Wage Policy as an Essential Ingredient in a Democratic Society

Oren M. Levin-Waldman

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DOI: 10.2190/WR.17.1.d

Abstract

In this article, I argue that wage policy is an essential ingredient in the maintenance of democratic society for the following reasons. First, it raises the wages of those at the bottom, and thereby gives workers more independence and power as they are placed on a more equal footing with managers. This is not just a matter of affording low-wage workers greater monopoly power, as James Galbraith (1998) suggested; it is a matter of enabling these workers to develop their capabilities and thus enhance their freedom as suggested by Amartya Sen (1999). Second, because wage policy through wage contour effects might increase median wages for the middle class, it has the potential to arrest wage stagnation, thereby forming the foundation of a jobs policy. This alone forms an essential ingredient in the maintenance of democratic society: economic development. And third, by adding to personal autonomy and benefiting the middle class, wage policy can also result in reduced income inequality.

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