Leaps in Scale Sticking (for now) to the definition chosen for this volume: “equal pay for all, no matter in which profession they work”, what would this mean for the average income? It depends on who “all” are. Usually, this is the working population within a country, but here “all” will refer to all adults in the world, since one can argue that the urgency of equal pay in, say, a Western European country, pales in comparison to the extreme income inequalities at the global level. And these are not going away, or at best very slowly, as is argued in the 2018 World Inequality Report: “While the global top 1% income share increased from 16% in 1980 to 22% in 2000, it declined slightly thereafter to 20%. The income share of the global bottom 50% has oscillated around 9% since 1980” (Alvaredo et al. 2017), the main cause for said decline being the substantial economic growth experienced by India and China (Milanovic 2013). What would worldwide equal pay concretely mean? The answer is relatively straightforward: taking 2019 estimations for both world GDP (US$88,081  billion—World Population Review 2019) and the

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economically active portion of world population1 (68.7% of 7.7 billion, that is, 5.29 billion—Population Pyramids of the World 2019), the world average GDP per capita (taken here as a proxy for pay or income) in 2019 can be estimated at US$16,650. That is, at the present level of world GDP, “equal pay on a global scale” would ensure a decent life for all— contrary to the current unequal distribution that leaves 700 million people in extreme poverty. In other words, theoretically it is possible to “leave no one behind”, to quote the UN slogan for the Sustainable Development Goals. So much for theory. Can and should “global equal pay for all adults” be realized in practice? Probably not, for reasons that, by the way, also apply within countries. First, while it is true that many arguments against greater equality are ideological and serve the interests of those that wield them (Piketty 2019), some income inequality might be inevitable in a socioeconomic system based on (incentives for) innovation. A second reason is that we must distinguish between income inequality and wealth inequality. Equal pay for all would fail to take into account the existing level of wealth concentration,2 and therefore not reduce those differences. If anything, if one takes the goal of equality completely serious, pay should not be equal in order to correct for the unequal distribution of wealth. And finally, “equal pay for all adults”, seems to be the perfect recipe for a bureaucratic nightmare, especially on a worldwide scale. Supposing that equal pay advocacy stems at least partially from a justice conception based on all humans having their (basic) needs satisfied, those needs are not the same for everyone. What to do with families that have different numbers of children? Should the provider(s) of a ten-child family have the same pay as those without children? And there are other variables. It would be a Herculean task to measure those needs and attach a price tag to them without indulging in arbitrariness. Thus, “equal pay for all economically active people in the world” is a non-starter. Time for a second leap in scale. Having first gone global, we now change the unit of analysis and look at inequality not between individuals but between societies—nation states, to be precise. The abovementioned objections against “equal pay for all individuals in the world” are not the only reason to do this: it is undisputed that “the bulk of global income inequality today is accounted for by income gaps between countries, rather than within them” (Rodrik 2017). Or, as Milanovic (2016)

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puts it, “location” is a more important determinant of inequality than class. Consequently, it seems appropriate to go beyond the concept of “equal pay for all individuals” and to start thinking about “equal pay for all countries”, to coin a phrase—obviously not in absolute terms but relative to their respective populations, that is: the pay per capita. That is the real issue. Should and can pay per capita be (roughly) equal across the countries in the world? There is no reason why it shouldn’t; in addition to more philosophical considerations (see the section on distributive justice, below), the counter argument of inequality as a condition for stimulating innovation does not apply between countries. It can still apply within them, but starting from a pay per capita level that is much more likely to leave no one behind. Whether “equal pay per capita for all countries” is feasible is another question, but at least it seems more realistic than global equal pay for individuals: bureaucratic and administrative problems will be less serious since it is easier to deal with some 190 units of analysis (countries) instead of 5.29 billion. For instance, progress toward the goal should be much easier to monitor.

Inequality between Countries Just as we did with income differences between persons, let’s first of all have a look at what the present-day situation is regarding the differences in average income between the countries of the world: the so-called Concept 1 inequality (Milanovic 2006), that concerns those differences, unweighted for their respective populations.3 This “international inequality”, as we will call it henceforth, will not accurately reflect the global income distribution among individuals,4 but since our focus is precisely the (in)equality between nations, that need not concern us. A good indicator for average income is the GDP per capita (in 2011 international dollars), as given in the International Monetary Fund’s World Economic Outlook (International Monetary Fund 2019). It is true that average income and GDP per capita are different figures, but the latter is a good proxy for well-being, particularly since Rosling (2012) has shown that GDP/capita correlates strongly with Human Development

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scores. The October 2019 figures for 191 countries, from less than US$800 in Burundi to over US$116,000 in Qatar, can be consulted in the Appendix (Table 13.1) and are visualized in Fig. 13.1, showing that the distribution of countries according to their GDP/capita is quite skewed: the median is situated at US$12,243 (Egypt), far below the average between the highest and the lowest figure (US$58,000). For a more complete picture it is useful to apply an inequality measure to these data. Despite some methodological disadvantages (Alvaredo et al. 2017), the Gini Index is frequently chosen, with a value of 0 for total equality (all subjects receive the same income) and of 1 for extreme inequality (one subject earns everything, all others nothing). Applying the Index to the above distribution,5 the resulting score is 0.525, meaning that international inequality is high: within countries, a Gini of 0.525 or more occurs in only 10 nation states (World Bank 2017), which leaves our finding right next to the scores for Belize or Lesotho, and even above proverbially unequal countries like Guatemala and Brazil. But is that figure proof of injustice? Not really. By itself, no measure of inequality, even it is relatively high, can tell us that; it depends on one’s view on (distributive) justice.

GDP/capita 1,40,000 1,20,000 1,00,000 80,000 60,000 40,000 20,000 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127 133 139 145 151 157 163 169 175 181 187

0

Fig. 13.1  The countries of the world ranked by GDP/capita (US$/PPP), 2019. (Data source: IMF, World Economic Outlook, October 2019)

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Distributive Justice: Theories and Experiments Political philosophers and other scholars have studied the question: what is a just distribution of income (or other “primary goods”—Sen 1999)? The different positions have to do with both the basic principle underlying one’s concept of justice and the scale on which to apply it. As for the principles, Maiese (2003) mentions three important ones: equality, equity and need. Confining ourselves to income, equality means just that: equal pay, regardless of either one’s needs or one’s contribution to the group or society one belongs to. The equity principle, on the contrary, takes into account that contribution; the need principle speaks for itself. Regarding the scope of application of those principles, the most important contrast is that between the statist (or minimalist) view that there are only moral imperatives concerning distributive justice within a political entity and, on the other hand, cosmopolitanism, which claims that those “duties”, as Thomas Pogge (a prominent cosmopolitan; see Nili 2015) calls them, do not stop at a country’s border. In cosmopolitanism, which is adhered to in this text, there is no reason for distinguishing, when thinking about justice, between human beings according to the place where they have been born or live. Consequently, cosmopolitans think that, whatever the causes of the inequalities between nations, and whether these are more attributable to factors of domestic policies or to global economic interactions, human beings should all have the same right to, or chance of, a decent life, wherever they are born. There is no fundamental reason why Honduras and Burundi should not be places where it is just as pleasant to live as Norway or the Netherlands. Who is going to tell a Honduran that she can never have what a Norwegian has? It is beyond the scope of this text to thoroughly discuss the different approaches to distributive justice—Caney (2001) presents a comprehensive overview—but one thing they have in common is that they seem to be confined to the level of purely theoretical reflection, without any practical checks. It can be questioned how realistic (and legitimate) any view on distributive justice is if the people whom that view actually is about are not involved in some way.

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To a certain extent, an elegant way out of this critique was found by John Rawls, who in his seminal A Theory of Justice (1971) derived a vision of justice from a thought experiment on what actual people would think and prefer when given certain options, in contrast to conclusions reached by, to put it irreverently, “armchair scholars”. In Rawls’ thought experiment, respondents would choose among societies with different degrees of inequality, but without knowing what position they would occupy in the society they preferred; they were behind a “veil of ignorance”. According to Rawls, most respondents would be likely to opt for a high degree of (income) equality, since preferring a society with, for instance, 10% very rich people and 90% very poor would be unwise: the odds of belonging to the disadvantaged group would be very high. Most people would avoid such risks, and the resulting majority preference could be regarded as a solid basis for a participatory foundation of justice. The phrase “to a certain extent” is justified, since Rawls, despite thinking about including people’s choices in the formulation of his justice theory, never asked real test subjects to take place behind a veil of ignorance and prioritize between distributional options. Perhaps it was too soon; the field of experimental philosophy had not yet emerged, and few philosophers were aware of, or inclined to, the possibility of subjecting their ideas to empirical tests. Shifting again to the international scale, we can wonder what would happen if people participated in a thought experiment in which they would have to choose between communities of nations with different patterns of international (in)equality, under the same condition: respondents would not know beforehand in which one of all the world’s countries they would be living, in any world they chose. Certainly, Rawls (1999) himself did apply his veil of ignorance perspective also to justice in the relation between nations (or “peoples”, in his words), but his focus was legal, explicitly rejecting the pertinence of distributive justice on a supranational level. For this statist approach he has been criticized, among others by Caney (2001), Moellendorf (2009) and Milanovic (2016), who maintain that it is inconsistent with his earlier thinking.

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An Actual Test What will a thought experiment on global justice look like when choosing, precisely, a distributional perspective? Will the results show preference for a world with no major per capita GDP differences between countries? One is indeed inclined to think that not many people would choose the Fig. 13.1 situation and run the rather high risk of ending up in a low-income country (assuming that the probability is the same for any country, regardless of its population size), since there would be only a few nations with comfortably high average incomes: out of 191, not even 15 surpass the US$50,000 mark, while over 50 countries fall short of US$5,000. On the other hand, judging by past performance, this preference for high equality is no certainty—the past performance being the few occasions that Rawls’ original proposition (on distributive justice within a society) has been put to the test (e.g. Bruner 2018; Frohlich et al. 1987). In those experiments, it turned out that most respondents preferred a model in which the aggregate income was maximized. Total income, not equality, was the first yardstick by which they measured the different options, apparently feeling that you must have a (big) cake before thinking about how to divide it. The question, therefore, is whether the same would happen when ranking different distributions of GDP/capita figures between countries. Would a majority choose a world where some nations are richer than others, with the risk that this entails for one’s own position? In a lecture on global justice, which was part of the Globalization and Contemporaneous Society course for Geography undergraduates at the Universidad Nacional in Costa Rica, I have explored this question, presenting the students with four scenarios (see Fig.  13.2). In each one, the world’s countries are divided into five quintiles with ascending average GDP per capita, that is: the unweighted average of the GDP per capita figures for the 38 or 39 countries in each quintile. The four distributions range from highly unequal to perfectly equal, with Distribution II reflecting the 2019 state of affairs (Gini 0.49) and the third one a scenario of moderate inequality (Gini 0.198). Showing

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Four global scenarios

90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Distribution I

Present distribution (2019)

First quintile of countries

Second quintile

Distribution III Third quintile

Distribution IV

Fourth quintile

Fifth quintile

Fig. 13.2  Four scenarios for distribution of countries according to their GDP/ capita. (Source: author)

the chart to the 27 students, they were asked to rank all four scenarios in descending order of preference from behind an imaginary veil of ignorance,6 that is, not knowing in which quintile they would end up in any distribution. A borda count7 was applied to the 27 received rankings, assigning a 4 to the first-preferred scenario on each response sheet, a 3 to the second-preferred and so on, after which the rankings for each scenario were added up. As Fig.  13.3 shows, option III (moderate inequality) “won”, both according to the borda count (96 out of 270) and in being the scenario that had the highest first-preference count (17 out of 27). One possible explanation for this somewhat unexpected result is that some students, despite emphatical instructions to the effect that the distributions in Fig. 13.2 were between countries, and not between individuals (in which case moderate inequality can be justified because of the innovation argument), have made the latter interpretation. A second, more fundamental factor may have to do with culture: in the discussion after the response was processed, some students shared interesting thoughts about cultural

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Perfect equality

Moderate inequality

2019

High inequality 0

20

40

60

First choice frequency

80

100

120

Total borda count

Fig. 13.3  The results of the “veil of ignorance” experiment among 27 Geography students in Costa Rica. (Source: author)

differences that might not even make it desirable or necessary that all countries have (more or less) the same GDP/capita. Recapitulating, there are good reasons to prioritize the reduction of international (between-countries) inequality. First, we have seen that “Concept 1 inequality” accounts for the lion’s share of global income inequality. As Roser (2019) expresses it: “Today’s global inequality of opportunity means that what matters most for your living conditions is the good or bad luck of your place of birth”. He is right: one’s place of birth matters, it matters a great deal. If it would cease to do so, that would not mean that inequality between individuals is eradicated, but the extreme poverty that is now the clearest expression of global inequality would disappear, since the average income level in any country (say, US$16,650 before taxes—see above) would be more likely to prevent that. Also, the evolution of this international inequality would be much easier to monitor than inequality between individuals, more easily allowing for proposals to adjust policies and mechanisms. Finally, and however limited our sample and crude our survey, respondents behind a veil of ignorance seem to reject, in large majority the present-day situation of high international inequality (as depicted in Distribution 2 in Fig. 13.2).

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Solutions: Mechanisms and Policies Is there a road map? If we want to have a world in which one’s place of birth ceases to matter for one’s living conditions, we first of all have to deal with the question of growth vs. redistribution. What would it mean if the solution is that poor countries’ GDP/capita catch up with that of the well-to-do countries in Western Europe? (Qatar is beyond the pale.) Even if that were feasible, it might have disastrous consequences for the planet. In a recent interview (Bogdanovic 2019), the influential Dutch environmental lobbyist Wouter van Dieren used the formula (I=P  ×  W  ×  T): environmental Impact equals Population times Well-­ being times Technology. For the advocates of growth, the T is the factor that reduces the total product P  ×  W  ×  T: new technologies (think of wind energy, electrical cars etc.) make the I smaller, so that P × W has room to increase. But according to Van Dieren, T will not be able to keep up with P × W. The technology solution is not inexhaustible: there is an “inherent limit” to the catching up that India and China are doing. The corollary is that some form of redistribution is needed (combined with the development of clean technologies: there is no need to throw away the child with the bathwater). There are a few ways in which this can happen; two of them have to do with equilibrium-seeking mobility; the third one with explicit policies. The first mechanism is for capital to “migrate” to poor countries. Classical economic theory postulates that “investment should flow from rich countries, where capital is abundant and returns are limited, to poor countries, where capital is scarce, and returns are much higher” (Homer-­ Dixon 2005). Eventually this should contribute to a closing of the GDP/ capita gap between countries, but from all evidence it does seem that this is not happening.8 If the mountain won’t come to Muhammad, then Muhammad must go to the mountain: if capital does not move, then labor should—in the opposite direction. That is exactly what is going on, and if allowed freely, migration would no doubt go a long way to closing gaps (Milanovic 2013), but one only has to follow the news to know that there are so

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many obstacles that migration, although a logical response to inequality, is not yet its solution. Since these two market-driven mechanisms do not, or are not allowed to, work, the remaining option is agreement on global policymaking regarding the abovementioned mechanisms as well as other relevant policy areas. Considering their global sphere of influence and the universalist (cosmopolitan) nature of the Sustainable Development Goals (SDGs), the United Nations seem to be the appropriate platform for the development and implementation of pertinent measures, especially since one of the SDGs (# 10) is to “reduce inequality within and between countries”. Although criticism of the SDG system and its near-endless list of ambitions is possible, the targets and indicators the 17 Goals have been broken down into make it potentially possible to monitor progress toward certain aims. That is commendable: what you don’t measure, you can’t improve, as the saying goes. And for sure, within SDG 10 some targets do specifically aim at the improvement of the position of developing countries in the world, particularly with regard to financial flows (including official development aid), differential treatment in World Trade Organization regulations and representation “in decision-making in global (…) institutions” (UNSTATS—United Nations Department of Economic and Social Affairs: Statistics Division 2019). Migration is also addressed. Nevertheless, some important (methodological) problems remain. First, many SDG indicators do not yet belong to “Tier 1”, that is, the highest degree of measurability.9 For SDG 10, only three out of ten indicators reached this status, and even they lack either a target value, a baseline (the initial situation), or both, which makes it hard to monitor them meaningfully: when can success be claimed? The same goes for the overarching SDG 10 itself, so that it is uncertain at what point it can be stated that inequality between and within countries has been reduced satisfactorily. And in the third place, it is not yet clear exactly how results are going to be reached. Plans and budgets are required, but many governments have yet to produce a comprehensive financial needs assessment for achieving the Goals in their countries. This is particularly concerning for the world’s 59 low-income developing countries, which face

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the greatest financing challenges. Without an approximate estimate for the Goals’ budgetary needs, it is impossible to create an SDG-focused budget to facilitate their achievement. (UNSDSN—United Nations Sustainable Development Solutions Network 2019)

To overcome these problems and enable result-oriented monitoring, it is necessary to make existing and new indicators SMART10 and relate them to both a baseline and a target value. The importance of this can hardly be overstated. Having clearly defined goals, knowing how much progress toward them is being made, and using that information as a basis for discussion, is the best way to keep ambitions alive and realize them. This also applies to the need for a clear indicator for the international component of SDG 10’s overarching goal, which can be met by calculating periodically a Concept 1 inequality index like the Gini we used above. The outcome would not be the last word on international inequality reduction, but it can be one of the first: again, periodic measurements are a powerful basis for discussion, analysis and action, that is, for improvement. That is how projects and programs work. Except when they don’t, which brings us to the third problem above: the lack of plans and budgets. Things do not work the other way around: what you measure does not necessarily improve. Commitment is needed and makes sense, since inequality is not dictated by natural laws nor inexorably connected to globalization. It is ideological and political (Piketty 2019) and can be changed; where there is a will, there is a way. However, for the time being that (political) will is not too apparent. Rich nations are not exactly forthcoming, and as for poor countries—although the SDGs and their progress measurement can give them and their leaders bargaining power, the reality is that many of those leaders are not that committed either about greater equality, either domestically or internationally. The fact that most low-income countries have not elaborated a budget for SDG activities speaks volumes. On the other hand, governments of developing countries represent, like any government, the outcome of a balance of forces, responding to the most powerful ones. The key, therefore, is that those forces in a country that are committed to greater equality (social movements and political parties) acquire power—which is best achieved by being strong and

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well-­organized (Blokland and Schuurman 2016). It happened in Chile: thanks to the organized protests, the government agreed to set in motion the revision of the Pinochet-inspired Constitution that made Chile the most unequal country in Latin America and in the OECD (Sachs 2019). And the same holds at the international level. If governments of poor countries unite and organize, they can achieve important progress in reducing the gap with rich countries—but they have to be pushed domestically to do so. In sum, the advancement of greater international equality, based on meaningful monitoring of ambitions, is a two-stage affair: (1) organization, lobby and advocacy in developing countries to get governments to listen to the needs of the disadvantaged population and to make sure that (2) those governments will likewise advocate and negotiate in international fora, not least the UN, on behalf of that population, getting the rich countries to commit as well.

Conclusions and Recommended Reading The original question to be addressed in the present volume was “equal pay for all, no matter in which profession they work”. In this contribution however, the focus was shifted from equal pay for all individuals to equal pay (per capita) for all countries, for three main reasons. In the first place, there is no philosophical justification for not including all human beings, regardless of their nationality or birthplace, in the equality equation; the well-being of a Burundian is just as important as that of a Dutchman. Secondly, advocacy for equal pay that stops at national borders does not address the extreme differences in wealth and well-being at the global level, and that constitute the most urgent problem in the world today. And finally, equality between countries would seem to be better manageable, and easier to study and monitor, than between individuals. That being said, some conclusions can be drawn from our (exploratory) analysis. First, there is no doubt that global income inequality is (still) high, and that the between-country component plays a crucial part in that reality, making it pertinent to focus policymaking on “Concept 1 inequality” (between countries’ GDP/capita). Second, it is not unlikely

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that people, when asked what kind of community of nations they would prefer, under the condition that they would not know their future country and its average income, would go for a world without pronounced between-country inequality. Both conclusions call for action, such that the place of birth is not determinant of one’s life perspectives. And to some extent, steps are being taken at the international level with the UN Sustainable Development Goals, particularly Goal #10. But at least two conditions have to be fulfilled for this to have a chance of success: (a) SMART definition of goals and targets, enabling progress measurement so that informed discussion is possible about how successful efforts have been; (b) commitment by the responsible authorities. Since governments are the visible result of a balance of forces, the challenge for emancipatory forces is to get stronger: organized, accountable, influential, serious. Finally, it is important to remind ourselves that all of the above takes for granted the present-day geopolitical situation in the world: that is, the existence of some 200 nations, the inequalities between them and the challenge to reduce those differences. Some cosmopolitans, though, propose a more radical solution: a world state, in which rights and duties— voting, minimum wages, tax regimes—would be the same for everyone, so that it would cease to matter where one is born. Nili (2015) makes a strong case for keeping alive the idea(l) of a world government and its positive influence on equality (and peace). Such a world government would contribute to, and be the consequence of, a decline of nowadays omnipresent nationalistic tendencies that divide instead of uniting, and that lead not only to the persistence of international inequality but also to xenophobia and war, as Robert Menasse reminds us of in his brilliant La Capitale (2019). It would be a spoiler to reveal what one of the novel’s characters proposes in order to prevent nationalism from rising again in Europe, but it has to do with the ideal EU capital—certainly not Brussels, where the action takes place. Read the book and marvel.

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Appendix Table 13.1  Countries of the world and their gross domestic product per capita, in 2011 international dollars, at purchasing power parity (PPP) (2019) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

Countries

GDP/capita

Burundi Central African Republic Democratic Republic of the Congo Eritrea Niger Malawi Mozambique Liberia South Sudan Sierra Leone Madagascar Togo Haiti Guinea-Bissau Burkina Faso Afghanistan Kiribati Yemen Solomon Islands Guinea Rwanda Mali Chad Ethiopia Uganda Zimbabwe The Gambia Comoros Vanuatu Nepal São Tomé and Príncipe Tanzania Benin Micronesia Tajikistan Lesotho Senegal Marshall Islands Kenya Cameroon Papua New Guinea

635 718 741 925 966 1083 1138 1234 1399 1476 1484 1594 1640 1762 1813 1829 1866 1991 2010 2131 2141 2157 2166 2192 2297 2359 2397 2444 2581 2897 2957 2970 3009 3110 3133 3156 3364 3377 3383 3453 3477 (continued)

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Table 13.1 (continued)

42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82

Countries

GDP/capita

Kyrgyz Republic Sudan Zambia Tuvalu Côte d’Ivoire Cambodia Mauritania Bangladesh Timor-Leste Nicaragua Honduras Djibouti Pakistan Nigeria Samoa Tonga Myanmar Angola Ghana Republic of Congo Moldova Cabo Verde Vietnam Lao PDR Bolivia El Salvador India Belize Guatemala Nauru Uzbekistan Guyana Morocco Libya Philippines Jordan Jamaica Ukraine Bhutan Armenia Eswatini

3541 3555 3621 3734 3891 4072 4262 4390 4587 4618 4710 4861 5126 5286 5371 5662 5856 5895 6073 6263 6725 6748 7042 7080 7135 7257 7315 7564 7600 7856 7857 7939 8063 8170 8268 8424 8461 8534 8622 9676 9744 (continued)

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Table 13.1 (continued)

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123

Countries

GDP/capita

Namibia Ecuador Dominica Fiji Georgia Kosovo St. Vincent and the Grenadines Tunisia Paraguay South Africa Sri Lanka Albania Indonesia Egypt Bosnia and Herzegovina Mongolia St. Lucia Peru Lebanon Suriname Colombia Algeria Palau Brazil North Macedonia Grenada Islamic Republic of Iran Iraq Costa Rica Botswana Serbia Azerbaijan Barbados Gabon Dominican Republic China Argentina Montenegro Thailand Turkmenistan Belarus

9835 10,252 10,483 10,605 10,675 10,757 10,873 11,054 11,859 12,007 12,133 12,215 12,221 12,243 12,414 12,492 12,652 12,850 13,138 13,560 13,568 13,703 14,173 14,372 14,393 14,595 15,419 15,736 15,747 16,202 16,207 16,252 16,519 16,638 16,946 17,027 17,509 17,534 17,779 17,819 18,023 (continued)

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Table 13.1 (continued)

124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164

Countries

GDP/capita

Mexico Equatorial Guinea Maldives Uruguay Bulgaria Mauritius Chile Panama Croatia Romania Turkey Kazakhstan Antigua and Barbuda Russia Greece St. Kitts and Nevis Latvia Seychelles Trinidad and Tobago Malaysia The Bahamas Portugal Poland Hungary Estonia Slovak Republic Lithuania Slovenia Czech Republic Israel Puerto Rico Aruba Italy New Zealand Cyprus Spain Korea Japan United Kingdom France Oman

18,218 18,596 20,352 20,586 21,472 21,822 22,976 23,416 24,208 24,443 24,676 25,186 25,620 25,879 26,411 26,695 27,415 27,669 28,561 28,706 29,101 29,391 29,587 29,723 31,301 31,988 32,041 33,579 33,903 34,154 34,980 35,051 35,332 35,744 36,149 36,311 39,060 39,763 40,881 41,227 41,352 (continued)

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Table 13.1 (continued) 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191

Countries

GDP/capita

Malta Finland Belgium Canada Bahrain Australia Austria Germany Denmark Sweden Taiwan Province of China Saudi Arabia Iceland Netherlands San Marino Hong Kong SAR United States Switzerland Kuwait United Arab Emirates Norway Brunei Darussalam Ireland Singapore Luxembourg Macao SAR Qatar

41,386 41,883 43,240 44,285 44,465 46,601 46,758 46,765 47,040 47,692 48,085 48,631 48,948 50,933 53,757 56,684 56,844 57,791 57,958 60,619 66,948 70,177 72,810 90,080 95,117 99,842 116,014

Source: International Monetary Fund (2019)

Notes 1. All people over 15 years old and under 70. 2. Attributable to returns on capital, as has been shown by Piketty (2013). 3. Concept 2 is also about inequalities between countries, but weighed for population sizes, while Concept 3 refers to global income inequality, with individuals as the unit of analysis. 4. For two reasons: the world’s countries have vastly different population sizes as well as very different income distributions. 5. With the online Gini Coefficient Calculator (Shlegeris 2020).

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6. My heartfelt thanks to Prof. Lilliam Quirós for allowing me to subject her students to this ordeal. 7. In a borda count, points are given to each option in reverse proportion to their ranking, so that the first-preferred option receives as many points as there are options; the second preference gets one point less and so on. When all rankings have been counted, the points are added up for every option. 8. This is known as the Lucas paradox, after the American economist Robert Lucas. 9. “Indicator is conceptually clear, has an internationally established methodology and standards are available, and data are regularly produced by countries for at least 50 per cent of countries and of the population in every region where the indicator is relevant” (UNSTATS—United Nations Department of Economic and Social Affairs: Statistics Division 2019). 10. Specific, Measurable, Achievable, Realistic, Time-bound.

References Alvaredo, F., Chancel, L., Piketty, T., Saez, E., & Zucman, G. (2017). World inequality report 2018. World Inequality Lab. Retrieved November 1, 2019, from http://wir2018.wid.world. Armstrong, C. (2012). Global distributive justice: An introduction. Cambridge, UK: Cambridge University Press. Blokland, K., & Schuurman, J. (2016). Growth, democracy and income equality: Cooperatives—The development impact beyond membership benefits. In J. Bijman, R. Muradian, & J. Schuurman (Eds.), Cooperatives, economic democratization and rural development (pp.  255–275). Cheltenham, UK: Edward Elgar. Bogdanovic, Z. (2019, September 26). Wouter van Dieren, groene visionair: “De industrie opvoeden, dat is mijn taak”. De Groene Amsterdammer, pp. 34–39. Bruner, J. P. (2018). Decisions behind the veil: An experimental approach. In T. Lombrozo, J. Knobe, & S. Nichols (Eds.), Oxford studies in experimental philosophy (Vol. 2, pp. 167–180). Oxford: Oxford University Press. Caney, S. (2001). Review article: International distributive justice. Political Studies, 49(5), 974–997.

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Fariza, I. (2019, October 16). El mercado no va a crear por sí solo sociedades más equitativas. El País. Retrieved November 19, 2019, from https://elpais. com/economia/2019/10/16/actualidad/1571237188_724936.html. Frohlich, N., Oppenheimer, J., & Eavey, C. (1987). Laboratory results on Rawls’ distributive justice. British Journal of Political Science, 17(1), 1–21. Homer-Dixon, T. (2005). The rich get richer, the poor get squat—Review of Branko Milanovic: Worlds apart: Measuring international and global inequality. Retrieved November 23, 2019, from https://homerdixon.com/ the-rich-get-richer-the-poor-get-squat-review-of-branko-milanovic-worldsapart-measuring-international-and-global-inequality-princeton-2005/. International Monetary Fund. (2019). World economic outlook. Retrieved December 16, 2019, from https://www.imf.org/external/pubs/ft/ weo/2019/02/weodata/index.aspx. Maiese, M. (2003). Distributive justice: Beyond intractability. Updated 2013 by H. Burgess. Retrieved November 18, 2019, from https://www.beyondintractability.org/essay/distributive_justice/. Menasse, R. (2019). La capitale (O.  Mannoni, Trans.). Lagrasse: Éditions Verdier. (2017). Die Hauptstadt. Berlin: Suhrkamp. Milanovic, B. (2006). Concepts in inequality. World Economics, 7(1), 131–157. Milanovic, B. (2013). Global income inequality in numbers: In history and now. Global Policy, 4(2), 198–208. Milanovic, B. (2016). Global inequality: A new approach for the age of globalization. Cambridge, MA: Belknap Press. Moellendorf, D. (2009). Global inequality and justice. Journal of International Development, 21(8), 1125–1136. Nili, S. (2015). Who’s afraid of a world state? A global sovereign and the statist-­ cosmopolitan debate. Critical Review of International Social and Political Philosophy, 18(3), 241–263. Piketty, T. (2013). Le Capital au XXIe siècle. Paris: Éditons du Seuil. Piketty, T. (2019, September 6). L’inégalité est idéologique et politique. Le Monde, pp. 24–25. Population Pyramids of the World. (2019). Population pyramids of the world from 1950 to 2100. Retrieved November 30, 2019, from https://www.populationpyramid.net/. Rawls, J. (1971). A theory of justice. Cambridge, MA: Harvard University Press. Rawls, J. (1999). The law of peoples. Cambridge, MA: Harvard University Press. Rodrik, D. (2017). Is global equality the enemy of national equality? Harvard Kennedy School research working papers 17-003. Retrieved October 31,

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2019, from https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2910603_ code385205.pdf?abstractid=2910603&mirid=1&type=2. Roser, M. (2019). Global inequality of opportunity: Our world in data. Retrieved November 20, 2019, from https://ourworldindata.org/ global-inequality-of-opportunity. Rosling, H. (2012). HDI surprisingly similar to GDP/capita. Gapminder. Retrieved November 1, 2019, from https://www.gapminder.org/news/ hdi-surprisingly-similar-to-gdpcapita/. Sachs, J. (2019). Why rich cities rebel: Project syndicate. Retrieved October 28, 2019, from https://www.project-syndicate.org/commentary/ explaining-social-protest-in-paris-hong-kong-santiago-by-jeffrey-dsachs-2019-10. Sen, A. (1999). Development as freedom. Oxford: Oxford University Press. Shlegeris, B. (2020). Gini coefficient calculator. Retrieved January 23, 2020, from http://shlegeris.com/gini. Stiglitz, J. (2016). Inequality and economic growth. In M.  Jacobs & M. Mazzucato (Eds.), Rethinking capitalism: Economics and policy for sustainable and inclusive growth (pp. 134–155). Hoboken, NJ: Wiley-Blackwell. UNDP—United Nations Development Programme. (2019). Beyond income, beyond averages, beyond today: Inequalities in human development in the 21st century. New York: UNDP. UNSDSN—United Nations Sustainable Development Solutions Network. (2019). New report estimates SDG financing needs for 59 of the world’s lowest-­ income countries. UNSDSN. Retrieved November 21, 2019, from https:// www.unsdsn.org/new-report-estimates-sdg-financing-needs-for-59-of-theworlds-lowest-income-countries. UNSTATS—United Nations Department of Economic and Social Affairs: Statistics Division. (2019). Tier classification for global SDG indicators as of 20 November 2019. UNSTATS. Retrieved November 21, 2019, from https:// unstats.un.org/sdgs/files/Tier_Classification_of_SDG_Indicators_20_ November_2019_web.pdf. World Bank. (2017). Gini index (World Bank estimate). Retrieved November 27, 2019, from https://data.worldbank.org/indicator/SI.POV.GINI?view= chart gini 2017. World Population Review. (2019). GDP ranked by country 2019. Retrieved November 22, 2019, from http://worldpopulationreview.com/countries/ countries-by-gdp.

14 Economic Equality as a Precondition for Democracy and Social Justice Lauretta Conklin Frederking

Introduction The debate framework centering around equal pay for all pushes us beyond the pragmatic policy conversations that typically consider adjustments and trajectories tied to current conditions. Instead, the purist construction of the argument “equal pay for all” provocatively invites us to enter a theoretical debate about ideals and the ideal manifestations of capitalism and democracy. Arguably, the theoretical focus evokes consideration of a priori first principles of these economic and political systems in ways that seem particularly relevant but often are clouded by the lure of pragmatic solutions with attention to current conditions. Economically, the Occupy Movement drew in tens of thousands across the world who protested increasing inequality, but none mobilized beyond spontaneous and then sporadic protests (Grusky 2013, p.  4). Certainly, mainstream narratives continue to draw connections between L. C. Frederking (*) Brescia University College, Western University, London, ON, Canada e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_14

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innovation and growth as positive outcomes. As long as inequality is considered part of growth, then unequal outcomes are conveyed often as a necessary engine for growth or unintended consequence of growth. It remains much more palatable to weigh how much inequality, with continued innovation and growth, than to forge an argument of perfect equality. However, this book frames the either/or so that we can probe a first-order condition of equal pay for all. We may learn about the problems around current conditions by holding up the more absolute forms of the either/or sides of the debate. So even for those aspiring for less inequality, not perfect equality, it is a worthwhile exercise to unpack the merits of equal pay for all. This chapter has three parts. Part I is a brief critique of our current systems of democracy and capitalism with particular attention to the intersection of increasing inequality in the market system and its reinforcing effect on unequal conditions in democracy. The intersectionality of inequality within economic and political systems contributes further to the deterioration of our social contract thereby presenting additional challenges to reform. We are living through a vicious cycle of inequality coinciding with the simultaneous deteriorating conditions for reforming the systems of inequality. Part II unpacks the gnawing distance between the ideals of capitalism and democracy. Seminal advocates of political participation in a robust democracy and freedom within the market, lay the groundwork for serious consideration around equal pay as a first-order condition. Early conceptualizations of democracy and capitalism emphasize the importance of social and moral meaning as core values that inform the proper functioning of capitalism and democracy. Equality, and at the very least a strong perception of equality, is central to fostering the social support for long-run growth and a robust democracy. At least as a first condition, a starting point, these motivating ideals around capitalism and democracy can be achieved only through a more equalized pay for all. Part III weighs the reasonableness of this condition by looking at Japan as a country case that approached this radical equality in the years following World War II. Rather than exceptional, there are crisis events that precipitate disruption of current conditions. The

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chapter concludes that equal pay for all is not unfathomable in the context of a range of plausible, potential crises in the future.

Part I A fundamental conceptualization of a market economy is that it functions in a way that gives to each according to her or his abilities and motivates all to specialize according to their abilities. Maximizing efficiencies is enhanced by trading with those who are also specializing in their own unique abilities. However, this perfection of growth and seemingly natural specialization of the market economy has not been realized in the long run. Heather Boushey (2019) argues that we are living through a paradigm shift away from the prevailing assumption that the invisible hand of supply and demand provides self-correction and continued growth. Instead, increasing inequality in the United States undermines long-run growth in three ways: by obstructing, subverting, and distorting political and social processes. Clearly, inequality has pushed the market into much more of a rigged system of privilege and reinforcing inequality. The statistics around inequality are known and its dimensions are likely repeated throughout this volume. With a focus on the United States in this chapter, it is worthwhile to highlight how inequality dropped just prior to the depression, stabilized for the next 30 years and then began a trend to unparalleled levels of inequality from the 1970s (Grusky and Cumberworth 2013, p. 22). Particularly concerning is the fact that economic inequality is not confined to the static economic conditions. Rather, Boushey unpacks how inequality blocks the flow of people and ideas through hoarding, intended and unintended, opportunities for access to skills that may lead to specialization. Secondly, within the current political context individuals spend resources to determine policies that advantage them rather than investing in further specialization within a competitive market. These rent-seeking activities are unproductive and reorient individual skills to thwarting the political process rather than contributing to growth.

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Finally, Boushey points to the distortion of decision-making in terms of both spending (loose credit and spending by those who cannot afford it) and investment (less investment in areas that would benefit the most) precisely because of inequality (Boushey 2019). Even beyond the different dimensions and measures of extant financial inequality, criticisms include that the logic of capitalism has become pervasive in a way that limits access and opportunities. The moral implications for an expansive domain of the market is often debated, especially in terms of public goods, but the creep into domains such as body parts, standing in lines (yes, people pay to have others stand in line for them to attend congressional hearings, for example), and even traditionally emotional moments like cuddling can be purchased, all together affirming that we have lost previous sacred spaces that were once “priceless”. Just as much as the market’s influence has grown, the mechanisms to challenge the market have lost power and been subsumed into the same dimension of inequality. Especially for those who want to counter or correct inequalities, “[t]oday, advocates for reducing inequality, increasing opportunities, and protections for the collective enter an economic arena that is fully rigged against them” (Frederking 2014, p. 69). So while the narrative of equality of opportunity may persist as the response to current inequalities (Reich and Satz 2013, p.  49), social mobility is lower today than a generation ago. Access to good schools, day cares, safe neighborhoods, and health care reinforce unequal salaries and support long-run intergenerational inequality (Reich and Satz 2013, p.  55). Jonathan Kozol describes the “savage inequalities” that define K-12 school rewarding those lucky enough, arbitrarily, to be born into neighborhoods that contribute to the additions and rewards to open the gates for more educational opportunities (McAdam 2013, p. 173). Michael Sandel aptly identifies how economic inequalities reinforce inequalities in non-market spaces. He puts forward the law as one non-­ market space that has been eroded in terms of fairness by the increasingly omnipresent force of the market (Sandel 2010, p. 175). Similarly, rather than its historical and idealized role as a brake to capitalism, the political process has institutionalized access and reinforced privilege. Rather than challenging existing inequalities with the idea that one person/one vote maintains equality into the policy process, the democratic process

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reinforces inequality through its institutions, the aspects of the electoral system, and then policy decisions. Adam Bonica et al. identify reasons why democracy has not countered market forces (Bonica et  al. 2013). First, ideologically and historically, both Democrats and Republicans converge on unquestioned support for the capitalist system. Secondly, the free market narrative challenges government intervention and regulation as well as redistribution. Distribution of voters has skewed in favor of those with higher incomes while voting has become more costly for the poor, supported by administrative and relative opportunity costs. For example, higher income voters are less willing to invest in government social insurance where private insurance can be obtained relatively easily and without the associated high-risk cost. Fourthly, the electoral process and lobbying can be thwarted by individuals with higher income and resources. Finally, the political process is increasingly caught in institutional gridlock so that reform is both less likely in terms of incentives and disincentives and less possible (Bonica et al. 2013). Democracy and its status of equal participation through voting contributed to a sense and social narrative that the political system could be an effective counter to the dominance of fewer and fewer winners in the economic system. However, the ideal notion of equality through voting, and the ideal that voting provides access to the construction and enforcement of equal opportunity, has been undermined even more significantly by the unlimited access to funding elections, especially through the 2010 Supreme Court decision, Citizens United v. Federal Election Commission: Access capitalism is nurtured throughout the entire electoral cycle. Political Action Committee (PAC) and Super PAC influence is unprecedented in the United States. Since the 2010 Supreme Court decision, interest group money dominates electoral outcomes in ways that threaten the democratic ideal of one person, one vote. At the same time, monetary influence is cloaked in virtue as free speech, and winning a seat has become a marketable good for sale to the highest bidder. As an example, the cost of winning a seat in the Senate rose from $3,067,559 in 1986 to $8.993,945 in 2010, while the cost of winning a seat in the House of Representatives increased

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from $359,577 in 1986 to $1,434,760 in 2010. (The Campaign Finance Institute as quoted in Frederking 2014, p. 74)

So whereas democracy was intended to protect a space for managing the collective where each person contributed to the outcomes equally, “the canyon between the ‘1%’ and the ‘99%’ is not the result of a fair process, where the rules and rulers of the game are equally responsible to the interests of all persons” (Reich and Satz 2013, p. 54). Instead, rules increasingly mirror the interests of the very rich and no longer respond to the interests of the majority. Indeed, the vast majority are left out of decision-making in institutions in a way that one person, one vote is much less relevant as a mechanism to effect change. “As Aristotle warned, beyond a certain point, inequality is corrosive. It makes politics far more fractious, undermines social mobility; weakens aggregate demand and slows economic growth” (Wolfe 2019, p. 13). Beyond voting, the inequality directing the voting process reinforces policies that reflect the interests of fewer and fewer. As much because of the rules of the political process rather than real-time voter preferences, the principles and ideals of democracy are challenged (Reich and Satz 2013, p. 55). The impacts of economic inequality have spilled into our spheres of social space as well. Specifically Sandel describes how inequality threatens the social connections and bonds between us to the point that civic virtue is increasingly compromised (Sandel 2010, p.  267). The social places where people would mix and mingle regardless of economic status are fewer because the privileged no longer use them and so don’t support them with their taxes. Because people from different life backgrounds and experiences don’t interact often, the ways they did in the good old days, there is less public empathy. Civic virtue and even civic tolerance erodes. “The hollowing out of the public realm makes it difficult to cultivate the solidarity and sense of community on which democratic citizenship depends” (Sandel 2010, p. 267). Similarly, Jonathan Sacks addresses the wild success of economic globalization as a disruption to the previously relevant social meaning of economic transactions:

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Today’s global elites have little connection with the people their decisions affect. They do not live in the same country as those who produce their goods. They may have little if any contact with those who buy them, especially when purchasing is done through the Internet. This is important because moral responsibility is no mere abstraction. It grows out of face-to-­ face relationships. We see how what we do affects others. That is how we learn what to do and what not to do. The distance and depersonalization of contemporary life have robbed us of the immediate connection between act and consequences and this too has weakened our moral sense. (Frederking 2014, p. 70)

Capitalist systems, without social commitments and moral foundations, become unreliable and characterized by uncertainty. Uncertainty increases instability and both erode the social contract and empathy for others as individualism prevails. Engagement with others, and our ethical framework for engaging with others, is increasingly defined by the market system rather than ethical frameworks and discernment circumscribing the limits of the market. As Michel Albert outlines, morality and ethical behavior is not just a luxury or additional part of life, but rather the critical foundation for a well-­ functioning market economy (Albert 1993, p. 82). Equilibrium where moral considerations coexist and circumscribe market activity has been challenged by a tipping into the dominance of market forces driving morality. According to Desmond Tutu and Bettina Gronbloom: “It is fine to make a living; we are meant to enjoy abundant lives. The conflict comes when we separate ethics and economic progress and when we equate the latter with happiness” (Tutu and Gronblom 2012). Another social erosion emerges as political and economic inequality bring overt oppression, but also much more insipidly a form of self-­ suppression. These pervasive acts of self-censorship are hallmarks of our post-capitalist, post-democratic society. Everything is for sale and available for approval by some, if not all, and so all values are neutralized. No particular value is privileged. We are living through the massive tunneling and hollowing out of our core foundations—participation becomes perfunctory and consensus-building becomes more by tolerance and

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distance rather than authentic, consensus-building through meaningful exchange. While economic and political reform can be imagined in ways that could ameliorate inequality, the hollowing core of our social contract pushes us further away from the visualization, motivation, and consensus-­ building for change. This cursory overview confirms that repairing inequality cannot happen within the extant conditions of inequality. Arguably, we need to restart our political, economic, and social systems from a foundation of equality with more equal pay as a healthy part of that foundation.

Part II Adam Smith is more often associated with unfettered capitalism. However, his work has been misappropriated and celebrated in ways that miss this driving assumption that any healthy market must be supported by social connections and moral commitments. The Wealth of Nations (Smith 1776/2003) has been prioritized over The Theory of Moral Sentiments (Smith 1759/2011) to the detriment of an authentic understanding of Smith’s argument about the market. While our world looks much more like the hardened version of the invisible hand it is far from Adam Smith’s understanding outlined in The Theory of Moral Sentiments. The critical role of morality defining and redefining the construction of markets has turned upside down where we increasingly see our values emerging from and being defined by the market. And “rather than thinking about the correspondence of our identities, with our purchases, we let our purchases provide our identities” (Frederking 2014, p. 68). So far this chapter has outlined the ways that economic inequality negatively impacts the healthy functioning of democracy and capitalism. While many discussions and debates around inequality propose political and social spheres as the potential remedy and ways for reform, it is clear that inequality has pervasively spilled into these spheres as well. Before we see the brakes on economic inequality and before we see the capacity of the political and social space to offer important reform, the moral and

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social foundation of the economy needs to be recharged or recalibrated around the collective. But how? And is this realistic? If we know any system’s rewards, then we are likely to participate strategically rather than considering the collective good. As in feudal times, “[r]uling classes use government-controlled means and resources to extract surplus value from the efforts of categorically excluded subject populations, redirecting at least some of the surplus to activities from which the subject population does not benefit, although the ruling classes do” (Tilly 1998, p. 193). However, while writing about conditions under feudal and autocratic systems, Tilly acknowledges that “[a]s compared with tyrannies and oligarchies, nevertheless, democracies include far more of their populations in the ruling classes and provide more regular channels for movement from exclusion to inclusion” (Tilly 1998, p. 194). The democratic process and policies following from the democratic process have the capacity to generate the greatest good for the greatest number. But it needs the proper condition of voters’ consideration of themselves as part of shared values, shared goals, and shared outcomes. We need to believe that all of us benefit when those other than ourselves benefit. Alternatively, we need to be deeply certain that we could benefit from particular outcomes in the long run even if we don’t benefit in the short run. Motivation that taps into self-interest is stronger than the benevolent caring about others. Rawls describes how the likelihood of voting for common goals and constraints on equality is much more likely if we don’t know our status relative to others (1999). We are more likely to choose fair principles and policies. According to John Rawls, societies make fairer and more just decisions for the collective but only behind a “veil”, removed from any particular interests or anticipated outcomes (1999 p. 12). While today’s democracies don’t implement the veil of ignorance in any strict fashion, there are conditions, namely that of greater economic equality, that may approximate the orientation of voters to consider the best conditions for all. Similarly, and much like the veil, if voters see themselves in those around them, and see themselves becoming subject to the conditions of those around them, they are more likely to vote for policies that take care of those around them. Any approximation of

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those conditions fosters the healthy functioning of a public square where citizens consider and advocate for goods that serve everyone. To get there, John Rawls relies on a social contract (1999, p. 18), fair and impartial and likened to the veil; “a hypothetical social contract in an original position of equality” then “everyone would agree to a principle that would support some form of redistribution” (Sandel 2010, p. 266). Even as a temporary condition, “equal pay for all” is a potentially critical first condition to recharge the social and political strength of the public square. Just as a vicious cycle of economic inequality begets inequality in other domains, a shift to the more virtuous cycle requires a greater perception or reality of equality in community and stronger individual identities motivated by civic virtue. A healthy, robust democracy depends upon the strength and wisdom of the majority and also the consideration beyond individual self-interest to advocate for the collective good. Political structures can reinforce or challenge existing inequalities. Historically, the political process was distinct and democracies were intended to serve as the arena to discuss and implement policies in the best interest of the majority. Societies can return to a virtuous cycle where the market and the polity are working in tandem and countering the dangers of extremes if either sphere is left unchecked. However, an emerging virtuous cycle with healthy political, economic, and social systems requires the foundation of equality, or perceived equalities, as first-order conditions.

Part III Karl Marx envisioned communist revolutions that would usher in a new dawn of equality with political, economic and social outcomes that benefitted the collective. The possibility and desirability of these types of revolutions waned with the reality of dictatorships that failed to reach the ideal manifestations. Millions may have believed in equal pay as part of an ideology that promised growing solidarity, equal economic opportunity and outcomes, as well as shared political leadership. However, with its system-wide failures, tenets of communism like equal pay became tainted by association.

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While this chapter puts forward the argument that equal pay can be an essential starting point for a robust democracy and strong bonds of social justice, the pending question is whether this is a hypothetical exercise, suggestive at its very best. Is there any possibility of a political, economic, and social system getting to more meaningful equal pay without confronting the reality of a failed revolution like those experienced throughout the twentieth century? When Michel Albert wrote about the triumph of capitalism back in the 1990s, he juxtaposed the United States, where unbridled capitalism contributed to the trajectory of inequality, and “other capitalist countries, where the private sector deliberately endeavors to keep the income spread within certain well-defined limits” (Albert 1993, p. 9). If there are examples of countries with a different balance through public intention and motivation, then the critical question becomes whether there are conditions that generate this motivation? Arguably, there are country examples that have approximated the condition of equality through circumstances of war. In the Japan Labor Review, Minami (2008), outlines the democratization of the economy with a dramatic shift away from high levels of inequality between the first and second world wars. Rather than a policy of forced income equality, the equalizing trend emerged from devastation combined with policies that challenged the process whereby economic power led to reinforcing political power. The war and air raids in particular destroyed over ¾ of the private assets in Japan’s major cities. Hyperinflation hurt those in the traditional wealthy class who had their money “protected” in bank accounts. Japan’s zaibatsu system, a carryover from Meiji Restoration, had concentrated wealth in the hands of few so that the destruction of its perpetuating privileges contributed to the economic democratization dramatically. Significant taxes on assets as well as taxes on income also served to equalize incomes. At the same time, solidarity around the collective loss and shame in the aftermath of World War II shunned the potential for civil strife as the pool of privileged shrank and the opportunities became simultaneously more modest and more limited. Land reform, by the political narrative of rebuilding after devastation, gave the government an opportunity to seize land from the wealthy and redistribute it. Policies to

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keep agricultural prices high provided the bottom income earners new support to rise away from their relative deprivation (Minami 2008, p. 13). Both by policy prescription and by circumstance, Japan moved the needle significantly away from inequality. However by 1970, Japanese society came to be known as “all middle class”, gaining a global reputation as an egalitarian society (Minami 2008, p. 14). As pronounced by Michel Albert: The rebuilding of the Japanese economy thus incorporated a strong element of egalitarianism. This is not to say that everyone benefited equally: some did spectacularly better than others. But the new fortunes tended to be discreet, and were “acceptable” to the culture; the hardships of the war justified the accumulation of new wealth, and the fortunate few were thought (rightly or not) to have earned their success through exceptional personal merit. Frugality and modesty continued to define the national consensus until the mid-1980s. (Albert 1993, p. 170)

Today, academic texts announce Japan as a 90% middle-class “once equal” country (Tachibanaki 2009). Tachibanaki affirms that the foundation of equality contributed to its “Asian miracle status”. Perhaps not surprisingly, the ideal manifestation of equality has been challenged by global competition and success since the early post-war reforms. While the foundation of equality may have been fleeting, the social foundation persisted beyond the emerging inequalities.

Conclusion Japan provides one case of a country that achieved a restart or at least a recalibration around more equal access and more equal opportunity. The equalizing trend followed from a devastating loss through war. Nevertheless, during post-war times the shift toward equality became a precondition for economic restructuring, political solidarity, and social support. The shift toward equality through land reform and industrial reform would not have happened without the strengthening of solidarity. The

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role of social cohesion became vital as a motivation to shift away from the unequal conditions pervading economic, social, and political spheres in Japan prior to the war (Albert 1993, p. 167). Certainly, war has the potential to motivate individuals to think about the collective and simultaneously to accept policies that serve everyone more equally. Equal pay is unlikely to generate support during prosperous times but when a nation is threatened or a community has a shared cause we have instances of extreme policy change and redirected attention to the collective good. It is plausible to think of other instances like war and natural disasters, for instance, that level the economy and provide an opportunity to restart. While there is widespread commentary lamenting the consequences of inequality, there is an unrealistic expectation that our current political, economic, and social have the capacity for reform. Instead, economic inequality has permeated the systems themselves and imbedded the incentives to perpetuate inequality in all spheres. Through lobbying and campaign finance, the ideals of democracy have been distorted away from democracy’s purpose to provide an equality of voting. Democracy is no longer an alternative sphere capable of countering economic and social inequality. Instead of relying on current conditions in current systems, we need a restart. Equal pay, as a consequence of natural disasters or as a by-product of war has a leveling effect. The more equal economic and social foundation nurtures a healthier democracy and thereby the potential for policy reform. Unexpectedly, disaster becomes rich with possibility while the current excesses of inequality leave us stagnating in a vicious cycle.

References Albert, M. (1993). Capitalism vs. capitalism. New York: Four Wall Eight Windows. Bonica, A., McCarty, N., Poole, K., & Rosenthal, H. (2013). Why hasn’t democracy slowed rising inequality? Journal of Economic Perspectives, 27(3), 103–124. Boushey, H. (2019). UNBOUND: How inequality constricts our economy and what we can do about it. Cambridge, MA: Harvard University Press.

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Frederking, L. C. (2014). Reconstructing social justice. New York: Routledge. Grusky, D. B. (2013). Introduction. In D. B. Grusky, D. McAdam, R. Reich, & D. Satz (Eds.), Occupy the future (pp. 3–9). Cambridge, MA: The MIT Press. Grusky, D. B., & Cumberworth, E. (2013). Economic inequality in the United States: An occupy-inspired primer. In D. B. Grusky, D. McAdam, R. Reich, & D.  Satz (Eds.), Occupy the future (pp.  13–45). Cambridge, MA: The MIT Press. McAdam, D. (2013). The politics of occupy: Now and looking ahead. In D. B. Grusky, D. McAdam, R. Reich, & D. Satz (Eds.), Occupy the future (pp. 169–178). Cambridge, MA: The MIT Press. Minami, R. (2008). Income distribution of Japan: Historical perspective and its implications. Japan Labor Review, 5(4), 5–20. Rawls, J. (1999). A theory of justice (Revised ed.). Cambridge: Belknap Press. Reich, R., & Satz, D. (2013). Ethics and inequality. In D.  B. Grusky, D.  McAdam, R.  Reich, & D.  Satz (Eds.), Occupy the future (pp.  47–57). Cambridge, MA: The MIT Press. Sandel, J. (2010). Justice: What’s the right thing to do? New York: Farrar, Straus, and Giroux. Smith, A. (1759/2011). The theory of moral sentiments. Reprint of 1759. Gutenberg, IA: Gutenberg Publishers. Smith, A. (1776/2003). The wealth of nations. Reprint of 1776. London: Bantam Classics. Tachibanaki, T. (2009). Confronting income inequality in Japan. Cambridge, MA: MIT Press. Tilly, C. (1998). Durable inequality. Berkeley, CA: University of California Press. Tutu, D., & Gronblom, B. (2012, April 5). Camels can pass through the eye of a needle. Financial Times, p. 9. Wolfe, M. (2019, December 3). How to reform today’s rigged capitalism. Financial Times, p. 13.

15 Defending Equal Pay for All Against Objections from the Achievement Principle Jean-Philippe Deranty

Equal pay for all faces objections of many kinds. One of them is that it breaches a strong intuition about justice, namely the principle of desert (Miller 2001). According to this idea, justice consists among other things in everyone receiving what they deserve, no more and no less. Equal pay by contrast seems to open the door to a social organization that would reward the lazy over the hard-working, the incompetent over the experts, those who perform easy tasks over those who perform complex or dangerous ones, those who inherited valuable resources over those who had to work hard for what they achieved and so on. Many theories of justice encompass the idea that desert justifies differential treatment. This is the case, for instance, in those influential debates where the point is to defend a version of egalitarianism that avoids the rewarding of undeserved good “luck” or the punishing of undeserved bad “luck” (see Anderson 1999, for a clear review of the debate). This framing of the justice problem implies that deserved “luck” J.-P. Deranty (*) Department of Philosophy, Macquarie University, Sydney, NSW, Australia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_15

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is justified; that is, that it is fine to receive more social goods, notably economic ones, if one deserves it. One contemporary model that captures this normative grip of the just desert principle is Axel Honneth’s recognition theory. By mobilizing a concept elaborated by German sociology, the “achievement principle” (Honneth 1996, pp. 126–131), Honneth argues that a major aspect of justice in modern societies is that individuals receive symbolic and material rewards in accordance with their contribution to the realization of core values of society. From the point of view of the achievement principle, equal pay again seems to lead to normative incongruity since it appears to deny deserving individuals their due recognition. This chapter seeks to provide a defense of equal pay by tackling the objections arising from recognition theory and the achievement principle. The recognition perspective is interesting in and of itself, but it also overlaps with other approaches to justice on the issue of just distribution. Thus, the angle chosen should be significant for the defense of equal pay. In the first section, I summarize how Honneth uses the “achievement principle”. In the second section, I ask in what precise sense the achievement principle provides objections to equal pay for all. This section also highlights why recognition theory is a useful theory to draw on to study objections to equal pay. It brings out considerations that remain unaddressed in other debates. In the third section, I offer four rejoinders to these objections to equal pay from the achievement principle.

What Is the Achievement Principle? “Achievement principle” translates the German term Leistungsprinzip. It is a major concept in German sociology, where it is used to characterize modern society as a whole, as Leistungsgesellschaft, “achievement society”. Key post-war publications are by Heinz Kluth (1957) and Claus Offe (1970/1976). German sociologists regularly return to the question “what has become of the Leistungsprinzip?” (e.g. Dröge et al. 2008), to study the shifts in moral representations underpinning the world of work and the stratification of society at large.

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Axel Honneth, who is thoroughly trained in sociology, has made the achievement principle the main axis in the third of his “spheres of recognition”. As the notion arises from inquiries into the rise of modern society and how it has broken with “pre-modern” social models, its validity is not just conceptual and normative but also historical. Historical inquiries, which take up a descriptive stance, can show that the principle has a real footing in modern society. On Honneth’s historical reconstruction, the achievement principle designates a new way by which individuals achieve social recognition after the collapse of the system of orders predating the modern revolutions. In these older “conventional” social orders, an individual’s status was determined by the rank within the overall social hierarchy occupied by the group the person belonged to. The shift to contemporary modernity was triggered by a collapse of this aristocratic order and an individualization of social recognition. When individuals are no longer ranked according to their “estates”, their social status is determined in reference to two new logics. The first draws on natural law thinking, which asserts the legal and moral equality of all human persons. This ensures a universalistic form of social standing, that of every person as subject of right. Honneth makes this his second “sphere of recognition”, where the first sphere is recognition within close, intimate circles. The liberation of individuals from the strictures of group membership also makes another principle of social differentiation emerge. According to it, individual standing is measured by each individual’s “Leistung”, or “achievement”, within the social order, that is, their personal contribution to the realization of society’s fundamental goals. In the debate with Nancy Fraser, Honneth refers specifically to “achievement within the division of labour” (Fraser and Honneth 2003, p. 166), in other words, to economic activity. Through their activity, which includes their education, training and their actual mode of participation in the new economic order, each person establishes the amount of recognition they deserve as an individual, within formal organizations (typically a firm) and in society at large. In line with this recognition, individuals receive symbolical social goods, in terms of reputation, and material goods, via the distribution of social wealth, notably as income.

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 he Achievement Principle as Justification T for Unequal Pay The principle of equal dignity is universalistic in its scope and entails a radical democratic implication: if everyone has the same moral status as human person, then there can be no justified exclusion of any group of people from the different types of rights that translate general juridical status into particular spheres. By contrast, the achievement principle is inherently individualistic and meritocratic (Honneth 1996, p.  130; Fraser and Honneth 2003, p. 141). It consists in rewarding individuals according to the relative value of their specific achievement, in relation to personal attributes and activities. The measure of value here is not absolute, as in the law, but comparative. Some achievements, for reasons that ideally are as objective as possible, are better or more worthy, than others, and therefore deserve more: more consideration, more financial reward and so on. These valuations of achievement might refer specifically to the type of the achievements, notably occupations. Some occupations seem to realize important goals of society. Educating the young, ensuring the safety of the collective, caring for the elderly would seem to be occupations that are worthy of social praise and thus of collective support in any human collective. In this case, the social prestige attaches to the individual on account of their occupation, or their belonging to a profession. However, beyond the scaling of types of activity, there is also a fully individualistic way to understand “achievement”. In this case, each individual is to be rewarded differentially, depending on how well their individual contribution fulfills the goals of their occupation, and through the occupation, societal goals. In this case, it is the series of personal traits and personal achievements, the individual’s mode of “self-realization”, that is judged (Honneth 1996, p. 125). These meritocratic, comparative and individualistic dimensions of the achievement principle appear to contradict the demand for equal pay for a number of reasons. In logical terms, it would seem that the ranking of individuals according to their achievements would have to be reflected in differentials in social reward, typically income, as well as other goods, for

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example, opportunity for promotion within formal organizations. If there was no such reflection in differential rewards, the principle would seem to be meaningless. Honneth doesn’t formulate the link between recognition and unequal distribution in these analytical terms, but he explicitly acknowledges the distributive aspect entailed in the recognition of Leistung. He does this when he shows how the achievement principle entails a never-ending cultural conflict that pits groups and classes against each other, over the interpretation of what “value to society” entails and how it should be materially rewarded. When groups and classes engage in this kind of “struggle for recognition”, to contest valuings of their contributions they deem insufficient or even disrespectful, they do this not just in relation to symbolic expressions of these valuings, but also around concrete markers of such disrespect, typically in “distributive conflicts” (Fraser and Honneth 2003, pp. 150–155). The issues that are raised are notably the level of wages between professions. The distributive aspect of Honneth’s use of the Leistungsprinzip also comes through when he analyzes the transformations of it under neoliberalism (Hartmann and Honneth 2006). The two critical theorists show how the intrusion of market logic in social interactions and subjective experience leads to a “pathological” form of the Leistungsprinzip, one in which market success becomes the sole measure of value, irrespective of the contingencies, of birth or privilege or sheer luck, that might explain individual success or failure. With this argument, Honneth again assumes that a fair application of the Leistungsprinzip should translate into a fair distribution of social goods, one that rewards individual “achievement” according to its comparative, meritocratic value. From this first, distributive point of view, the demand for equal pay would be in clear contradiction of what the Leistungsprinzip demands. Equal pay would de facto negate the differences in value of different social contributions, whereas the recognition of such differences is precisely something modern individuals expect. A second line of objection draws on the historical background of the achievement principle. Honneth uses a historicist methodology, inherited from the left-Hegelian tradition. Rather than applying to real social situations normative principles that are constructed independently of

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them, as Rawls does for instance, Honneth believes that we should reconstruct principles of justice from the core moral assumptions underpinning the societies to which these principles are to apply. In his earlier work, from Struggle for Recognition to the debate with Fraser (Fraser and Honneth 2003), historical sociology helped him do this. It is from this historical material that he borrowed the notion of individual “achievement” as key principle of modernity. This historical dimension adds a second objection to the equal pay demand. If, as a matter of fact, modern individuals expect to be differentially recognized for their particular contribution to society, then for a theorist to demand otherwise would be illegitimate. Equal pay, by removing the material marker of differential recognition, seems utterly unrealistic from this point of view. It asks that we overlook what constitutes a demonstrable feature of social experience in modernity. Thirdly, in Honneth’s recognitive approach to justice the ultimate normative layer is constituted by the concept of “self-realization”. On the “intersubjective” view of subjective formation defended by him, an individual is able to construct positive relations to herself only if the most significant relations with others are conducive of it, provide forms of social support. In turn, such positive relations to self are conditions of self-realization. The ultimate judgement on social life, whether it makes the self-realization of its members possible, is thus determined by the quality of recognitive structures. The three “spheres of recognition” designate three fundamental ways in which modern individuals are able to relate positively to themselves thanks to positive acknowledgments by others. In the case of the third sphere, social appreciation for one’s personal features and achievements enables the individual to feel esteemed and develop “self-esteem”, a crucial part of self-realization. From this point of view, the undermining of the achievement principle that is implicit in equal pay would undermine at the same time a key vector of self-realization. At first, the link between self-realization and the demand for unequal social rewards is not obvious. Why would modern individuals insist on getting more than others as a condition for their positive sense of self? Indeed, in some passages, in Struggle for Recognition in particular, Honneth gives an egalitarian interpretation of the achievement principle.

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In those passages, what matters is that everyone gets recognized for their specific contribution. In that case, individualized recognition could be compatible with equal social rewards. Other passages, however, insist on the meritocratic dimension of Leistung (Honneth 1996, p. 130; Fraser and Honneth 2003, pp. 56, 141). This meritocratic dimension applies first at the level of entire groups. When professions engage in struggles for recognition in Honneth’s sense, what they are aiming for is not to be recognized as equal to all other professions but to counter what they perceive to be unjustified differences in social valuing. These are two different types of demands. Groups, classes, professions engaged in these kinds of social struggle want a reduction of inequality, not perfect equality. In particular, they are not aiming for equal, but better pay. Indeed, if we focus on the individual sense of esteem, the case against equal pay is just as strong. Within a particular profession, Leistung differentiates between better and worse achievements. Nurses, for instance, might demand to have their skills and responsibilities recognized in relation to other medical specialists, but that doesn’t mean they demand that each nurse receives the same recognition as all other nurses when performing nursing work. Indeed, such equalization might appear to defeat the purpose. The whole point of recognizing the complexity of nursing work entails precisely that there are more or less skilled ways of doing it. If everyone receives the same rewards for their efforts, how much does that allow for the recognition of one’s individual achievements? If I think I am a good nurse and I see that other nurses are not upholding the professional standards of the craft, yet receive the same rewards as I, then that means that my personal contribution as nurse is not well recognized. On Honneth’s model I am bound to feel robbed of an important mode of recognition. Equal pay would directly affect the sense that I get my fair share and I would feel injured in my self-esteem.

A Rejoinder in Four Points In response to the objections raised in the previous section, the following four points can be made to defend equal pay for all.

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1. The first rejoinder concerns the historical justification. Honneth emphasizes that the achievement principle when it first appeared was deeply ideological. What counted as “valuable achievement” reflected the values of the liberal, entrepreneurial bourgeoisie that had overthrown the previous regime (Fraser and Honneth 2003, p. 141). This initial ideological framing of achievement, however, did not end with the first period of capitalism. The cultural conflict around what counts as “valuable achievement” is unending, therefore there can be no time when the principle is free of interpretations exercising temporary hegemony. Despite this, Honneth maintains his faith in the principle itself, as providing a valid critical perspective and explaining a number of modern social movements. Indeed, it is precisely those struggles for recognition which, in the long run, are entrusted with the historical task of gradually purifying existing frameworks of valuation and establishing a modality of the principle corresponding to its genuine normative content. Honneth’s optimism is in stark contrast with the way sociology has studied the concrete instantiations of the Leistungsprinzip throughout the decades. German sociologists denounce not just ideological applications of it, but denounce it as ideology, as a key contemporary narrative serving to justify inequality and social domination, a “disciplinary technique which rewards loyalty to the dominant interests and forms of life … perpetuates cultural divisions and creates and stabilizes the appearance of an objective or ‘technical’ legitimacy of organizational hierarchies” (Offe 1970/1976, p. 138). This much sharper view of the achievement principle suggests a critical consideration of it. It is plausible to claim that there are deeply entrenched biases in contemporary societies, which mean that particular types of social activities are unlikely to be acknowledged as equal in value as others, at least any time soon. And yet a strong case might well be made in that sense. Honneth himself analyzes care work and feminized professions as significant examples of ideological skewing in the interpretation of the principle. Even if progress has occurred, professions performed mostly by women are still under-recognized and underpaid compared to professions where men are the majority. Another divide concerns the difference in evaluation regarding manual and intellectual work. There seems to be a deep-running prejudice in favor of intellectual work throughout

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history, one that has not been corrected in modern, industrial and post-­ industrial societies, as Honneth himself notes (2014, p.  241). Here as well, the case could easily be made that some types of manual work, or work that is described as being “low-skill”, in fact is a lot more complex than assumed, or fulfills important functions without getting due credit for it. If history is to be our guide then, we might in fact doubt that the achievement principle will ever get closer to its pure normative core. In turn, that would mean that we cannot put our trust in it to justify inequalities, since many of them are justified only because the groups experiencing lesser treatment have not been able to shake off prejudice and disrespect. To insist on the validity of unequal pay on the grounds that it reflects differing levels of achievement, and that different achievements should command different social rewards, runs the risk of accepting as objective and justified what are only contingent forms of social prejudice. Some of these prejudices might be temporary, just waiting for a struggle for recognition to be successfully overcome. But if social prejudice is long-lasting, it becomes problematic to hold faith in the idealized version of a principle that might in fact never come true. The problem with the way in which Honneth constructs his historical justification of the achievement principle is that it commits him to accepting capitalism as the only possible way to organize modern societies. His method of immanent criticism, as we recalled, is to extract the principles of social criticism from the society to which those principles are to be applied. The way in which Honneth uses this method, however, means that the existing capitalist order is the only one that is considered relevant for normative reconstruction. Yet historicism doesn’t necessarily commit us to reducing the possible to the actually existing. It could be the case that the achievement principle as it has been articulated so far remains an irreducibly ideological principle, one that is indissolubly tied to the capitalist order. It would be replaced by other principles, or another articulation of “achievement”, coinciding with the overcoming of the social order in which its current articulation serves as a central justificatory plank. Those other principles might well be active already in contemporary societies, even though currently they don’t exert the same normative force as the achievement principle.

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2. One aspect of Leistung that seems to resist this reference to alternative norms is its apparent objectivity. If there is an objective way to measure achievement, then it might be possible to justifiably tie unequal distribution to levels of achievement. It is difficult to definitively capture what the objective measures of valuable achievement might be, but there is a sense that the latter is not just the product of subjective or ideological interpretations. In working activities, for example, a number of factors immediately suggest themselves to define superior achievement, such as: the complexity of the tasks; the responsibility involved in fulfilling them; the training required to be able to deliver the desired achievement; the dangerousness of the activity; the seniority of the agents. Two considerations can be raised, however, to question the validity of the link suggested here between social recognition for objective achievements and unequal distribution of social goods. First, the idea that recognition would be meaningless if it did not translate into differential rewards is not as obvious as it sounds. Indeed, Honneth himself implies another possibility, as we intimated already. The need for recognition of my achievements is not necessarily that I am rated higher than others. It could just as well be that my contribution to the collective is valued for what it brings to it. The emphasis in this case is on the specificity of the achievement. Its value is unique, based on the function it fulfills for others, the needs it satisfies. Of course, some activities are more complex, some demand more training, others involve more responsibility toward others and so on. But if the emphasis is on what each agent brings to society by performing their activities, why should they insist on making sure they are ranked higher than others? That such an ideology exists today is undeniable, but what is not so obvious is whether this insistence on being ranked higher than others is a necessary part of wanting to have one’s social contribution recognized. Another objection concerns ranking within particular occupations and professions. Some agents just are better at doing the same tasks, more reliable than their colleagues in dangerous jobs, have gained more experience, undergone more training than them and so on. Shouldn’t they be recognized for their superior achievement and rewarded accordingly? It does seem here as though not recognizing their achievement in comparison with their peers would be an injustice. However, if the point of

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esteem recognition is to have personal contributions recognized for what they bring to others uniquely, then what experts, senior workers, virtuosos actually demand is not higher pays, but full recognition of their special contribution, to the working collective as well as society. Even in societies such as ours so keen to find ways to justify inequality, many agents engaged in the same tasks (e.g. professionals at the same level of seniority) receive similar financial rewards and superior achievement is rewarded in other ways, through awards, prizes, honorary titles and so on. The sociology of work has amply demonstrated that work that is meaningful has intrinsic rewards, such that income is not the main motivation for working. The link between social recognition and material distribution can be severed all the more easily if another principle is put forward as either replacing or more simply as trumping it. Need and welfare are such principles. It is entirely plausible to claim that the right to welfare should overrule any claim some individuals might raise for greater material remuneration based on their alleged superior contribution. The argument is all the more powerful if we add that social wealth is finite, and that giving more to some means giving less to others. From the point of view of individual needs, it seems dubious to ensure higher welfare for some rather than others, simply because the former deliver a higher “achievement”. A toilet cleaner is entitled to just as much welfare and has a right to cover just as many of his or her needs, as a university professor. 3. On the alternative vision that emerges from this last point and the point before, there are ways to apply the achievement principle that would inspire a different social model than the current, bourgeois-­ capitalist one. In this alternative model, high-performing individuals might well demand recognition of their achievement, but this would not entail a right to greater distributive goods. Indeed, the very logic of recognition leads us to think that these individuals might operate on a motivational logic utterly at odds with the current capitalistic one, in which greater distributive share, higher pay, is both a sign and a motivation for greater achievement. In this alternative social model, high-performing individuals would accept equal pay because their higher achievements (if indeed they truly are such) would entail intrinsic goods linked to their activities, and because they would receive recognition for their ability to

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fulfill social needs excellently. They would find motivation in doing just that, fulfilling social needs excellently. Indeed, it doesn’t seem a stretch to suggest that even in our capitalist societies, many experts and virtuosos draw a lot satisfaction not just, and maybe not even primarily, from their higher pay, but rather from their ability to fulfill needs through complex or difficult routes. This model delivers a more obvious sense of solidarity than if the latter is based on a meritocratic understanding of achievement. It is hard to see where the solidarity lies if every individual and every group is bent on asserting the superiority of their achievements by comparison with others. True solidarity seems to entail not just recognizing the achievements of others, but also performing for others, to the best of one’s ability and for the sake of it. Equal pay for high achievement seems a sure sign that such solidarity is in place. Honneth is ambiguous on this point. As we saw, he defends the meritocratic moment in solidarity. And yet his concept of “social freedom” (Honneth 2014, pp.  42–62) and his “idea of socialism” (Honneth 2016) revolve around the alternative, other-directed conception. It is telling that this latter sense of solidarity overlaps significantly with GA Cohen’s “principle of community” (2009, pp. 34–45), the second one of his defining principles of socialist justice. 4. The final rejoinder is of a consequentialist kind. If we only consider normative principles in the abstract, it seems we can consistently combine equality regarding social status with inequality of material rewards according to the achievement principle. Miller argues in this way (2001) and Honneth’s position is similar. However, history also tells us that material inequality is not just a sign of social inequality but a sure way to entrench it. Honneth himself makes the point when he highlights that interpretations of the achievement principle thus far have been set by the groups enjoying hegemonic power. Yet he doesn’t draw the important conclusion from this: namely, that accepting material inequality, even if it might be justifiable on some level, risks entrenching social inequality. Symbolically, inequality of pay justifies differential treatment, it enculturates everyone to think that some objectively do better than others and therefore deserve better treatment. It is only a small step from these ideas to the notion that the dominated and the underprivileged only have themselves to blame for their situation.

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Unequal distribution of material rewards also entrenches social inequality through the simple yet highly effective mechanism of inheritance, which, after only a few generations, makes equality of opportunity unlikely to ever be achieved. The problem of inherited privilege creates a serious tension for defenders of the achievement principle. Just desert requires equality of opportunity to be valid, lest one receives praise for something one is not responsible for. Honneth himself argues in this way (2014, pp. 196–197). Yet even if an individual deserves to be rewarded more than others for their achievements, the history of inequality shows that repeated inheritance of higher rewards is likely to create social structures that make equality of opportunity an unachievable dream. Differential distribution according to achievement thus negates in the long run a key premise of a just application of the principle itself.

Conclusion The “achievement principle” captures a widely held intuition about justice in contemporary societies. In turn, the principle seems to justify the unequal distribution of social goods, in accordance with different levels of social contribution. As such, it seems to represent a strong objection to equal pay for all. However, the rejoinders presented in this chapter have shown that it is entirely consistent, from the point of view of justice, to recognize the value of individual achievements without translating such recognition into differences in distribution. Indeed, once the recognition of individual achievement is married with equality of pay, a model of social organization is suggested, one that is based on genuine solidarity. Far from being a significant objection, the recognition of individual achievements in fact provides further arguments in favor of equal pay, as the two principles combined promote real equality and real solidarity.

References Anderson, E. (1999). What is the point of equality? Ethics, 109(2), 287–337. Cohen, G. A. (2009). Why not socialism? Princeton, NJ: Princeton University Press.

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Dröge, K., Marss, K., & Menz, W. (2008). Rückkehr der Leistungsfrage. Berlin: Sigma. Fraser, N., & Honneth, A. (2003). Redistribution or recognition? A political-­ philosophical exchange (J. Ganahl, Trans.). London: Verso. Hartmann, M., & Honneth, A. (2006). Paradoxes of capitalism. Constellations, 13(1), 41–58. Honneth, A. (1996). The struggle for recognition: The moral grammar of social conflicts (J. Anderson, Trans.). Cambridge, MA: MIT Press. Honneth, A. (2014). Freedom’s right: The social foundations of democratic life (J. Ganahl, Trans.). Cambridge, UK: Polity. Honneth, A. (2016). The idea of socialism: Towards a renewal. Cambridge, UK: Polity. Kluth, H. (1957). Sozialprestige and sozialer status. Stuttgart, Germany: Enke. Miller, D. (2001). Principles of social justice. Cambridge, MA: Harvard University Press. Offe, C. (1970/1976). Industry and inequality: The achievement principle in work and social status. London: Edward Arnold.

16 Equal Pay as a Precondition of Justice? Daniel Pointon and Matthew Sinnicks

Introduction Equality is typically presumed to be an end of justice; however, in this chapter, we argue that equality may be better understood as a condition of justice. This is because inequality is deleterious to the kinds of relationships required to foster communities which sustain justice, both within individual workplaces and within the polity at large. Inequality of pay is, to be sure, only one form of inequality, but it is a pervasive and powerful one. We aim to demonstrate how unequal pay can vitiate the kind of relationships required to sustain relationally egalitarian justice, and a fortiori that equal pay, together with other forms of equality, is a condition of the possibility of sustaining relationally egalitarian justice.

D. Pointon London, UK M. Sinnicks (*) The York Management School, University of York, York, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_16

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The basic question of whether equal pay for all is desirable can be applied at two levels: that of society overall, which is the theme of this volume, and secondarily that of the individual workplace. Due to the appeal of establishing a sense of community at both of these levels, equality of pay in the workplace is a condition of a more relationally egalitarian workplace, and equality of pay across society is a condition of a relationally egalitarian polity. Crucial to defending the claims we make about the effects of unequal pay is the Just World Fallacy. Previous research that has attempted to apply the Just World Fallacy to various ethical and political issues has focused on the obstacles it presents to egalitarianism in the form of psychological resistance (Kasperbauer 2015), whether or not a belief in a just world should be encouraged by parents and teachers (Kristjánsson 2004), and whether business organizations can constitute Aristotelian communities (Sinnicks 2020). We believe that the Just World Fallacy can also ground an argument in favor of equal pay for all.

Equality and Justice At the heart of the debate about the ends of justice is the question of what the aims of egalitarianism ought to be. Various accounts of equality— now grouped together under the heading of “luck egalitarianism”—hold that we ought to eliminate the effects of “brute luck” (Dworkin 2003; Arneson 1997) and so for luck egalitarians a distribution that makes individuals equal with respect to the effects of luck is what justice aims at, rather than say, an equal distribution or a distribution according to Rawls’ difference principle. Arneson sets out the position succinctly: Luck egalitarianism can be encapsulated in a slogan: It is morally bad— unfair and unjust—if some are worse off than others and morally good— just and fair—if all are equally well off. The injustice and unfairness of inequality are expunged if those who are worse off are so through their own fault or choice. (2012, p. 154)

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Whether or not someone has a special talent for sprinting quickly, and thus can make a living as a professional athlete, and whether or not someone has a medical condition that prevents them from working full time, and thus being dependent on benefit payments, are matters of brute luck. Such factors, according to luck egalitarianism, should not determine my well-being, and so a fully just society would seek to overturn any reward or harm that results from such a fortuitous distribution of abilities and conditions. In reality, the outcomes of most lives depend on a complex interplay of option luck (the results of our free choices) and brute luck (external factors outside of our control that influence our lives). For this reason, among others, it may not be feasible for any real polity to fully “neutralize” such examples of brute luck, but to do so would be the conceptual, ethical, and philosophical ideal, and society is, according to the luck egalitarian, more or less just to the extent that this ideal, this pattern of distribution, is realized. It is worth bearing in mind that there is a diverse array of goods which must be considered in order to provide a comprehensive account of justice. According to Wolff, “[d]istributive justice should be limited in its application by other egalitarian concerns” (1998, p.  122). This line of thinking is central to another line of egalitarian thought, most notably associated with Anderson (1999) who criticized accounts of distributive justice that focused on redistributing resources and argued instead that what we ought to want is a theory of justice which is founded on “equal respect and concern for all citizens” (Anderson 1999, p. 289). This is not to say that the relational egalitarian is unconcerned with distribution, indeed Anderson and Skorupski are clear that when “we reconceive equality as fundamentally a kind of social relationship than a pattern of distribution, we do not abandon distributive concerns. Rather, we give such concerns a rationale” (Anderson and Skorupski 2008, p. 143). It is however to say that on this view the “proper negative aim of egalitarian justice is not to eliminate the impact of brute luck from human affairs, but to end oppression, which by definition is socially imposed” (Anderson 1999, p. 288). This position is known as “democratic egalitarianism” or “relational egalitarianism” as it prioritizes the cultivation of the relationships which citizens must be able to enter into for a genuinely democratic community to function, rather than the promoting of particular patterns

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of income and wealth. While “ending oppression” and “equal respect” may sound like somewhat vague ends, in contrast to the relative clarity of luck egalitarianism and the framework of welfare economics that can underpin its application, Anderson has set out the position in greater detail. Specifically, relational egalitarianism is concerned with a social relation of equality of authority, status or standing between individuals as the end of justice; it claims inequality is unjust when inequality disadvantages people; it views justice as a virtue of agents (rather than, say, distributions); and it maintains that claims of justice are justified interpersonally rather than being objective facts about such and such a distribution (Anderson 2010, pp.  1–2). Since we can readily understand concepts such as equality of authority, status, and standing, and since it is reasonably clear-cut when an individual is disadvantaged, this gives a good idea of what a relationally egalitarian society would look like and shines some light on what forms claims of justice (and injustice) should take. These debates about relational and distributional equality have started to have an impact in business and organizational ethics. Néron persuasively argues that the reasons typically offered by egalitarians for their decision to ignore the corporation—namely “an obsessive focus on the justice of distributions, compounded by methodological priorities accorded to ideal theorizing about the principles of justice appropriate for the so-called “basic structure of society” (2015, p. 116)—are unconvincing. Instead, he suggests, “relational-egalitarian theorists are well placed to dive into the myriad justice issues inside the ‘black box’ of the modern business firm” (Néron 2015, p. 108). Our focus on community and justice means that there is a strong connection between arguments pertaining to organizations and to society at large. Indeed, as Néron (2010) notes, ethicists working in a variety of traditions have sought to understand businesses as political communities. Examples include work in the Kantian tradition (Robinson 2019), the Aristotelian tradition (Solomon 1994), the Thomistic tradition (Sison and Fontrodona 2012), stakeholder theory (Freeman and Liedtka 1991), and indeed a variety of other perspectives (Heckscher and Adler 2007). Thus, the present chapter is, in part, an attempt to stimulate further discussion about relational equality within the literature on business and organizational ethics, as well as political philosophy. In what follows, we draw on research into the

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Just World Fallacy in order to argue the relationships required by relational egalitarianism require distributional equality, which in turn provides grounds for holding that equal pay for all is a worthy ideal. We thus identify a major obstacle to realizing a relationally egalitarian society (namely, unequal pay). In the words of Anderson and Skorupski (2008), we are attempting to give distributive concerns a further rationale within relational egalitarianism.

The Just World Fallacy Research into the Just World Fallacy reveals that when confronted with examples of injustice, experimental participants tend to show disdain for innocent victims and admiration for the undeservedly successful. In his original study Lerner (1965) found that participants who were told that a fellow student had won a cash prize in a random draw were inclined to believe that the student worked harder than another student who had not won the prize. This outcome led participants to draw the conclusion that the fortunate student in some way deserved the reward. This way of interpreting the fortuitous allocation of goods suggests that the recipients of rewards of whatever kind (including rewards of status, wealth, or authority) are therefore regarded as deserving those rewards, with the result that our relationships with them are colored by this fallacious inference. Lerner and Simmons (1966) presented a subject in a paired-associate learning test, who was seemingly penalized for error through being subject to apparently violent electric shocks. When it was suggested by the investigator that this painful experiment would continue running, the participants “chose to devalue and reject the victim” (Lerner and Simmons 1966, p. 209), with participants tending to disdain the subject more as the apparent shocks increased in severity. A different tendency manifested when participants were told that the subject would receive financial compensation for successful responses in the learning task—specifically, the participants’ disdain lessened considerably. Interestingly, where the participants were given the power to compensate the subject or to lessen their apparent pain they showed less disdain to the subject, but only when participants were certain that the compensation/reduced shocking

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would be realized. This suggests that even when the outcome is clearly not a matter of moral desert, the inclination to approbation/disapprobation remains. When the experiments were repeated, successful and unsuccessful subjects were likewise construed as deserving, respectively, their successes and failures. This phenomenon of victim-blaming is not limited to such cases as considered by Lerner and Simmons (1966). Other research on this topic has suggested that people are inclined to blame AIDS victims (Correia et al. 2001) and assault victims (Hammock and Richardson 1993) for the harms that have befallen them, that people are inclined to praise beneficiaries of gambling gains (Schmitt et al. 1991), and that the Just World Fallacy can lead to worse health outcomes for ethnic minorities (Hagiwara et al. 2015). Further work has shown that the evidence demonstrates that people are motivated not only to hold favourable attitudes toward themselves and toward members of their own groups…but also to hold favourable attitudes toward the existing social system and the status quo. What is especially significant is that system justification motives are sometimes capable of overriding ego and group justification motives associated with the protection of individual and collective interests and esteem. (Jost et al. 2004, p. 912)

Furthermore, the tendency for human judgment to fall foul of the Just World Fallacy has “been shown to be stable and cross-culturally generalizable” (Furnham 2003, p. 795). Lerner’s (1965, 1980) account of this psychological phenomenon, the “just world hypothesis”, is that individuals need to construe the world in which they live as fundamentally just. This is so even in the face of decisive counterexamples involving random, or at least clearly unmerited, patterns of reward and harm, and positively or negatively evaluating individuals on the basis of these patterns—hence why it is called the Just World Fallacy. To quote Lerner and Miller, “[t]he just world hypothesis is easily stated: Individuals have a need to believe that they live in a world where people generally get what they deserve” (1978, p. 1050). According to Lerner and Simmons, “most people cannot afford, for the sake of their

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own sanity, to believe in a world governed by a schedule of random reinforcements” (1966, p. 203). Research has shown this fallacy is manifested in introspective thinking as well as judgments of others. For instance, Ritter et al. observed as a result of their study that (1) the concepts of mastery and belief in a just world are statistically independent; (2) belief in a just world is negatively correlated with depressive affect; (3) belief in a just world affects the relationship between economic hardship and age and depression; and (4) belief in a just world does not moderate the relationship between economic hardship and depression. (1990, p. 247)

Thus, in addition to shaping our attitudes to and appraisals of others, and affecting our relationships to others, the Just World Fallacy also shapes our appraisals of and attitudes to ourselves which affects the relationships that others have with us. The self-derogation that can result from the Just World Fallacy is a severe obstacle to the ability of the less successful to regard themselves as equals with more successful colleagues. In light of the Just World Fallacy, it seems that distributive inequality— even if ostensibly deserved—will disrupt the ability of the less successful to challenge the more successful, which they must be able to do if there is to be shared, rational, intra-community deliberation.

An Argument for Equal Pay If everyone received equal pay, then the propensity for people to commit the Just World Fallacy would be diminished, and thus it would be more possible for people to enter into the sorts of relationships of equal respect and regard that just communities require. Of course, there are goods other than pay and factors which shape—and perhaps distort—our appraisals of one another beyond the Just World Fallacy. Indeed, there are also other arguments which may count against equal pay for all, and there are considerations of justice that may outweigh the imperative to create and maintain communities in which relationships of equality can

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flourish. However, we believe that the Just World Fallacy constitutes a reason in favor of a presumption of equal pay and is an as-yet underappreciated phenomenon that ought to be of greater concern to political philosophers and business and organizational ethicists. Rawls’ (1975) classic argument that inequality is justified if and only if it benefits the least well off may very well be a good candidate for the special justification required for unequal distributions of social goods, in this case pay. However, what research into the Just World Fallacy highlights is that even a financial benefit resulting from the existence of inequality is not necessarily an overall benefit, because distributive inequality can undermine participation in a community by undermining our ability to enter into relationships of equality. As advocates of relational equality are aware, the derogated victim of injustice is not necessarily better off simply in virtue of an income gain relative to an abstractly defined baseline because the derogation itself, and the change in relationships it entails, are themselves harms. Weighing the goods of communal relationships against the good of monetary gain is no easy matter, but it is not obvious that the latter ought to trump the former when we are trying to decide how to organize businesses and society. We should however be clear: the Just World Fallacy is a propensity in some populations and not a psychological certainty, not all individuals have the same tendency to commit the Just World Fallacy (Rubin and Peplau 1975), and over a third of participants in Lerner and Simmons’ (1966) study did not commit the fallacy. It is possible that these variations are not reflections of immutable individual differences, and thus it may be the case that under certain circumstances, we are able to cultivate a resistance to the Just World Fallacy. One form may be a suspicion of inequality. Emergency situations—hurricanes and earthquakes, the aftermath of terrorist attacks, and so on—often create a heightened sense of social solidarity, and in such circumstances people are far less tolerant of unequal distributions of various provisions. This point is powerfully made by Heath: Emergencies typically evoke a higher level of social solidarity than everyday interactions, and so the norms governing them are often more egalitarian. As a matter of historical record, the norm that…governed the evacuation

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of the Titanic was “women and children first”—to the point where men were barred entirely from entering lifeboats on one side of the ship. (2014, p. 168)

In this vein, equal pay for all would be both a reflection of a sense of social solidarity and a contributor to it. Equal pay would, a fortiori, support and consolidate the sorts of equal relationship required for relational egalitarianism to be realized. For those for whom social solidarity is an end in itself, this comprises a second argument for equal pay, but regardless, social solidarity is a plausible contender for inclusion in any list of conditions considered as part of the transcendental argument for what would have to be the case in order for a just society to exist. If we were to see unequal provisions of goods such as pay as reflective of a seriously misguided way of organizing society, we would, in virtue of that fact, be less prone to committing the Just World Fallacy, and make it easier to enter into the sorts of relationships required for relational egalitarianism to be brought about even in circumstances where inequality is present. Even just inequalities, rather than “patterns of fortuitous reward”, can shape our appraisals of others in ways that may undermine our deliberative and judgmental capacities when the relevant judgments of praise or blame are reached in advance of the knowledge that such patterns of reward and harm are deserved, and equal pay could help to avoid this too. On the other hand, if we know that someone deserves their lot (whether good or bad), this suggests we have got past the stage where the absence of information encourages us to use reward or harm as a heuristic. To know that someone deserves their receipt of some reward or harm is to know more about them than merely that they are in receipt of reward or harm, and this knowledge may allow us to reach conclusions that are not shaped by the Just World Fallacy. But opportunities to gain such information are scarce, particularly at the level of the polity, where relational egalitarianism most needs its relations of equal respect and regard to hold. The only way for this “desert argument” to work is if we could know that all distributions of goods are always and necessarily reflective of merit. However, it may be harder to construct a world in which unequal pay is unfailingly reflective of merit than a world in which everyone receives equal pay.

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Concluding Remarks The question of practical feasibility is not to be ignored. As Wolff notes, “things are very likely to go badly wrong if we set out an ideal theory of equality and then attempt to implement it in the real world without a great deal of further thought about how it would actually impact on people, and the relations between them” (2010, p. 349). Thus, we endorse equal pay for all more confidently at the level of the individual workplace. In such a context, there are fewer variables, and less complexity, than at the level of society as a whole. Furthermore, there is a greater possibility of community due to the relatively small scale of the organization, the possibility of a shared sense of purpose and clearer nature of shared commitments. At the level of the polity, or indeed the world, equal pay for all is a worthy aspiration and one that would make it easier for us to enter into relationships required for justice. There may, however, be other considerations that, in practice, outweigh it or, at any rate, make it more difficult to implement—such as the motivational power of the prospect of a pay increase, or the possible advantages of the market more generally. Nevertheless, the consequences of the Just World Fallacy for our ability to accurately appraise others give us a reason to be suspicious of inequality and a reason to prefer equal pay for all.

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Correia, I., Vala, J., & Aguiar, P. (2001). The effects of belief in a just world and victim’s innocence on secondary victimization, judgements of justice and deservingness. Social Justice Research, 14(3), 327–342. Dworkin, R. (2003). Equality, luck and hierarchy. Philosophy & Public Affairs, 31(2), 190–198. Freeman, R. E., & Liedtka, J. (1991). Corporate social responsibility: A critical approach. Business Horizons, 34(4), 92–98. Furnham, A. (2003). Belief in a just world: Research progress over the past decade. Personality and Individual Differences, 34(5), 795–817. Hagiwara, N., Alderson, C. J., & McCauley, J. M. (2015). “We get what we deserve”: The belief in a just world and its health consequences for Blacks. Journal of Behavioral Medicine, 38(6), 912–921. Hammock, G. S., & Richardson, D. (1993). Blaming drunk victims: Is it just world or sex role violation? Journal of Applied Social Psychology, 23(19), 1574–1586. Heath, J. (2014). Morality, competition and the firm. Oxford: Oxford University Press. Heckscher, C., & Adler, P. (2007). The firm as collaborative community. Oxford: Oxford University Press. Jost, J. T., Banaji, M. R., & Nosek, B. A. (2004). A decade of system justification theory: Accumulated evidence of conscious and unconscious bolstering of the status quo. Political Psychology, 25(6), 881–919. Kasperbauer, T. J. (2015). Psychological constraints on egalitarianism: The challenge of just world beliefs. Res Publica, 21(3), 217–234. Kristjánsson, K. (2004). Children and the belief in a just world. Studies in Philosophy and Education, 23(1), 41–60. Lerner, M. J. (1965). Evaluation of performance as a function of performer’s reward and attractiveness. Journal of Personality and Social Psychology, 1(4), 355–360. Lerner, M. J. (1980). The belief in a just world: A fundamental delusion. New York, NY: Plenum Press. Lerner, M. J., & Miller, D. T. (1978). Just world research and the attribution process: Looking back and ahead. Psychological Bulletin, 85(5), 1030–1051. Lerner, M. J., & Simmons, C. H. (1966). Observer’s reaction to the “innocent victim”: Compassion or rejection? Journal of Personality and Social Psychology, 4(2), 203–210. Néron, P. Y. (2010). Business and the polis: What does it mean to see corporations as political actors? Journal of Business Ethics, 94(3), 333–352.

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Néron, P. Y. (2015). Rethinking the very idea of egalitarian markets and corporations: Why relationships might matter more than distribution. Business Ethics Quarterly, 25(1), 93–124. Rawls, J. (1975). A theory of justice (Revised ed.). Cambridge, MA: Harvard University Press. Ritter, C., Benson, D. E., & Synder, C. (1990). Belief in a just world and depression. Sociological Perspectives, 33(2), 235–252. Robinson, R. (2019). The management nexus of imperfect duty: Kantian views of virtuous relations, reasoned discourse, and due diligence. Journal of Business Ethics, 157(1), 119–136. Rubin, Z., & Peplau, A. (1975). Who believes in a just world? Journal of Social Issues, 31(3), 65–89. Schmitt, M., Kilders, M., Mösle, A., & Müller, L. (1991). Gerechte-Welt-­ Glaube, Gewinn und Verlust: Rechtfertigung oder ausgleichende Gerechtigkeit? Zeitschrift für Sozialpsychologie, 22(1), 37–45. Sinnicks, M. (2020). The just world fallacy as a challenge to the business-ascommunity thesis. Business & Society, 59(6), 1269–1292. Sison, A. J. G., & Fontrodona, J. (2012). The common good of the firm in the Aristotelian-Thomistic tradition. Business Ethics Quarterly, 22(2), 211–246. Solomon, R. C. (1994). The corporation as community. Business Ethics Quarterly, 4(3), 271–285. Wolff, J. (1998). Fairness, respect, and the egalitarian ethos. Philosophy & Public Affairs, 27(2), 97–122. Wolff, J. (2010). Fairness, respect and the egalitarian ethos revisited. The Journal of Ethics, 14(3/4), 335–350.

17 Equal Pay for All (Per Hour Worked) Einar Duenger Bøhn

In what follows, I will be interested in an extreme form of egalitarianism with respect to wages. More specifically, I will be interested in the thesis that everyone, no matter what kind of work they do, should get paid the same amount of money per hour worked. I call this the thesis of Equal Pay for All (EPA). A corollary of this thesis is that no one, no matter what kind of work they do, can get paid more than 24x per day, or 24x times 365 per year (though, of course, no one could in fact put in that many hours). Note a few things about this thesis. First, EPA is a normative claim, saying that we should pay everyone the same amount of money per hour worked. So, any conclusive reason for or against EPA must also include a normative reason, on pain of fallacious reasoning between what is or will be the case on the one hand and what ought to be the case on the other. Second, it is only concerned with wages; it says nothing as to how we E. D. Bøhn (*) Department of Religion, Philosophy and History, University of Agder, Kristiansand, Norway e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_17

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should distribute goods and (social, political, and legal) rights in society more generally. Third, EPA is not a thesis about everyone having the same of everything. If you put in more hours than your neighbor, you will make more money; if society allows inheriting property from one’s parents, and you do but your neighbor doesn’t, then you will most likely be better off with respect to property than your neighbor; and so on. EPA need not be a particularly socialistic thesis and could be far from a communistic thesis. In exploring EPA, I am not thereby exploring socialism or communism. Fourth, there is no assumption of everyone being able to work; many might not, for example, for reasons of health, or simply lack of work in one’s community. A society implementing EPA could, just like many current systems, find better or worse ways of dealing with that. Personally, I like the idea of universal basic income (see, e.g., Van Parijs and Vanderborght 2017). Fifth, EPA is silent about how high or low to set the same salary for all; but I take it the reasonable thing to do is to set it as high as possible. As an example, consider a hospital, with both cleaning personnel and doctors, all of whom, we’ll assume, work eight hours per day. Given EPA, they would get paid exactly the same in terms of money. Is that wrong? Why? Why should we pay the doctors more than the cleaning personnel per hours worked? Note that I am not asking why we do pay the doctors more; I am asking why we should pay the doctors more. There are many reasons why we do pay the doctors more than the cleaning personnel. Such reasons might or might not be the reasons we should pay doctors more than cleaning personnel. Apart from contingent conventions and self-serving social dynamics, here are some more plausible such reasons. First, it needs a lot more education and training, and hence effort, to become a doctor than a cleaning personnel. Second, doctors carry more responsibility for things we care more deeply about than the cleaning personnel, namely matters of life and death. Third, being a doctor is more stressful than cleaning; after all, lives are on the line. Fourth, putting in the extra effort and carry the extra stress and responsibility involved in becoming a doctor deserves being paid more in return. Fifth, being paid more provides an incentive to put in the extra effort and carry the extra stress and responsibility involved in becoming a doctor, which is a kind of work we care deeply about.

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It’s not obvious that these are the reasons we should pay doctors more than cleaners by the hour. The question is whether these five reasons are best rewarded in terms of our salary, rather than in some other way. Why is money supposed to be the best indicator of the value of our work (cf. Mazzucato 2019)? Isn’t the value of your work given by the importance, and how much we care about the work? Why think such importance and care should be reflected in your personal paycheck? Shouldn’t our personal paychecks just make sure we are all well off after putting in our hours of work? What I am questioning, but not trying to answer here, is whether your salary is the best way to show the value of your work. An exploration of EPA is an attempt at trying to see an alternative. One obvious reason to take EPA seriously, is that it would secure more economic stability for more people, and with more economic stability comes, presumably, more peace, less crime, more freedom for self-­ development and self-realization, and in general a better society for all (cf. Stiglitz 2013). So, a reason to favor EPA is a consequentialist one, namely that it plausibly will bring about more of other good things for more people. This is of course a mere hypothesis at this point, and a partly empirical one, which I cannot explore here. But, in any case, it should make us think more seriously about EPA.1 A second reason to take EPA seriously, is that it seems to put the economic value of work closer to where it belongs, morally speaking, namely in the amount of work you put in. It is well known that it is hard to quantify quality, witnessed by the fact that the quantity of many people’s salary today is far from a one-one correlation with the value and quality of the work they put in (cf. Piketty 2014; Stiglitz 2013). We should rather set our salary in a one-one correlation with the hours of work we put in, and gain recognition for the importance of it beyond that by our fellow citizens instead. In other words, instead of getting recognition from others by virtue of our paycheck, which is not an optimal indicator of the quality and quantity of our work, we should get recognition from others by virtue of what we do, and how many hours we work at it. A third good reason to take EPA seriously, is that it is a potentially good means to a society with more fairly distributed goods and (social, political, and legal) rights for all. This of course rests on the assumption that with more economic stability comes better access to other goods and rights in society.

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But, of course, EPA raises many worries, old and new. For the rest of this chapter, I will focus on some of those. According to anarchist Peter Kropotkin (1892/2015, chapter 13), any wage system, and hence EPA too,2 ought not to be the case because it wrongly quantifies quality and upholds inequalities. Any wage system, including EPA, will put a value on the work done, but according to Kropotkin, different kinds of work just cannot be quantified in terms of its value and reasonably compared to each other. Kropotkin thus raises the general worry of quantifying and comparing quality. All kinds of work are interdependent and needs to be so for society to function well, so, in the end, no kind of work is worth more by the hour than another kind. Think back to our earlier example, roughly, the doctors cannot perform their work well unless the hospital is clean, and there is no (or at least far less) point cleaning the hospital unless the doctors need a clean hospital to do their work well. The doctors and the cleaning personnel thus depend on each other to do their work well, both of which are in the general interest of us all. Kropotkin further worries that as long as we put a value—any kind of value—on the work done, we will start measuring and compare each other’s work, and unjust inequalities (and jealousy) will inevitably arise. Kropotkin thus suggests, as a good old-fashioned anarchist, that all kinds of wage systems should be abandoned. For Kropotkin, anti-authoritarian equality seems to be a moral ideal (though it is highly unclear what the equality is supposed to apply to), but such equality cannot be achieved as long as there is some kind of value attached to the kind of work we do, which we then inevitably will measure and compare. So, according to Kropotkin, we should abandon all kinds of wage systems, including EPA. Kropotkin’s worries are directed at egalitarian wage systems but according to which some kinds of work are nonetheless, to some extent, paid more than others. He does not commit to a system as egalitarian as EPA. He briefly mentions a system like EPA, but he never objects directly to it. Rather, he simply generally worries that the quality of any kind of work cannot be economically quantified and compared and that unjust inequalities (and jealousy) will inevitably arise if we do. I can see how that

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might happen if different kinds of work are economically valued to different degrees, but will it inevitably happen if no kind of work is economically valued to different degrees? Kropotkin never discusses it any further. But, leaving good old-fashioned anarchism behind, is economic equality a moral ideal at all?3 According to Harry Frankfurt, “economic equality is not as such of particular moral importance … what is important from the point of view of morality is not that everyone should have the same but that each should have enough” (1987/1998, p.  134, emphasis in original).4 Frankfurt claims that many arguments in favor of economic equality appeal to cases of some people not having enough, but that in itself provides no conclusive reason to think that everyone should have the same—only that they should get enough. Frankfurt does not mention it, but Kropotkin is in fact a good example of someone arguing for equality on the grounds that many people don’t have enough. Frankfurt’s point is that such an argument is formally invalid. Later, Frankfurt strengthens his claim in the sense that he says that not only equality has no particular moral importance, but “equality has no moral value in itself ” (1997/1999, p. 147), and “surely what is of genuine moral concern is … whether people have good lives, and not how their lives compare with the lives of others” (1997/1999, p. 148). So, when two people are well off, or have good lives, any further economic inequality between them is in itself of no moral concern. There might of course be other reasons for their economic inequality being morally wrong, for example, one of them might have been unjustly treated, or treated with disrespect, leading to unfair economic inequality, but then the negative moral value involved has nothing to do with the inequality in itself, but rather with the unjust or disrespectful treatment leading to such economic inequality. I believe Frankfurt makes a partly valid point, but a purely formal one, and that it does not entail that EPA should not be the case. In itself, inequality is simply non-identity between two features, for example, not

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having the same color, or not having the same salary, and as such it, of course, has no moral value. But the question is whether it has moral value when we switch from variables to instances, for example different wages. When a doctor makes more money per hour worked than a cleaning personnel at a hospital, is that difference in salary in itself really of no moral importance? Paying a different salary amounts to putting a different value on the work done; putting a different value on the work done amounts to saying that the one kind of work is more valuable than the other; but saying that one kind of work is more valuable than another seems to be a claim of high moral importance. In what sense of moral importance? There are many different notions on the market, which might give different results, but let’s for the sake of argument consider one that it seems Frankfurt himself is using, namely an individualistic virtue-ethical notion. Frankfurt (1987/1998, p.  136) claims that focusing on economic equality, and hence comparing your own salary to others, distracts attention away from attending to your own life, needs, and requirements, and ultimately what kind of person you are. It thus seems the ultimate moral question is an individualistic virtue-­ ethical one: what kind of person do I really want to be? Do I want to be one who compares my salary to others, or do I want to be one who works to develop my own life under my own conditions towards an ideal I have authentically set for myself? Even with such an individualistic virtue-ethical moral notion in play, I believe the matter of economic equality, and in particular EPA, as an instance of equality as such, is morally relevant. By paying different amounts for different kinds of work, we are in effect putting different values on different kinds of work, which in turn is partly setting the ideals we should strive for, individually as well. I don’t see how the moral virtue-­ ethical question of what kind of person I really want to be can be asked and answered in isolation from the rest of society and its social dynamics. We are all to some extent shaped by our environment, and by each other, even our deepest desires, including our desires for what to desire (i.e. our second-order desires, which Frankfurt is deeply concerned with elsewhere). Inequality in itself, as a purely formal relation of non-identity, has no moral value. Frankfurt is perhaps right about that, but an instance

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of inequality, for example, a vast difference in salary, can have moral value in the sense of “telling us” what we ought to strive for. So, even if Frankfurt is right, and inequality in itself is of no negative moral value, we can ask whether EPA ought to be the case. Whatever has no intrinsic moral value can still have extrinsic moral value, or it might be that it ought to be the case for other reasons. As Frankfurt himself points out, there can be many reasons for striving for various forms of equality, including economic equality, even if equality in itself has no positive moral value. For example, it might turn out that more economic equality means less violence and crime, that more economic equality better secures legal, political and social rights for all (cf. Nagel 1978/1979), and that more economic equality means more personal freedom for more people; that could be reasons to strive for it, even if equality in itself is of no moral value. Interestingly, Frankfurt (1997/1999, p.  151) discusses a case from Isaiah Berlin of dividing up a cake to be split among ten people. Berlin believes that if we divide up the cake in ten equal parts, no explanation is needed, but if we divide it up into unequal parts, some bigger than others, an explanation is needed. Berlin concludes that equality is the morally right thing, by default, and inequality is the morally wrong thing, unless relevant reasons are given. Frankfurt agrees with Berlin, but believes the explanation is not that equality in itself has moral value, but that the inequality in question would be disrespectful and partial rather than respectful and impartial. Equality is the default position only when we lack information justifying inequality; if we go for inequality when we lack justifying information for it, we are being disrespectful and partial. According to Frankfurt, it is such disrespectfulness and partiality involved in dividing up the cake unequally that carries the moral weight, not the inequality in itself. Maybe we can agree with Frankfurt and say the same in favor of EPA? Instead of saying with Berlin that the equality involved in EPA is in itself the morally right thing, can we say with Frankfurt that the inequality involved in non-EPA systems are disrespectful and partial (due to insufficient information to justify the difference), and therefore the morally wrong thing? In fact, very often, a grotesque difference in salary is disrespectful and partial in this sense, but is it always so?

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One reason to think so, is that we might never have sufficient information to justify unequal pay per hour worked; that unequal pay per hour worked is mostly due to contingent conventions and self-serving social dynamics, and that we have insufficient information as to what justifies it all. It will not do, in reply, to merely point out that unequal payment per hour worked in fact leads to more economic growth overall, because the question is a normative one, not a descriptive one, as to how it ought to be distributed, and hence whether economic growth is a goal we should strive for in the first place. Plausibly, economic growth in itself is of no more moral value than equality. Plausibly, just like economic inequality might negatively affect access to the same legal, political and social rights, so economic growth might negatively affect the general culture and natural environment (see, e.g., Klein 2015), which we also care about. Another general worry is that EPA will remove the incentives for individuals to work hard, and hence efficiency, production and growth will drop in society at large. But, again, since our question is a normative one, what we really should be asking in this connection is whether economic efficiency, production and growth is something we should strive for, or even just keep up at present level? It certainly weighs on our culture and natural environment. In other words, maybe it ought to be the case that economic efficiency, production and growth decrease from our presentday level? Maybe we should instead distribute what we already have more equally? Maybe EPA would be a good means or part of that? EPA amounts to an extreme change from our present system; we don’t really know what would happen if we approached and eventually reached EPA. Would too many people become lazy, and stop working very hard? Why? It is hard, close to impossible to say from our current point of view. Whether to implement EPA, is the kind of decision-theoretic problem that Laurie Paul (2014) calls the problem of a transformative choice. Because the change involved is so radical compared to our current subjective experiences, we have no rational way of telling, on the basis of our current experiences, whether it is something we should prefer. It is like when you and your partner wonder whether to have your first child. From your subjective point of view, until you have experienced it, you have no idea what it will be like to have your first child. You have

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insufficient subjective experiences to rely on in making your choice; or as Paul says about the choice as to whether to participate in a political revolution, [Y]ou don’t know what such an upheaval could bring, especially if your country has been politically stable until now, and at least one possible outcome of the revolution could be the installment of a new regime that is even more oppressive… you cannot use your simulations of what it would be like after the revolution as evidence for a decision about whether to participate. (Paul 2014, pp. 55–56)

The same goes for whether to implement EPA. We don’t know what it will be like afterwards. We cannot use our simulations based on our previous experiences to assess what it will be like. Of course, we can imagine what it would be like to be a doctor, making the same amount of money per hour worked as a cleaning personnel, and vice versa, and we can imagine what that might do to our motivation to become a doctor, with all the extra effort, stress, and responsibility involved in that, versus becoming a cleaning personnel. But all such imagining will be inadequate for making a rational choice because it is based on our current experiences, in a radically different system. When placed in a radically new system such as EPA, our deepest preferences might eventually change into something we don’t know what is like today, based on our current experiences. From a merely subjective point of view, we therefore cannot dismiss EPA based on our current experiences of being paid differently per hour for different kinds of work. It’s like my earlier 20-year-old point of view dismissing my current life; my current 42-year-old point of view disagrees. I have had many very different experiences since then, and my preferences have changed accordingly. Given what I know today, I would characterize it as irrational of my earlier self to dismiss my current self on the basis of its own pre-mature point of view. Of course, by the same reasoning, neither can we rationally choose in favor of EPA. But this is all from a merely subjective first-person point of view. There might of course be more objective third-person points of view, for example, social scientific empirical evidence, that can tell in

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favor or disfavor of EPA. But the point here is that our subjective experiences affects what motivates us, and how we behave, and hence how our social community functions. But we have not had any personal experience with EPA, and since it is such a radical change from our current system, even more objective third-person evidence is doomed to be a limited predictive tool as to what an implementation of it will be like, and lead to. We should therefore be very careful in simply assuming what our motivations will be like in such a system, based on what our motivations are like in our current system. This is of course not an argument in favor of EPA, but rather meant to stop us from dismissing it too easily, on irrational grounds. Even if we don’t really know what will happen to our motivation and behavior under EPA, there certainly will be no economic incentive in terms of salary to choose one occupation over another. One might therefore suspect, rationally or irrationally, that this in turn will negatively affect our work habits. In addition, some kinds of work are more demanding in many respects than other kinds of work; without an economic incentive to choose the more demanding kind of work, one might suspect that fewer people will choose it. But why think so? Given EPA, putting in more hours, means getting more money. Our motivation for choosing an occupation would not be based on its promised paycheck, but rather on our interest in, and general prestige of, the work itself. More demanding kinds of work might give more prestige, and collective meaning. It is very hard to tell which way it will go under very different circumstances. Though I would normatively question the need to work hard and effectively beyond what is purely necessary to begin with, because I normatively question the very idea of growth it all relies on, Joseph Carens (1981) defends an interesting alternative to EPA, an alternative explicitly designed to preserve the incentives for individuals to work hard, and hence to preserve today’s level of efficiency, production and growth in society at large. Carens imagines what he calls the egalitarian system, which lets the market decide salaries prior to taxation, just like today, but, unlike today, everyone would be taxed 100%, and then, after tax, the total sum would be redistributed back to the people, equally among all. Presumably, this redistribution would all happen before you get your

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paycheck, so, in effect, the amount of money you actually get paid (into your bank account) per hour worked would be the same for all, no matter what kind of work you do. So, for example, the cleaning personnel and the doctors at our hospital would have a vastly different pre-taxed paycheck, which they would never get their hands on, so to speak, but the exact same post-taxed paycheck, which they would get their hands on, so to speak. In short, they would have the same amount of money for dayto-day spending. Carens (1981) argues that the difference in pre-taxed paychecks might be sufficient incentive to avoid negatively affecting our current work habits, if we could all be socialized into caring more about the common good. The rough idea is that just like the possibility of getting more money for ourselves motivates us to work hard in our current system, so the possibility of contributing more to the common good would motivate us to work hard in the imagined egalitarian system. Just like EPA, Carens’ egalitarian system is a radical change compared to our current system, so it is hard to say how we would be motivated and act in such a system, and hence whether we have good reasons to go for it, on the basis of our current subjective experiences. The key for Carens’ idea is whether the socialization process towards more altruism would, in principle, work. This is also the weak spot many reviewers of Caren’s book pointed to, for example, Goodin (1982), Worland (1982), Hardin (1983), and Moon (1983). One might suspect that people are essentially too selfish for such a radical socialization process towards altruism to work, even in principle. For example, according to Nagel (1991), we operate in virtue of both an agent-relative perspective (a partial point of view) and an agent-neutral perspective (an impartial point of view). From the agent-relative (partial) point of view, people take special interest in their relatives, especially their children. There is no possibility of abolishing this interest, and no sane person would wish to do so. The only real possibility, for those of egalitarian sympathies, is to limit its scope of operation and the magnitude of its consequences. So long as people come in families, the approach to fair equality of opportunity can only be partial. (Nagel 1991, p. 110)

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But note that both Carens’ egalitarian system and EPA preserve this agent-relative (partial) perspective. Both systems are only concerned about the paycheck, not about a general equality of all goods. For example, if you work more than your neighbor, or inherit property from your parents and your neighbor doesn’t inherit property from his or her parents, then you will be able to secure your relatives, and especially your children, more than your neighbor will be able to secure his or hers. So, neither system will abolish agent-relative (partial) points of view, by virtue of which we might essentially operate as agents, rather, both systems are concerned with merely limiting its scope of operation and the magnitude of its consequences, just like Nagel suggests. A quick side note: Nagel’s distinction between our agent-relative versus agent-neutral perspectives, might help us better understand what was missing in Frankfurt’s objections to economic equality as a moral ideal. Plausibly, Frankfurt was focusing too much on the agent-relative perspective, neglecting the agent-neutral perspective. One might even argue that being a moral creature involves being able to weigh these two perspectives up against each other. In any case, there are two reasons I think we should be more interested in EPA than Carens’ egalitarian system. First, Carens’ (1981) system is designed to preserve our current market-driven economic efficiency, production and growth. But I think we should normatively question the value of the very idea of economic growth (cf. Mazzucato 2019), not only for reasons of less inequality in society (cf. Stiglitz 2013), but also for reasons of environmental ethics (cf. Klein 2015). Constant economic growth, in the most common understanding of the term, is, for many reasons, simply not an overall good thing in the long run, for anyone. Second, EPA helps better place the value of work where it belongs. Let me end by a brief remark on the utopic feature of EPA. Any utopic feature is more or less unrealistic, but it might still be a good idea, something we should strive for. Likewise, EPA might be more or less unrealistic. For example, we have not at all considered how realistic it is, nor how an eventual change in its direction ought to happen. A particularly important problem to consider is how to think of investments and reinvestments of capital in a system such as EPA. But, all in all, it might still

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be a good idea, something we should take seriously, and maybe even strive for. A moral ideal.

Notes 1. In addition to a consequentialistic reason, there might be a virtue-ethical reason to think more seriously about EPA as well, namely: What kind of people should we be? Should we be the kind of people who economically value each other’s work equally, as equal parts in a more global system? Or should we be the kind of people who economically value each other’s work unequally? 2. Kropotkin (1892/2015) briefly mentions a system like EPA in chapter 13, section 2, with reference to Jules Guesde, a leader of the French working party in the 1880s. 3. For some classics in philosophy on equality as a moral ideal more

generally, see Williams 1962/1973; Nagel 1978/1979; Dworkin 1981a, b; and, of course, Rawls 1971; Nozick 1973; for a more recent discussion, see Scanlon. 2018.

4. Frankfurt (1987/1998, p.  135) calls this the doctrine of sufficiency. Frankfurt’s doctrine of sufficiency has since been much discussed, both defended, for example, in Crisp (2003), and rejected, for example, in Casal (2007), but none of the two works directly engages with the present thesis of EPA, so I will here steer clear of doing so as well for clarity.

References Carens, J. H. (1981). Equality, moral incentives, and the market. Chicago, IL and London: Chicago University Press. Casal, P. (2007). Why sufficiency is not enough. Ethics, 117(2), 296–326. Crisp, R. (2003). Equality, priority, and compassion. Ethics, 113(4), 745–763. Dworkin, R. (1981a). What is equality? Part 1: Equality of welfare. Philosophy and Public Affairs, 10(3), 185–246. Dworkin, R. (1981b). What is equality? Part 2: Equality of resources. Philosophy and Public Affairs, 10(4), 283–345.

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Frankfurt, H. G. (1987/1998). Equality as a moral ideal. In H. Frankfurt (Ed.), The importance of what we care about (pp. 134–158). New York: Cambridge University Press. Frankfurt, H.  G. (1997/1999). Equality and respect. In H.  Frankfurt (Ed.), Necessity, volition, and love (pp.  146–154). Cambridge, UK: Cambridge University Press. Goodin, R. (1982). Review of “Equality, moral incentives, and the market” by Joseph Carens. American Political Science Review, 76(2), 458–459. Hardin, R. (1983). Review of “Equality, moral incentives, and the market” by Joseph Carens. The Annals of the American Academy of Political and Social Science, 468, 258–259. Klein, N. (2015). This changes everything. New York: Penguin. Kropotkin, P. (1892/2015). The conquest of bread. London: Penguin Classics. Mazzucato, M. (2019). The value of everything (2nd ed.). London: Penguin Books. Moon, J. D. (1983). Review of “Equality, moral incentives, and the market” by Joseph Carens. Ethics, 94(1), 146–150. Nagel, T. (1978/1979). Equality. In T.  Nagel (Ed.), Mortal questions (pp. 106–127). Cambridge, UK: Cambridge University Press. Nagel, T. (1991). Equality and partiality. New York: Oxford University Press. Nozick, R. (1973). Anarchy, state and utopia. Malden, MA: Basic Books. Paul, L. A. (2014). Transformative experience. Oxford: Oxford University Press. Piketty, T. (2014). Capital in the twenty-first century (A. Goldhammer, Trans.). Cambridge, MA and London, UK: The Belknap Press of Harvard University Press. Rawls, J. (1971). A theory of justice. Cambridge, MA and London, UK: The Belknap Press of Harvard University Press. Scanlon, T. (2018). Why does inequality matter? Oxford: Oxford University Press. Stiglitz, J. E. (2013). The price of inequality. New York and London: Penguin. Van Parijs, P., & Vanderborght, Y. (2017). Basic income: A radical proposal for a free society and a sane economy. Cambridge, MA and London, UK: Harvard University Press. Williams, B. (1962/1973). The idea of equality. In B. Williams (Ed.), Problems of the self (pp. 230–249). Cambridge, UK: Cambridge University Press. Worland, S. T. (1982). Review: Moral incentives and the market. The Review of Politics, 44(4), 628–630.

Part V Afterword

18 Afterword: Equality, Not Equal Pay— Distributional Justice Beyond Money Rohan Grey

Introduction Debates over providing equal pay for all tend to take money itself for granted. By relying on money values as a proxy for underlying goods and services, interlocutors on both sides abstract away from the messy legal and operational realities of the monetary system, and instead focus exclusively on ostensibly more interesting philosophical questions concerning the morality and ethics of distribution, redistribution, and just compensation. In reality, however, money is not a mere veil over the “real” economy, nor can it be reasonably approximated as such. To the contrary, monetary systems are creatures of history, law, and politics, and their institutional dynamics shape the dynamics of the rest of the economy. Consequently, any proposal to engage in large-scale social reordering via monetary means must take seriously the structural constraints implied by

R. Grey (*) College of Law, Willamette University, Salem, OR, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9_18

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monetary theory, as well as the implications of doing so on the monetary system itself. Viewed from this perspective, the question of whether or not to provide equal pay to all is really a question about how best to use the monetary system to achieve equitable prosperity for all. This, in turn, can be decomposed into three distinct sub-questions: (1) how to maximize our productive capacity (i.e. how to grow the pie), (2) how to direct our productive efforts on the basis of social priorities (i.e. how to choose the filling), and (3) how to equitably distribute the output generated from the socially oriented production (i.e. how to share the pie). The answer to each of these questions inevitably implicates broader questions about the nature of money, its relationship to real production, and the appropriate role and scope of monetary versus non-monetary modes of social ordering. In particular, I argue that providing equal pay to all, regardless of whether someone is a worker or non-worker, or the kind of work they engage in, undermines the real production dynamics upon which monetary economies are built. Instead, monetary remuneration should be directed primarily toward socially useful labor in order to maximize collective productive capacity and direct production on the basis of social need. At the same time, money is an inferior mechanism for distributing public goods, compared to a universally accessible commons not centered around the cash nexus. Consequently, reforms aimed at achieving distributional justice must go beyond monetary flows, to the real economy underneath. The remainder of this chapter proceeds as follows: the first part examines the nature of money and its essential role in driving modern systems of production, beyond merely coordinating consumption. The second part reconceptualizes money as a labor-driven phenomenon and advocates for the superiority of a Job Guarantee to providing equal pay for all. The third part considers the importance of differentiated labor output to broader systems of coordinated investment and industrial planning, and proposes augmenting the job guarantee with an income supplement program to allow for unequal wage incomes while still preserving the underlying political equality of the working class. Finally, the fourth part evaluates the relative merits of monetary and non-monetary systems of distribution, and argues for prioritizing equal access to a universal

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commons over equal pay, while recognizing a qualified systemic role for guaranteed income programs alongside labor wages and supplementary income programs.

Money as a System of Production According to standard economics textbooks (see, e.g., Mankiw 2011, p. 324), money emerged as a technically superior way to facilitate private exchange than in-kind barter. By agreeing upon a certain commodity, like gold, to function as a general circulating medium, store of value, and unit of account, private actors overcame the problem of the “double coincidence of wants” and developed more sophisticated systems of coordinated production and consumption. The state, by contrast, entered only later, as the collective entity responsible for enforcing property rights and contracts in exchange for the power to levy taxes to fund its activities. This stylized account has no empirical basis. To the contrary, the earliest documented forms of money emerge contemporaneously with the written word, as a tool of public governance in societies too large to be administered via kinship and in-person relationships (Graeber 2011; Ingham 2004; Schmandt-Besserat 1986). In particular, public authorities impose taxes and other non-reciprocal obligations that can only be satisfied by tendering tokens (or credits) issued or endorsed by the public authority itself. The nominal value of the tokens establishes a common unit of account, which private actors later use to denominate their own private credits (Desan 2016). For monetarily sovereign public authorities, the function of taxes has thus never been to generate revenue, but rather to establish demand for currency only they can create (Wray 2016; Tcherneva 2007a; Forstater 2005). Once such demand is established, public authorities then inject currency into the economy in exchange for real goods and services, most importantly labor, thereby creating a real production circuit that otherwise would not exist.1 As societies expand in size and complexity, they typically rely more on formal institutions and legal relationships structured around monetary flows and values (Deakin et  al. 2017). According to legal historian

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Christine Desan, the transition from feudalism to capitalism, for example, was driven by the delegation of public money creation powers to profit-seeking commercial banks (Desan 2014). This accelerated the process of private capital formation, at the cost of increasing overall inequality and financial instability. Today, various legal entities function as “going concerns” that ostensibly pursue profit, but are concerned most of all with balance sheet survival. Many of these are considered “private” actors, and paragons of the “free market,” even as their existence depends heavily upon subsidies and privileges conferred by the state (Hockett and Omarova 2016, 2017). Since the advent of “Keynesianism” in the 1930s, however, there has been renewed appreciation of the central role of public authorities in achieving macroeconomic stabilization (Keynes 1936; Lerner 1944). In particular, it is now widely accepted that private investment is incapable of generating and sustaining conditions of full employment, which is necessary to maximize the real economic output available for society to consume. More recently, monetary economist Hyman Minsky (see, e.g., Minsky 1986), as well as the increasingly popular school of macroeconomic thought known as Modern Monetary Theory (MMT) (see, e.g., Kelton 2020; Mitchell et al. 2019) have extended the Keynesian framework by demonstrating that sustained public spending is necessary to maintain stable private income growth and counterbalance the vicissitudes of financial speculation. Another important policy popularized by Minsky and MMT is the Job Guarantee, whereby the government commits to providing paid work to anyone who wants it (Tcherneva 2014a, 2020; Murray and Forstater 2013; Wray 2007). In contrast to traditional public employment, which hires on the basis of programmatic need, a Job Guarantee program (JGP—discussed further in the second part of the chapter) hires anyone willing and able to work at a fixed wage and benefits. Unlike traditional stimulus, which involves “trickle-down” spending on specific projects, JGPs employ a “trickle-up” approach that spends directly on hiring the unemployed (Tcherneva 2014b). Of course, macroeconomic policy consists of more than just achieving and maintaining full employment. Public authorities pursue public purpose via management of the commons, and promoting capital

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development through investment, industrial planning, and innovation policy (see, e.g., Mazzucato and Wray 2015; Mazzucato and Penna 2015; Kaboub 2007; Forstater 2001). These broader goals, discussed further in the third part of the chapter, provide an overarching directionality to full employment policy, grounding it in principles of equity and sustainability.

Money as a Labor-Driven Phenomenon As the preceding account makes clear, modern monetary systems do not merely exist to facilitate exchange, but to induce individuals into becoming workers to further collective production goals determined by public authorities. Proposals to provide equal pay to all, by contrast, make no attempt to recognize the structural importance of labor, or to properly remunerate workers for their time. Instead, they obscure the meaningful economic and social distinctions between work and non-work under a shallow veneer of formal income equality, and behind defeatist claims that because such distinctions are difficult to delineate legally it is preferable to pretend they do not exist at all (cf. Alessandrini 2013; Schultz 2000). A vision of equal pay for all thus reflects a fundamental ambivalence, if not ignorance, of the core productive logic upon which monetary production economies are built. At the same time, equalizing all incomes does not actually solve the problem of persistent underemployment. While it may seem counter-­ intuitive, the level of unemployment in the economy is a policy decision, as public authorities can always purchase any labor available for sale in their own currency (Tcherneva 2016). Every monetary economy is thus undergirded by either an unemployed or employed reserve pool—there is no other alternative (Mitchell 2017). Equal pay policies do not by definition even attempt to address this problem—doing so instead requires paying wage income to the presently unemployed in exchange for their labor. This is self-defeating, as a necessary condition of equitable prosperity—which equal pay proposals are presumably intended to promote—is maximizing the productive capacity of the economy via sustained full employment.

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Modern capitalist economies maintain a reserve pool of the unemployed, despite the resulting lost potential output, because it disciplines wage levels and reduces the political power of the working class (Kalecki 1943). Conversely, with a JGP, public authorities sidestep private employers entirely, and expand and contract spending on job creation elastically in response to need. When other sources of employment are scarce, more workers are induced to enter the JGP. When they are plenty, JGP employment decreases. In effect, the JGP functions like “buffer stock” schemes that stabilize the value of commodities (i.e. wool) by purchasing any excess supply at a fixed price, and then selling it again when demand increases (Mitchell 2017). The JGP wage thus creates a universal floor for wages, against which other employers must compete. At the same time, it targets new spending toward increasing production directly, in contrast to equal pay policies that at best indirectly stimulate production via increased consumption demand. For workers, the JGP provides an opportunity to sell their labor power that does not indenture them to private capitalists. Any eligible worker can exchange their time for money, notwithstanding their personal, social, or economic circumstances. The effect is to economically and psychologically stabilize the value of money in terms of the average worker’s time.2 This principle—that every person’s time is equally valuable to them, since everyone has but one life, and one heartbeat—is powerfully egalitarian. In addition, it builds class consciousness by encouraging workers to identify, first and foremost, as sellers of their labor power, rather than sellers of the specific output of their labor (Marx 1887/1976, pp. 270–273). There is plenty of reason to believe that direct public employment is, on average, of positive value when designed around genuine social need. Even if this were not true, however, an economy with an employed reserve pool is superior to one with an unemployed reserve pool. Involuntary unemployment deteriorates physical and mental health, increases the risk of suicide, harms families, and undermines social cohesion (Tcherneva 2017). It also degrades workers’ productive capacity and makes it more difficult for them to reenter the workforce in the future, lowering overall productive capacity (Watts and Mitchell 2000). By contrast, dignified and decently paid employment provides purpose, community, and

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opportunities to grow and give back to society (Tcherneva 2014a). In this sense, the value of a JGP extends far beyond the income it directly provides to workers. At the same time, many existing forms of paid labor are exploitative and socially harmful. These must be unequivocally condemned, even while simultaneously affirming the economic importance of labor, and the potential for paid work to play a positive force in people’s lives. Instead, a JGP should be designed to directly center the needs and interests of workers and their communities. When implemented properly, a JGP expands and transforms our understanding of paid work to include forms of care labor, creative labor, and environmental protection labor that presently go unrecognized and unremunerated (Ferguson 2018). Moreover, it places the burden on public authorities to create meaningful and socially oriented work opportunities, rather than blaming the persistence of unemployment on workers themselves, or assuming that a policy of equal pay for all can meaningfully substitute for access to paid work opportunities (Tcherneva 2012). Of course, to argue that the primary economic function of incomes should be to remunerate socially valuable labor is not in any way tantamount to arguing that everyone should be compelled to work, or that those who do not work should be treated like second-class citizens. Rather, it is based on the recognition that our shared prosperity depends on maximizing our collective productive capacity, and thus, at a structural level, society cannot be indifferent as to whether individuals contribute their labor to the common product, or whether society maintains full employment. More broadly, the monetary dynamics of an economy in which the creation of new currency fluctuates on the basis of the amount of labor undertaken by workers are vastly different to one in which currency is injected in a uniform manner, regardless of the underlying level of labor-­ driven production, as is implied by a policy of equal pay to all (Harvey 2012; Tcherneva 2007b; Tcherneva and Wray 2005). The former constitutes a vision of an economy built upon labor-respecting production, while the latter—at best—reifies the existing capitalist mode of accumulation, in which production is driven primarily by the expectation that

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private owners of the means of production will generate additional profit from increased consumer demand (Nakayama and Kolokotronis 2017). At the same time, even the complete replacement of capitalist accumulation with a system of labor-centered production, based around “equal pay for all workers” cannot, on its own, ensure equitable prosperity to all. Such a system establishes formal equality between all workers, to the extent that they are entitled to receive the same wage on the basis of the same contribution of labor power, but it does not address either the substantive inequality between different forms of labor output (addressed further in part three below), nor the deeper structural inequality between those who can and cannot work for whatever reason (addressed further in part four below) (Marx 1891/2009). According to Marx, however, such “defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby” (Marx 1891/2009, p.  10). Thus, it is only after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his [sic] ability, to each according to his [sic] needs! (Marx 1891/2009, p. 11)

Differentiated Output, Differentiated Value Growing the pie via sustained full employment is necessary, but not sufficient, to achieve equitably prosperity. Exploitative, extractive, and unsustainable production can be equally if not more harmful than underproduction. Thus, it is necessary to ensure the pie has the right “filling,” by directing production toward the greatest social needs through investment, planning, and innovation policies. These include workforce development programs that support workers in acquiring socially useful (a)

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skills, (b) credentials, and (c) experience (henceforth “SCEs”). Or, as Minsky argued, “once tight full employment is achieved, the second step is to generate programs to upgrade workers” (Minsky 1965, p. 200). It is impossible to meaningfully promote workforce development without establishing a hierarchy of remuneration of labor output. Consequently, a policy of “equal pay for all workers” is still in tension with the goal of promoting workforce development, albeit less so than providing equal pay to all regardless of their work status. Today, there is an implicit hierarchy of remunerated labor established by the fragmented system of minimum wage laws, award rates, public sector wage scales, and guild regulations. The only question is whether it should remain implicit, or be made explicit via a unified and coordinated policy framework. One way to achieve the latter is to offer tiered remuneration for workers who successfully meet specific SCE-based criteria. This could take the form of a supplementary income program (SIP) offered at varying levels on top of the base JGP wage. These levels can then be adjusted periodically, on the basis of social need. Such programs complement full employment policies by establishing a qualitative directionality to social deployment of labor (McMillan Cottom 2014). Presently, many (unionized and non-unionized) industries have minimum award rates that—absent a SIP—preclude them from integration into a JGP. Workers in such industries must engage in alternative JGP labor that does not utilize (and potentially even degrades) their existing SCEs, or remain unemployed until additional non-JGP employment opportunities emerge. Thus, without a complementary SIP, society will continue to suffer from structural underemployment in specific industries, leading to similar undercapacity and lost output issues as occurs from general underemployment. Beyond the benefits for social planning, a SIP can offset the costs and risks associated with specialized labor. For example, certain industries, like caregiving and teaching, require qualifications that impose costs on workers to obtain and maintain. A SIP ensures that workers in such industries are not penalized under a JGP relative to workers in other industries with fewer professional expenses or barriers to entry. Additionally, a SIP can facilitate the just transition of workers out of

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industries that no longer promote public purpose (Brecher 2019; see also Kaboub 2007). Maintaining the formal separation between the JGP and SIP preserves the egalitarian social dynamic of a single JGP wage for all workers who convert their labor power into money, while allowing economic differentiation on the basis of the kinds of work undertaken. Each worker’s imputed labor time remains equally remunerated on the basis of their equal value as human beings, even as their labor output is remunerated differently on the basis of social need. In addition, SIP categories can be defined broadly, on the basis of standardized SCE-based criteria. This ensures the design of the SIP remains true to principles of formal equality and universality, even in the context of income differentiation (see also Vaheesan and Pasquale 2018).3 At the same time, differentiating worker incomes can encourage political disunity among the working class, and exacerbate existing power disparities between workers in different industries (see, e.g., Nijhuis 2017). Hence, it is critical to emphasize and prioritize, wherever possible, areas of common interest among all workers. One way to do so is by calculating SIP levels in terms of fixed percentages of the JGP wage, rather than as distinct, standalone amounts. This preserves a common interest in improving JGP wage rates across all workers, while allowing certain groups to separately advocate for their own industry-specific interests via the SIP. Another way to promote worker equality is to establish a common rights and benefits package (a.k.a. social wage) for all JGP employees, and limit any SIP-based differentiation to income alone.4 This preserves a common basis for worker solidarity and class consciousness, even while allowing for some degree of workforce variation in the service of social planning goals.

Universal Commons, Not Equal Pay Ultimately, the goal of economic justice is not merely to “grow the pie” and “choose the filling,” but to share the resulting economic prosperity equitably among all. As discussed above, money plays an essential role in

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structuring the production systems of modern, complex economies, including most notably their underlying labor dynamics. To that end, there are legitimate economic and social reasons to prefer both “equal pay for imputed labor time” and “differentiated pay for differentiated labor output” over a blanket policy of “equal pay for all.” At the same time, however, there is little reason to believe that money-based systems of market exchange are inherently superior mechanisms for distributing public goods than systems that allocate on the basis of need (see, e.g., Robinson 2019; Laxer and Soron 2006). To the contrary, it is almost impossible for consumers to accurately plan and allocate limited financial resources in such a way as to perfectly meet their present and future needs. In reality, forcing an individual to choose, for example, between healthcare or food because they failed to properly budget their monthly income the week before is not the epitome of freedom but its opposite. This is why, in most advanced social democracies, the public goods considered most essential to human flourishing and freedom, from healthcare and education through to libraries and legal representation, are provided free at the point of service to those who cannot afford them. Similarly, various ecological and human commons, from air, oceans, and public parks, through to language, culture, and the franchise, are legally protected in various ways to ensure that access to them is not unduly restricted on the basis of ability to pay. Nevertheless, there are at least two valid reasons why any equitable system of distribution should nevertheless include a guaranteed income program (GIP) for anyone who cannot, should not, or will not work.5 First, many welfare and distribution systems are presently structured around the cash nexus. To the extent such systems are impossible to dismantle and replace overnight, a GIP ensures non-working individuals will not be arbitrarily excluded or denied a minimum standard of living. To address the wide variety of individuals’ needs and considerations, the GIP should include a “general” income, awarded unconditionally, as well as various additional “special” incomes awarded on the basis of demonstrated need, such as for parents or people with disabilities. Second, a GIP provides non-workers with comparable access to goods and services available for sale as workers who earn a wage income, thereby preventing

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them from being arbitrarily excluded from entire sectors of the economy still centered around monetary exchange. Beyond the impact on their immediate beneficiaries, GIP programs provide a mechanism for public authorities to inject “limited purpose” monies into the economy in order alter the dynamics of the markets in which they are spent (Zelizer 1989; Dalton 1965). For example, economist Dean Baker has long advocated for an “Artistic Freedom Voucher” program, whereby each citizen receives an annual voucher of a fixed amount (e.g. $100) to spend on cultural investment, on the condition that any creative worker who chooses to receive such funds release any subsequent creative works for a set period of time under a permissive, “Creative Commons” copyright license (Baker 2003). Such programs promote equitable prosperity because, rather than reify existing market dynamics, they subvert them in order to increase the availability of public goods outside of the cash nexus. At the same time, both general and special GIP incomes should not be conflated with JGP wages, just as JGP wages should not be conflated with SIP incomes. To do so—for example, by replacing them all with a single policy of “equal pay for all”—would obviate the very reasons for distinguishing between each program in the first place. On the other hand, there are both equitable and political grounds to support indexing the income levels of each program in such a way as to limit excessive inequality and preserve a core unity of interests between participants in each program. One way to do so is to cap the JGP wage at a low multiple (i.e. 200%) of the GIP general income level, and then cap the maximum SIP rate at a similarly low multiple of the JGP wage. Any additional increase in the JGP wage or SIP income would thus require first increasing the general GIP level, ensuring all groups rise in tandem. To the extent that modern economies typically reflect a mixture of monetary and non-monetary modes of distribution, there is little indication that expanding the former over the latter will encourage greater equity in the allocation of real resources. On the contrary, contemporary proposals to replace public schools with school vouchers, public healthcare with “health savings accounts,” and public housing with private rent subsidies are overwhelmingly viewed as right-wing reforms that increase overall inequality. Moreover, proposals to replace traditional democratic

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institutions with markets, in which consumers “vote” with their dollars, tend to betray a deep ignorance of how markets themselves are built upon monetary systems governed by public law (see, e.g., Desan 2016; Pistor 2013). Ultimately, money is not and should not be treated as a substitute for public goods (Grey and Carrillo 2019). Rather than attempting to equalize money incomes, with potentially destabilizing effects on real production, we should focus our collective energy on providing public goods equally to all as a universal commons, unmediated by the cash nexus. After all, it is not in the act of growing, filling, or even sharing the pie that we ultimately find nourishment, but in its eating, and you can’t eat money.

Conclusion Proposals to provide equal pay for all are well intentioned, but ultimately misguided. Achieving true equitable prosperity requires a more nuanced approach, that recognizes and takes seriously the systemic implications of money’s socially constructed and institutionally contingent nature. In particular, the related but distinct challenges of full employment (growing the pie), socially oriented production (filling the pie), and distribution of real resources (sharing the pie) necessitate related but distinct responses, rather than a blanket, one-size-fits-all approach of equalizing all money incomes. While the problems of economic injustice may be relatively easy to identify and understand, their solutions, regrettably, are not. Instead of retreating into the comforting embrace of superficial remedies, like equal pay for all, we must instead commit ourselves forward and downward, toward the root of the evil we seek to expunge—namely, capitalist production itself. The moral urgency of the cause demands no less.

Notes 1. At the same time, public authorities also exercise control over private production through other legal methods (Pistor 2019).

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2. Of course, additional price-stabilizing tools beyond the JGP will remain necessary (see Fullwiler et al. 2019). 3. Empirically, greater reliance on occupational licensing tends to reduce discrimination of minority workers (Leubsdorf 2017; Law and Marks 2009). 4. However, this must not come at the expense of the underlying commitment to full employment (Karimi 2017, pp. 182–184; Wright 2014). 5. Notably, a guaranteed income, provided on the basis of need, is distinct from the contemporary notion of a “universal basic income” (cf. Guida 1981; Douglas 1924/1933).

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Index1

NUMBERS AND SYMBOLS

20:1, 10, 126, 127, 137 A

Absolute equality, 118, 183 Academic employers, 79 Academics, 8, 72–79, 128 Achievement(s), 14, 61, 73, 78, 177, 215, 243–253 principle, 14, 241–253 society, 242 Administrative costs, 154 After-tax, 86, 276 Age, 23, 42, 46, 161, 188, 261 Agent(s), 86, 250, 251, 278 Agent-neutral perspective, 278 Agent-relative perspective, 277, 278 Altruism, 7, 31, 87, 100, 277

Altruistic/altruistically, 9, 23, 87, 89 American(s), 136, 139, 140, 150, 223n8 American companies, 124 Anderson, E., 57, 160, 176, 241, 257–259 Applicants, 78 Argumentum ad absurdum, 185, 191 Aristotle, 188, 232 Arneson, R. J., 90, 180, 256 Artificial intelligence (AI), 12, 152, 185, 188, 191, 194, 195 Austerity, 119, 125, 127, 128 Australia, 222 Authority, 161, 168, 173, 176, 177, 179, 180, 184, 258, 259 Automation, 117, 188, 191, 195

 Note: Page numbers followed by ‘n’ refer to notes.

1

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 A. Örtenblad (ed.), Debating Equal Pay for All, Palgrave Debates in Business and Management, https://doi.org/10.1007/978-3-030-53575-9

301

302 Index

Autonomy, 9, 105, 108, 117, 153, 178 Average-paid employees, 119 Average worker(s), 10, 120, 135–137, 140, 143, 168 B

Bads, 8, 61–63 Bargaining, 172, 215 Basic economic security, 184 Basic income, 9, 12, 40, 94, 95, 100, 107–111, 194–196 Basic needs, 95, 168, 179, 205 Before taxes/taxation, 39, 86, 212 Bezos, Jeff, 160 Biases, 40, 173, 248 Blue collar workers, 188 Boardroom remuneration, 119 Bonuses, 2, 10, 79, 121, 126, 128, 138, 152, 153, 159, 167, 193 Brazil, 207, 220 Breadwinners, 38, 46 British, 101 companies, 125 corporate, 124 British Labour Party, 126 Building capability, 153 Business management, 3 performance, 155 C

Capabilities egalitarianism, 90 Capital income(s), 7, 23, 49, 52 Capital intensive industries, 159

Capitalism, 13, 118, 131, 151, 173–175, 227, 228, 230, 231, 234, 237, 248, 249, 286 Capitalist(s)/capitalistic, 87, 91, 95, 101, 102, 130, 231, 233, 237, 249, 251, 252, 288–290, 295 Capitalist ideology, 121 Career(s), 50, 61, 63, 102, 158 Career progression, 158 Carens, J. H., 22, 31, 276–278 Carens, Joseph, 86, 87, 89, 103 Caring capitalism, 160 Cascading, 189 Cash nexus, 284, 293–295 CEO-to-worker pay ratios, 10, 135, 138, 140, 142, 143, 168 Chamberlain, W., 91, 92, 104 Chief executive officer (CEOs), 10, 102, 104, 119–121, 124–127, 129–131, 135–137, 139–142, 150, 152 compensation, 121, 135, 136, 138, 140, 187 pay, 136, 137, 139, 168 remuneration, 119 Child/children, 23, 24, 74, 78, 95, 187, 205, 213, 263, 274, 277, 278 China/Chinese, 101, 155, 159, 204, 213, 220, 222 Citizens United v. Federal Election Commission, 231 Class(es), 32, 173, 206, 245, 247 Class consciousness, 288, 292 Cleaner(s), 6, 14, 104, 251, 269 Cleaning personnel, 15, 268, 270, 272, 275, 277

 Index 

Climate/climatic, 12, 99, 185, 189–190, 192–194, 196 Climate and environment crisis, 184 Climate change(s), 5, 12, 189, 193, 195 Coercion, 91, 171–176 Coercive, 91, 168, 173–177, 179, 180 Collaboration, 137, 153 Colleagues, 14, 74–76, 78, 153, 250, 261 Collective/collectively, 11, 24, 32, 50, 75, 156, 157, 160, 230, 232, 235–237, 239, 244, 250, 251, 260, 276, 284, 285, 287, 289, 295 Collective performance, 161 Comments on Pay Ratio Disclosure, 137, 138 Committee, 155 Common good, 101, 107, 277 Common national wage, 159 Common pay levels, 150 Common pay structure, 152 Common profit-sharing, 154 Commons, 284, 286, 293, 294 Communism, 236, 268 Communist/Communistic, 103, 159, 236, 268, 290 Community, 34n5, 101, 109, 178, 217, 232, 236, 239, 252, 256–258, 262, 264, 268, 276, 288 Companies, 2, 12, 25, 34n3, 60, 119–121, 124–127, 129–131, 139–142, 144, 150–153, 155, 159, 161, 161n1, 188, 193

303

performance, 137, 152, 153 strategy, 155 Compensation, 10, 23, 47, 74, 121, 137, 140, 152, 167, 168, 170, 172, 175, 177–179, 185, 259, 283 Compensation value, 178 Compensatory desert, 57, 58, 60–62, 64–66, 73 Compensatory value, 169, 177 Competence(s), 76, 157, 196 Competition, 72, 73, 75–77, 154, 188, 238 Concept 1 inequality, 206, 212, 215, 216 Conservatives, 118, 119, 122, 123, 129, 130 Consultant, 60 Consumer(s), 10, 25, 34n3, 88, 92, 130, 137–139, 142–144, 191, 194, 293, 295 demand, 51, 89, 290 goods, 51, 188 purchase behavior, 139 purchase intention, 141 satisfaction, 187 Consumer-facing firms, 141 Consumer Protection Act, 129 Contribute(s)/contributed, 6, 14, 22, 32, 40, 127, 135, 143, 169, 170, 213, 217, 228, 230–232, 237, 238, 289 Cooperation, 154, 171 Co-operative, 155, 159 Co-operative companies, 159 Copyediting, 23 Copyeditor, 23

304 Index

Core values, 228, 242 Corporate, 119, 121, 128, 129, 141, 185, 187 culture, 125 elites, 128 excess, 129–131 governance, 129, 141, 150, 155 remuneration, 117, 118, 121, 130, 131 salaries, 117 Corporate social responsibility (CSR), 139, 193 Corporation(s), 101, 137, 140, 160, 258 Cosmopolitan(s), 208, 214, 217 Cosmopolitanism, 13, 208 Co-workers, 60 Cuba/Cuban, 122, 149, 150, 155, 159 Culture, 22, 32, 125, 153–155, 178, 185, 190, 196, 211, 238, 274, 293 Currency, 39, 285, 287, 289 Customer(s), 92, 130, 141, 150, 160, 161 Customer-facing staff, 119, 124 Customer service, 150, 154 D

Dangerous jobs, 250 Deadweight loss, 25, 30 Debate(s)/debated/debating, 1–16, 24, 38, 50, 57, 72, 74, 75, 99–101, 107, 111, 151, 156, 173, 188, 194, 204, 227, 228, 230, 234, 241–243, 246, 256, 258, 283

Define(s)/defined/defining/ definition, 13, 24, 27, 42, 51, 100, 118, 158, 183, 204, 215, 217, 230, 233, 234, 237, 238, 250, 252, 257, 262, 287, 292 of coercion, 174 of eligibility, 107 of equality, 184 of payments, 2, 42 Democracy/democratic, 5, 13, 99, 118, 131, 218, 227–239, 244, 257, 294 Democratic egalitarianism, 257 Democratic process, 13, 230, 235 Democratic societies, 167, 168, 177, 178 Democratic values, 169, 178 Demotivating/de-motivation/ demotivational, 11, 74, 75, 153, 154, 190 Dependent(s), 11, 13, 24, 94, 124, 142, 172, 175, 257 Desert(s), 7, 33, 55–61, 63, 65, 66, 241, 253, 260, 263 Desert bases/basis/-base/-based/bases, 8, 56–59, 63, 64 Desertism, 63 Desertist(s), 63, 65 De-skilling, 152 Differential(s)/differentially, 23, 57, 59, 61, 64, 89, 118, 136, 150, 152, 153, 155, 156, 158, 160, 161, 214, 241, 244, 246, 250, 252, 253 incentives, 89 rewards, 245 Differentiated needs, 74 Differentiated pay, 1–4, 78–79, 293

 Index 

Director, 156, 187 Dirty, 170 Dirty work, 170 Disabilities/disabled, 90, 195, 293 Discriminate/discrimination, 11, 33, 151, 160, 170, 296n3 Disincentive(s)/disincentivize, 24, 34n5, 231 Distributed justice, 104 Distributional justice, 16, 283–295 Distributive goods, 251 Distributive justice, 13, 33, 57, 103, 204, 206–210, 257 Doctor(s), 1, 15, 21, 268–270, 272, 275, 277 Dual earners, 49 Dugnad, 185, 192, 196 Dugnad economy, 192 Dworkin, R., 90, 256, 279n3 E

Earn, 26, 28, 29, 31, 32, 56, 77, 80, 91, 93, 105, 125, 130, 136, 160, 167, 191, 207, 293 Earnings, 12, 22, 37–39, 45, 47–49, 52, 92, 102–104, 117–119, 123–125, 127, 129, 191 Earth Overshoot Day, 190 Earth trajectory, 189 Economic equality, 13, 227–239, 271–273, 278 Economic growth, 23, 135, 185, 187, 192, 204, 232, 274, 278 models, 12 Economic incentive, 276 Economic mobility, 33 Economic performance, 121

305

Economics, 3, 57, 62, 172, 285 Economic value, 25, 269 Economist, 22, 31, 32, 85, 149, 169, 171, 172, 195, 203, 223n8, 286, 294 Economy, 3, 7, 10, 21, 25, 31, 38, 100–102, 104, 109, 126, 131, 150, 154, 159–161, 171, 184, 185, 191, 235, 237–239, 283–285, 287–289, 294 Educated workers, 168 Education, 1, 5, 14, 45, 46, 48, 50, 52, 75, 106, 109, 159, 168–171, 177, 187, 191, 196, 243, 268, 293 Educational, 42, 48, 50, 52, 61, 128 Educational opportunities, 230 Educrats, 125 Effective/effectively, 12, 77, 80, 101, 131, 173, 231, 253, 276 Effectiveness, 152 Efficiency, 11, 25, 29, 30, 32, 33, 66, 161n1, 190, 229, 274, 276, 278 Efficient/efficiently, 34n5, 171, 179 Efficient tax, 29 Effort, 2, 15, 32, 33, 58, 59, 75, 77, 80, 88, 103, 123, 141, 150, 154, 157–159, 190, 217, 235, 247, 268, 275, 284 Effort desert, 58 Effort desert view, 58, 66 Effort/reward bargain, 158 Egalitarian, 9, 15, 22, 23, 33, 56, 86, 90–92, 155, 238, 246, 256–259, 262, 270, 277, 288, 292 justice, 14, 255, 257 system, 276–278 wage systems, 270

306 Index

Egalitarianism, 32, 86, 90, 94, 121–123, 238, 241, 256, 267 Elderly, 24, 195, 244 Eligibility, 94 Elites, 128, 185, 233 Employed, 62, 121, 287, 288 Employees, 38–40, 42, 45, 46, 48–52, 53n1, 53n2, 75, 76, 79, 109, 120, 124, 125, 127, 129, 137, 140, 142, 151, 153, 154, 156, 158, 160, 161, 161n1, 170, 292 Employer, 11, 23, 38, 63, 74, 76, 78–80, 95, 109, 150–154, 161, 167, 168, 172, 173, 176, 180, 288 organization representatives, 4 perspective, 11 Employment conditions, 175, 177 market, 4 opportunities, 291 relations, 173, 174, 177 studies, 3 Entrepreneurial, 248 Entrepreneurial work, 77 Entrepreneurs, 124 Entrepreneurship, 122 Environment, 12, 60, 77, 90, 153, 161, 185, 190, 193–194, 272 Environmental, 99, 154, 190, 192, 193, 196, 213, 278, 289 Environmentalists, 191 Equal, 236 income, 96, 161 opportunity, 231, 238 treatment, 90 wage, 51, 103, 104, 106, 111

Equality, 208 Equal maximum, 93–96 pay, 93, 96 Equal minimum, 93–96 income, 85 income for all, 9–10, 94 pay, 94, 96 Equal-pay distribution, 46, 47 Equitable prosperity, 284, 287, 290, 294, 295 Equity, 71, 141, 208, 287, 294 Esteem/esteemed, 247, 260 recognition, 251 Ethic/ethical/ethically/ethics, 3, 7, 38, 49, 51, 52, 61, 139, 151, 155, 171, 204, 233, 256–258, 278, 283 egoism, 171 Ethics, 3, 7, 38, 51, 233, 258, 278, 283 Europe, 189, 194, 213, 217 European, 157, 204 European Union (EU), 39, 40, 42, 128, 217 Excess/excessive/excessively, 25, 126, 127, 177, 239 Excessive, 11, 118, 124, 126, 128–130, 160 inequalities, 10, 127 inequality, 122, 294 salaries, 118 Exchange, 25, 93, 234, 285, 287, 288, 293, 294 Executive, 136–138, 140, 143, 150–152, 159 Executive compensation, 140, 167 incentives, 154, 156 pay, 10, 143, 154, 156

 Index 

Exorbitant salaries, 122, 125, 130 Expectancy theory, 158 Expectation, 64, 107, 138–140, 184, 239, 289 Experience/experienced, 8, 16, 42, 47, 48, 50, 65, 76, 77, 92, 102, 103, 110, 117, 119, 149, 155–159, 161, 170, 193, 195, 204, 232, 237, 245, 246, 250, 274–277, 291 Expertise, 151 Experts, 77, 156, 193, 195, 241, 251, 252 Exploitation/exploitative/exploits, 11, 40, 109, 160, 196, 289, 290 Extrinsic, 153, 158 moral value, 273 motivations, 73 motivator, 77 F

Factory, 118, 124 Fairness, 7, 10, 37, 38, 48, 51, 72, 73, 104, 108, 110, 126, 130, 131, 138–141, 155, 230 Farmers, 92 Finance manager, 149 Financial incentives, 7, 75, 158 Financial services, 158 Financial Times Stock Exchange, 119 Finnish Institute for Health and Welfare, 106 Firefighter, 104 Firm, 10, 88, 121, 126, 136–144, 193, 243, 258 performance, 10, 136, 137, 143

307

Flexibility/flexible, 11, 23, 78, 109, 150, 152, 155 Forced labor, 173 Formal equality, 16, 60, 290, 292 For sale, 231, 233 France, 40, 203, 221 Frankfurt, H.G., 271–273, 278, 279n4 Fraser, N., 243–248 Freedom, 9, 11, 15, 73, 85, 89, 91, 95, 96, 171–177, 179, 180, 183, 204, 228, 252, 269, 273, 293, 294 Free market, 10, 101, 102, 117–131, 231, 286 capitalism, 99, 101, 102, 105, 110, 111 economies, 101, 150 French, 161, 279n2 French Revolution, 184 Friedman, Milton, 55–57, 66, 123, 195 Front-line staff, 124 Front-line workers, 102, 120 Full employment, 286, 287, 289–291, 295, 296n4 Full equality, 10, 117–131 G

Gainsharing, 156, 157, 161, 161n1 Gap, 10, 52, 117, 118, 135–144, 167, 184, 186, 193, 213, 216 between CEO and worker pay, 136 between executive and low-wage worker pay, 139, 143 between executives and low-wage workers, 140, 143 between those who are paid, 10, 135, 143 between top management and workers’ pay, 187

308 Index

Garbage collection, 65 Garbage collector, 60, 62, 63, 66 Garbage-men, 23 Gender, 22, 32, 46, 72, 150, 170 wage equality, 106 German, 242, 248 Germany, 40, 222 Gig economy, 150 Global equal pay, 205, 206 Global inequality, 101, 206, 212, 215 Globalization, 99, 187–188, 210, 215, 232 Global justice, 210 Goods, 8, 31, 61–63, 92–94, 103, 170, 233, 236, 244, 257, 259, 261–263, 268, 269, 278, 283, 285, 293 Government, 13, 22, 25, 27, 29–31, 74, 75, 87, 89, 94, 101, 102, 123, 128–130, 139, 150, 155, 156, 159, 160, 214–217, 231, 235, 237, 286 regulation, 150, 160 Green service, 191 Group incentive, 75 Growth, 96, 99, 101, 117, 121, 157, 167, 168, 171, 191, 192, 194, 213, 228, 229, 274, 276, 278 Guaranteed minimum income, 185 H

Harassment, 187 Hayek, F., 88, 123, 195 Health care/healthcare, 1, 12, 168, 179, 230, 293, 294 Hierarchal, 102, 105, 110, 111 state, 101, 111

Hierarchy/hierarchies/hierarchical, 2, 100, 105, 107, 108, 158, 160, 243, 248, 291 High educated/high-educated, 38, 42, 45, 46, 48–52 Higher education, 5, 50 Higher Education Statistics Agency, 159 Higher income, 47, 48, 102, 106, 231 Higher-paid jobs, 49 Higher salary, 61, 127, 151 Highest- and lowest-paid staff, 129 Highest-paid/highest-paid, 126 Highest-paid incomes, 118 Highest salaries, 10, 121, 126, 129, 130 Highly trained workers, 80 High salary, 56, 66, 125 Honneth, Axel, 242–250, 252, 253 Hourly, 79 pay, 7, 39, 40, 42, 49 rate, 157 Hourly wage, 34n2, 42, 51 earnings, 40 wage inequality, 49 Hours of employment, 38, 47, 48, 50, 52 Household distribution of hours of employment, 46 Household income distribution, 39 HR, 150, 154 HR directors, 152 I

Ideology, 139, 194, 236, 248, 250 Illegal, 7 Illegal labor, 51

 Index 

Immoral/immorality, 89, 118 Implement/implementation/ implemented/implementing, 15, 34n5, 57, 65, 66, 79, 80, 85, 91, 129, 183, 184, 193, 214, 235, 236, 264, 268, 274–276, 289 Incentive, 23, 72, 75, 77, 78, 85, 87, 89, 105, 109, 142, 157, 171, 179, 277 Incentive pay systems, 153 Incentives, 7–9, 11, 12, 66, 72–75, 77–80, 86, 88, 93, 95, 150, 151, 155, 156, 158, 161, 171, 205, 231, 239, 274, 276 Incentive to put in the extra effort, 268 Incentive to work, 22, 30, 31 Incentivization/incentivize/ incentivizing, 45, 86, 88, 89, 93, 150, 161 Income, 208 distribution, 22, 38, 39, 45–47, 49, 51, 52, 194, 204, 206, 222n4 equality, 12, 13, 209, 237, 287 gaps, 205 growth, 286 inequality, 10, 49, 51, 52, 99, 120, 135, 143, 144, 167, 204, 205, 212, 216, 222n3 mobility, 187 tax, 30, 185, 195 ‘Incomes and earnings’ gap, 121 Independence, 79, 80, 95 Independent/independently, 5, 30, 31, 71, 74, 79, 80, 89, 142, 245, 261

309

Independent workers, 74 India, 101, 136, 141, 204, 213, 219 Indifference curve, 26–30, 34n4 Individualism, 100, 101, 105, 107, 108, 233 Individualistic, 102, 105, 111, 244, 272 power, 110 Individual pay, 38, 65 for performance, 11 Individual wages, 39–47 Industries, 1, 124, 140, 291, 292 Ineffectiveness, 11, 152, 153 Inefficiency, 24–32 Inefficient, 7, 22, 24 tax, 29 Inequity, 135 Inflexibility/inflexible, 10, 76, 118 Information/informational, 4, 9, 88, 89, 93, 129, 142, 143, 215, 263, 273, 274 Injustice, 7, 10, 14, 106, 107, 118, 207, 250, 256, 258, 259, 262, 295 Innovation, 11, 101, 123, 151, 153, 158, 171, 188, 190, 205, 206, 211, 228, 287, 290 Insecure, 178 Insecurity, 9, 12, 99–111, 117 Institute for Employment Studies, 158 Insufficient, 103, 152, 245, 273–275 Interdependent, 172, 270 Interview/interviewed, 170, 173, 194, 204, 213 Intra-community, 261

310 Index

Intrinsic/intrinsically, 73, 104, 121, 158, 179, 251 goods, 251 individualism, 123 moral value, 273 motivation, 14, 153, 161 Investment/invest/investing, 1, 22, 23, 95, 96, 124, 127, 138, 159, 178, 187, 213, 229–231, 278, 284, 286, 287, 290, 294 Investors, 137, 138, 158 Italy, 40, 221 J

Japan, 13, 14, 221, 228, 237–239 Japanese, 238 Job applicant, 50, 77, 78 Job complexity, 157 Job creation, 187, 188, 288 Job evaluation, 149, 151–154, 157 Job guarantee, 284, 286 Job Guarantee program (JGP), 16, 286, 288, 289, 291, 292, 294 Jobless, 188 Job loss, 12, 127, 185, 188 Job opportunities, 187 Joblessness, 50, 52, 194 Jobs, 15, 23, 60–64, 72, 77, 79, 88, 105, 108, 111, 124, 130, 149, 151, 152, 156, 159, 169–171, 178, 179, 186–188, 191, 192, 194, 196 Justice, 7, 14, 22, 32–33, 56–58, 65, 66, 90, 102–104, 110, 204, 205, 208, 209, 241, 242, 246, 252, 253, 255–264, 292 Just World Fallacy, 14, 15, 256, 259–264

K

Kinds of labor, 88, 89 Knowledge workers, 8, 71–80 Kropotkin, Peter, 270, 271, 279n2 L

Labor-centered production, 290 Labor-driven production, 289 Labor intensive, 51, 159 Labor market, 3, 11, 22, 38, 48, 50, 71, 75, 80, 85, 101–103, 105, 107, 111, 168–171, 173, 175, 176, 179, 185 Labor market forces, 11 Labor output, 284, 290–293 Labour Party, 126 Labor power, 168, 172, 288, 290, 292 Labor-respecting production, 289 Land reform, 237, 238 Large companies, 128, 129 Large employers, 155 Laudato Si, 191 Laziness/lazy, 119 Leader, 2, 72, 74, 76, 100, 124, 125, 128–131, 151, 152, 183, 190, 191, 215, 279n2 Legal/legally, 209, 243, 268, 269, 273, 274, 283, 285, 286, 293, 295n1 Leisure, 26–31, 110 Less skilled, 247 workers, 169, 170, 177 Liberty, 9, 91–93, 95, 101, 104–108, 110, 111, 123 Limit, 11, 62, 65, 66, 96, 104, 105, 108, 111, 118, 126, 129, 168,

 Index 

169, 172, 175, 176, 178, 213, 230, 233, 237, 277, 292, 294 Limitarianism, 104 Limitation, 33, 79, 91, 107, 183 Limited opportunities, 178 Limiting, 9, 99–111, 141, 179, 196, 278 Living standards, 121 Living wage, 40, 159, 169, 178, 179 standard, 180 Logic of capitalism, 230 Low educated, 42, 45 Lower income, 47, 53n3, 56, 66 Lower-income groups, 187 Lower paid, 48 Lower pay, 6, 14, 48 Lowest-paid, 126 employees, 10, 126, 130 incomes, 118 labor, 51 staff, 129 worker, 127, 141 Low hierarchy organization, 156 Low pay, 2, 42, 48, 104, 150, 158 Low pay ratio, 142, 143 Low-skill/low-skilled, 88, 249 Low-wage jobs, 169 Low-wage labor, 7, 51 Low-wage work, 169, 177, 178 Low-wage workers, 11 Luck, 8, 33, 56, 59, 72, 90, 241, 245, 256, 257 challenge, 56–60 egalitarian, 256, 257 egalitarianism, 256–258 Lucky, 14, 90, 230 Lump-sum tax, 30, 34n5

311

M

Macroeconomic, 286 Management, 124, 152, 154, 155, 158, 286 consultant, 126 practice, 155, 156, 159–160 responsibility, 157, 158 systems, 155 team, 127 theorist, 137 Managers, 124 Manufacturing jobs, 188 Marginal product of labor, 176 Market, 1, 8, 9, 11, 13, 21, 23, 25, 62, 66, 86–89, 92, 95, 99, 121, 122, 129–131, 136, 151, 152, 155, 159–161, 168, 171, 172, 179, 186, 187, 190–192, 194, 195, 228–231, 233, 234, 236, 245, 264, 272, 276, 293–295 agents, 93 economy, 1, 13, 32, 86–88, 118, 167, 169, 171, 172, 178, 179, 191, 229, 233 forces, 21, 131, 231, 233 pricing/price, 24, 34n3, 152 share, 121 Market-driven, 214, 278 capitalistic, 135 Marketplace, 144 Marx, K., 173, 236, 288, 290, 291 Material goods, 243 Maximum, 9, 24, 91, 105, 107, 159, 160, 294 income, 118 salary, 127 Means of production, 173 Mechanics, 21

312 Index

Median worker, 141 “Median” staff, 129 Medium-sized company, 126 Mega-rich, 128 Menasse, R., 217 Merchants of doubt, 189, 190 Meritocratic, 244, 245, 247, 252 Mexico, 221 Middle class/middle-class, 101, 117, 238 Middle educated, 42, 45, 46, 51 Milanovic, B., 101, 203, 204, 206, 209, 213 Minimum, 91, 95, 150, 168, 178, 291, 293 equal pay, 9 living wage standard, 11, 12 wage, 139, 172, 217, 291 wage standard, 178 Minority workers, 296n3 Mitigative and adaptive global action, 184 Mobility, 150, 213 Modern Monetary Theory (MMT), 286 Monetary, 14, 16, 73, 76, 78, 80, 92, 94, 106, 206, 231, 262, 283–287, 289, 294 incentives, 72 system, 16, 283, 284, 287, 295 Money, 2, 8, 9, 15, 16, 26, 27, 34n2, 71, 76, 80, 87, 88, 90–93, 95, 102, 104–108, 110, 111, 154, 158, 191, 194–196, 231, 237, 267–269, 272, 275–277, 283–295 values, 283 Moral, 9, 15, 16, 21, 22, 29, 38, 39, 48, 49, 58, 63, 85–87, 89, 90,

93, 95, 96, 178, 191, 196, 204, 208, 228, 230, 233, 234, 242, 243, 246, 271–273, 278, 295 catastrophe, 9, 80, 85 costs, 9, 85, 96 ideal, 270, 271, 278, 279, 279n3 limits, 11, 167–180 problem, 95, 168, 172 sentiments, 234 value, 271–274 Morality, 89, 92, 172, 233, 234, 271, 283 Morally, 11, 32, 50, 52, 58, 63, 66, 85, 91, 94, 118, 124, 129, 131, 168, 174, 177, 179, 269 bad, 256 good, 256 neutral, 172 relevant, 172, 179, 272 right thing, 273 Morally wrong, 271 wrong thing, 273 Motivation/motivate/motivated/ motivating/motivational/ motives, 2, 8, 9, 15, 24, 38, 61, 73, 77–80, 87, 94, 105, 106, 138, 150, 156, 158, 187, 192, 228, 229, 234–237, 239, 251, 252, 260, 264, 275–277 Motivator, 72 Multi-skilling, 152 N

Nagel, T., 273, 277, 278, 279n3 Nation states, 205, 207 National Health Service, 102 Natural environment, 189–190, 274

 Index 

Needs, 8, 13, 14, 39, 72, 74, 80, 90, 100, 101, 176, 179, 205, 208, 214–216, 250–252, 272, 289, 290, 293 Negative income tax, 94, 195 Negotiate/negotiation, 152, 216 Neoliberal/neo-liberal, 121–123, 187, 190, 194 tax reforms, 186 Neoliberalism/neo-liberalism, 123, 128, 245 New economic class, 102 New Green Deal, 196 Non-managers, 2 Non-monetary, 106, 284, 294 incentives, 72, 73 rewards, 106 systems, 284 Non-worker, 284, 293 Nozick, R., 57, 87, 91, 104, 123, 173, 174, 279n3 Nurse, 1, 104, 247 O

Occupation/occupational, 63, 64, 118, 152, 158, 177, 244, 250, 276, 296n3 Occupy Movement, 227 Office, 61, 62, 66, 78, 186 job, 61 worker, 61 Office of National Statistics, 150 Old/older, 42, 46, 222n1 Onerousness, 65 Opportunity, 2, 4–6, 8, 9, 49, 60–62, 64, 66, 72, 76, 77, 80, 90, 99–111, 125, 176, 177,

313

229, 230, 236, 237, 239, 245, 253, 263, 277, 288, 289 cost, 50, 88, 89, 231 Ordinary workers, 117, 119, 125 Organizational change, 11, 152 Orwell, G., 126, 183 Outsourced jobs, 188 Outsourcing, 117, 152, 187, 188, 194 P

Paid employment, 37, 50, 106, 109, 110, 179, 288 Paid labor, 37, 289 Part-time jobs, 53n2 Past performance, 210 Paul, L.A., 274, 275 Pay, 78 equality, 10–12, 150–161 inequality, 2, 118–121, 185 mobility, 158 ranges, 154, 155 ratio, 10, 12, 117–131, 135–144, 150, 156, 160 variability, 11, 153 Pay gap, 72, 141 gap between CEO and the median worker, 141 Peer pressure, 155 Performance, 11, 121, 127, 154, 156–158, 161, 161n1, 170, 187, 196 pay, 153 Performance-related pay (PRP), 11, 152, 153, 155–158 Perspective, 278

314 Index

Philosopher, 22, 57, 58, 85, 86, 171, 173, 174, 191, 208, 209, 262 Philosophy/philosophical, 3, 57, 100, 122, 155, 184, 191, 206, 209, 216, 257, 279n3, 283 Platform economy, 50, 101 Plato, 160 Political Action Committee (PAC), 231 Political philosophy, 57, 258 Poor/poorer/poorest, 24, 25, 29, 34n5, 94, 123, 136, 151, 189, 190, 203, 209, 213, 215, 216, 231 pay, 158 Post-redistribution, 21 Post-tax/post-taxed, 29, 89, 277 Poverty, 9, 31, 33, 39, 87, 95, 96, 102, 119, 125, 128, 196, 205, 212 Power/powerful, 33, 95, 100–103, 105, 107, 108, 110, 111, 123, 136, 160, 168, 172, 173, 176, 177, 179, 180, 183, 191, 192, 215, 218–222, 230, 237, 251, 252, 255, 259, 264, 285, 286, 288, 292 Precariat, 102, 117 Predistribution/predistributive, 127 Pre-tax/pre-taxed, 29, 32, 86, 89 Prices of labor, 29 Price system, 86 Primary goods, 208 Private companies, 123 Private employers, 288 Private production, 295n1 Private sector, 153, 155, 237

Production, 22, 38, 87, 170, 173, 185, 187, 188, 190, 191, 193, 274, 276, 278, 284, 285, 287–290, 295 dynamics, 16 systems, 293 Productivity, 79, 88, 151, 157–159, 167 growth, 51 Products, 110, 124, 130, 137, 139, 170, 194 Profession, 2, 10, 15, 21, 72, 118, 126, 183, 204, 216, 244, 247 Professional, 6, 8, 64, 75, 80, 104, 106, 245, 247, 248, 250, 251, 291 athlete, 104, 257 career, 61 jobs, 188 staff, 152 standards, 247 Profit, 87, 131, 138, 157, 161, 191, 286, 290 maximization, 154 sharing, 156, 161, 167 Profitability, 117, 121, 130 Profits, 121, 123, 130, 131, 138 Progressive income- and wealth taxation, 184 Public authorities, 285–289, 294, 295n1 Public companies, 137 Public employment, 286, 288 Public goods, 154, 230, 284, 293–295 Public sector, 125, 152, 155, 291 employers, 160 Public services, 128

 Index  Q

Qualifications/qualified, 8, 50, 184, 285 Qualify, 77 R

Race/racial/racism, 7, 22, 32, 33, 88, 170, 172, 173 Rationing, 50, 52 Rawls, J., 32, 56–59, 63, 209, 210, 235, 236, 246, 256, 262, 279n3 Real, 284 production, 284, 285, 295 Recognition, 14, 106, 118, 129, 157, 158, 161, 177, 242, 243, 245–247, 250, 251, 253, 269, 289 theory, 14, 242 Redistribution/redistribute/ redistributed/redistributing/ redistributive, 7, 21, 25, 29, 31, 32, 38, 39, 87, 94, 127, 193, 213, 231, 236, 237, 257, 276, 283 Redistributionist, 91 Reductio ad absurdum, 191 Regulation, 129, 130, 150, 184, 185, 187, 190, 196, 214, 231, 291 Re-investments, 278 Relational egalitarianism, 257–259, 263 Relevant, 63 Remuneration, 15, 121, 126, 129, 131, 156, 159, 161, 251, 284, 291 Remuneration Committees, 156

315

Remuneration of senior staff, 127 Remuneration package, 120, 125 Remuneration processes, 155 Representation, 79, 141, 214, 293 Representatives, 231 Resource egalitarianism, 90 Responsibility/responsible, 2, 8, 9, 11, 15, 42, 47, 51, 58–62, 74, 76–78, 103, 105, 109, 110, 118, 125, 130, 151, 155, 157, 159, 161, 183, 232, 233, 247, 250, 253, 268, 275, 285 authorities, 217 Retail worker, 104 Return on learning, 157 Reward, 14, 73, 75, 76, 88, 105, 123, 127, 130, 150–158, 160, 161, 230, 235, 241, 242, 245–253, 257, 259, 260, 263 communications, 153 managers, 149, 150 Rich/richer/riches, 26, 34n5, 58, 87, 94, 110, 123–125, 137, 159, 188, 203, 209, 210, 213, 215, 216, 232, 239 Risk, 2, 5, 9, 12, 50, 74, 95, 96, 99, 103, 105, 109, 111, 151, 158, 160, 161, 173, 176, 179, 188, 189, 209, 210, 231, 252, 288, 291 Robot, 188, 191, 192 Robotization, 12, 188 Roofing jobs, 169, 170 Ruling classes, 235 Russia, 155, 221

316 Index S

Salary, 10, 34n2, 56, 61, 64–66, 107, 118, 121–123, 125–130, 136, 137, 141, 142, 150, 156, 167, 169, 172, 269, 272, 273, 276 cap, 141 differentials, 61, 66 Sale, 287, 293 Same compensation, 135, 143 Same income, 31, 32, 59, 90, 94, 95, 207 Same pay/payment, 3, 21, 65, 109, 157, 205 Same salar, 272 Same salary, 85, 86, 118, 268 Same wage, 100, 103, 108, 127, 168, 177, 290 Schmidtz, D., 87 School/schooling, 61, 64, 95, 159, 230, 286, 294 Second-class citizens, 289 Sector, 1, 103, 124–126, 152, 154, 158, 159, 191, 194, 294 Selection/select/selected/selecting, 26, 44, 50, 173, 175 Self-employed, 40, 53n1 Self-esteem, 60–62, 246, 247 Self-interest, 9, 87, 89, 171, 235, 236 Self-managing teams, 156 Self-motivated, 73, 74 Self-realization, 244, 246 Self-respect, 178 Self-sufficiency, 171 Sen, A., 90, 204, 208 Senior executive remuneration, 120 Senior management, 102

Senior manager, 124–127, 130 Senior staff, 127 Senior workers, 251 Seniority, 102, 103, 118, 250, 251 Service, 31, 51, 73, 80, 92–94, 110, 124, 130, 155, 170, 283, 285, 292, 293 jobs, 188 Shared values, 235 Shareholders, 160 Shop-floor, 118, 124 Size, 38, 39, 46, 47, 95, 126, 136, 169, 193, 210, 222n3, 222n4, 285, 295 Skill, 9, 16, 63, 64, 76, 88, 95, 104, 105, 122, 124, 157, 161, 168–171, 177, 229, 247, 291 Skilled workers, 168–170, 177 Skills-based, 158 Skillset, 109 Smaller companies, 155 SME companies, 156 Smith, A., 234 Social, 16 benefit, 154, 158 capital, 170, 171, 177, 179 classes, 106 control, 155 forcing, 175 goods, 14, 242, 243, 245, 250, 253, 262 justice, 13, 227–239 mobility, 104, 105, 128, 187, 230, 232 needs, 252, 290 recognition, 243, 250, 251 Socialism/socialistic, 131, 252, 268 Socialist, 86, 89, 103, 252

 Index 

Socioeconomic class, 22 Solidarity/solidaristic, 13–15, 100, 102, 108, 111, 196, 232, 236–238, 252, 253, 262, 263, 292 powers, 105 South Africa, 136, 220 Soviet Union, 106, 122 Spain, 221 Specialization, 229 Specialized, 71, 291 skills, 170 Sphere of recognition, 243, 246 Staff, 11, 102, 124, 127, 130, 152–156, 158 recruitment and retention, 151 Staffing, 150 Stakeholders, 160 Stakeholder theory, 258 Standard of living, 11, 169, 178, 179, 293 State, 9, 91, 105–109, 123, 131, 141, 175, 285, 286 control, 123, 155 intervention, 123 Status, 23, 57, 77, 110, 123, 125, 214, 231, 232, 235, 238, 243, 244, 252, 258, 259, 291 Stock market, 137 growth, 121 Stress/stressful, 15, 60, 61, 157, 192, 268, 275 Struggle for recognition, 245–249 Subsistence, 50, 52, 178 Sufficiency, 9, 94, 95, 279n4 Sufficient/sufficiently, 24, 48, 51, 88, 94, 104, 154, 168, 169, 172–174, 177, 178, 274, 277, 290

317

salaries, 66 Super-manager, 120 Superrich, 104 “Supply-side” economics, 187 Sustainability, 74, 103, 196, 287 Sustainable Development Goals (SDGs), 203, 205, 214, 217 Sustainable production, 12 Sweatshop labor, 66 System of production, 284–287 T

Talent/talented, 8, 59, 61, 72, 73, 75, 80, 90, 91, 104, 122, 136, 151, 160, 192, 257 management, 152 Tax/taxation/taxed/taxing, 12, 25–31, 34n5, 39, 50, 52, 74, 87, 89–93, 107, 110, 123, 127, 141, 185–187, 190, 191, 193–196, 217, 232, 237, 276, 285 companies, 141 cuts, 187 policies, 185 rates, 141 revenue, 7, 25 system, 94 Taxi driver, 149 Taxpayer/tax-payer, 71, 123 Teachers, 59, 87, 256 Team, 137, 155 effort, 124 performance, 137 working, 155 Technological unemployment, 12, 187–188

318 Index

Threat, 12, 128, 168, 169, 173–177, 188, 189, 194 Three powers, 100, 105, 108, 110, 111 Throffer, 174 Tiered remuneration, 291 Time, 16, 21–33, 34n2, 39, 50, 63, 74, 76, 78, 88, 91, 99, 102, 126, 154, 157, 161, 170, 178, 257, 287, 288, 292–294 Tipping point, 189 Top income, 7, 49, 51 Top sales staff, 158 Total equality, 3, 118, 122, 161, 207 Trade (labor) unions, 123 Trade union representatives, 4 Training, 170, 171, 177, 178, 243, 250, 268 Transformative choice, 274 Trickle-down economics, 187 Types of labor, 66, 89, 93 Typical workers, 187 U

Underemployment, 16, 186, 287, 291 Underprivileged children, 29 Underproduction, 290 Unemployed, 62, 176, 194, 286–288, 291 Unemployment, 11, 62, 109, 136, 173, 176, 185–188, 194, 287–289 Unequal distribution, 87, 99, 205, 245, 250, 253, 262 Unequal incomes, 33 Unequal opportunity, 33, 90

Unequal pay, 7, 8, 56, 71–80, 150, 196, 244–247, 249, 255, 256, 259, 263, 274 Unequal payment, 274 Unequal salaries, 230 Unequal wage, 86–89, 284 Unethical, 196 Unfair/unfairness, 1, 2, 6, 8, 34n5, 37, 38, 58, 74, 75, 92, 93, 105, 108, 138, 150, 190, 204, 256, 271 biases, 72 Union, 175 United Kingdom (UK), 40, 102, 103, 109, 117, 119, 120, 123, 124, 128–130, 136, 141, 150–156, 159, 160, 221 workers, 119 United Nations (UN), 13, 188, 196, 203, 205, 214–217, 223n9 United States (US), 56, 109, 119, 121, 123, 124, 129, 131, 136, 137, 139–141, 160, 189, 190, 194, 222, 229, 231, 237 state, 109 workers, 120 United States Securities and Exchange Commission (SEC), 137 Universal/universally/universalness, 10, 12, 51, 62, 80, 107, 108, 183, 196, 284, 288 commons, 16, 284–285, 292–295 minimum income, 12, 184, 185 salary cap, 118, 126 Universal basic income (UBI), 3, 9, 22, 24, 59, 85, 94–96, 195, 268, 296n5

 Index 

Universal equal pay (UEP), 7, 37–52, 53n1 Universalism, 108 Universalist/universalistic, 214, 243, 244 Universality, 110, 292 Unjust, 256 Unlucky, 14, 90 Unskilled worker, 139, 140 Unsustainable production, 290 V

Values, 63, 66, 73, 111, 153, 155, 233, 234, 248, 272, 285 Van Parijs, P., 94, 107, 110, 175, 268 Variable pay, 156 Veil of ignorance, 209, 211, 212, 235 Vicious cycle, 228, 236, 239 Virtue, 171, 231, 232, 236, 262, 263, 269, 277, 278 theory, 171 virtue-ethical, 272, 279n1 Virtuous cycle, 236 Voluntariness, 172, 173 von Hayek, Friedrich, 57 W

Wage distribution, 42, 45–47, 51, 52 Wage gap, 140, 143, 185 between top and bottom in the organization, 193 Wage growth, 136 Wage inequality, 11, 42, 104, 106, 108, 167–180 Wage labor, 173

319

Wage standard, 168, 172, 179 Wealth/wealthy/wealthiest, 12, 13, 33, 90, 94, 95, 104, 105, 121–124, 128, 184–187, 190, 193, 195, 205, 216, 234, 237, 238, 243, 251, 258, 259, 290 class, 237 Welfare, 8, 12, 14, 22, 24, 61–66, 85, 90, 123, 127, 139, 150, 168, 169, 171–173, 175–177, 179, 191, 193–196, 251, 293 economics, 258 egalitarianism, 90 opportunities, 66 state, 74, 184 Well-being/wellbeing, 60, 62, 86, 103, 128, 187, 190, 192, 206, 213, 216, 257 Well-being-limiting, 62 Well-motivated economy, 160 Well-paid jobs, 2 White collar work, 188 Work conditions, 78 Work hours, 79 Work opportunities, 289 Work robotization, 188 Workers, 11, 12, 16, 48, 66, 74, 80, 88, 105, 121, 123, 129–131, 139, 141, 150, 154, 167–170, 172–180, 185, 187, 188, 284, 287–294 equality, 16, 292 Workforce, 71, 74, 156, 159, 161n1, 288, 292 development, 16, 290, 291 Working class, 117, 284, 288, 292 Working conditions, 139, 161, 170, 175

320 Index

Working hours, 46, 49, 50, 79, 157 Workplace, 73, 79, 117, 127, 131, 178, 194, 255, 256, 264 World state, 13, 217 Worldwide, 51, 204, 205

Y

Young, 46 younger workers, 42 young workers, 40, 48