Skip to main content

Verified by Psychology Today

Will a Higher Minimum Wage Make People Happier?

Maybe, but employees also need to feel they are treated fairly

I study resilience all over the world. I look at why people do well, and I’ve been known to challenge anyone who believes that all anyone needs to succeed is a positive attitude or self-esteem. Attaining psychological wellbeing is far more complicated. Simple changes in attitude may make university undergrads happier during laboratory experiments, but the fact is that under stress and in the real world, the things that make us happy are far different. Most of those students already felt like their futures were economically secure and that they had some positive social standing. No wonder a little tweak in attitude could make them happier.

Even the grand daddy of positive psycholology, Martin Seligman, revised his explanation for what makes us “flourish” to include needing to understand the barriers people face to doing well. In other words, I can stare in the mirror and recite, “Every day, in every way, I’m getting better and better,” and I will still experience my life as awful unless I also have opportunities to succeed or I live in a community where, by comparison, I am no worse off than others. Wellbeing is a social phenomenon. It is not an individual experience.

Which brings us back nicely to the question of a fair minimum wage. If a little more money could actually increase the wellbeing of many of the most vulnerable in our countries, wouldn’t that be worth the investment? Would there be fewer mental health problems? Fewer school problems among children who live in stressed families? Would it be a step in the right direction towards helping people feel more a part of their communities? As a colleague of mine, Mark Totten, has noted, kids join street gangs when they are poor. Middle-class kids also get involved in organized and disorganized criminal activity, but they have more choices. For some poor kids, crime is a solution to problems they can’t otherwise solve.

Families that live on the margins struggle to maintain their wellbeing. A minimum wage won’t solve all our communities’ problems nor empty our jails, but in tandem with health care, access to education, and an end to racism and other forms of prejudice, we may crawl our way to the finish line and build safer, more just, places to live and work.

Which brings me again back to the problem of whether the minimum wage should be raised. I’ll leave the economic arguments aside for the moment (though I can tell you that having travelled the world extensively, a higher minimum wage does not create unemployment. People still buy burgers at fast food joints, waiters still serve you your meal—and do so much more happily—and people still shop at mega-sized box stores because prices are still relatively low). Instead, let’s think about this psychologically. A higher minimum wage has the potential to:

  • Decrease family stress, providing parents with a little more disposable income to meet their family’s needs. What is good for caregivers is great for kids.
  • Give individuals more spending power. That means all those career drifting 20-somethings have a little more money in their pockets to participate in the economy, or, remarkably, put themselves through school. Success socially, and with regard to training, are great self-esteem boosters. Far better than standing in front of mirrors trying to convince ourselves we’re special.
  • Make people feel they are being treated fairly. Though I have seen no research on this, I’ve wondered for years why restaurant staff in Australia are almost always pleasant and motivated even though they don’t get tips. I like to think that the living wage is a big part of the reason. Service work is valued by employers and customers. There are several sources of life satisfaction evident here. Money is one. Social recognition for a job well done is another. A higher minimum wage and good working conditions (including health care, etc.) are likely part of a complex formula that make people happier.

Now, there is a risk here, too. While I doubt jobs will be lost, the fact that a higher minimum wage does not address some of the bigger sources of inequality in western countries means its potential to have a positive impact on wellbeing may not be fully realized. CEOs of the same corporations for which minimum wage employees work have seen the spread between the lowest and highest paid employees grow exponentially over the last few years, with CEOs and other managers realizing far larger gains than the lowest ranks.

Be that as it may, the problem of happiness is closely linked to the process of social comparison. A higher minimum wage may help families avoid the food banks, but it won’t make them any happier unless their wages hit a level where they feel fairly compensated for the work they do and their wages are positioned-well when compared with the paycheques of others. In other words, more money does not equal happiness unless it brings with it social justice. And that, of course, isn’t on the bargaining table.

This challenge to old school positive psychology is coming from many corners. Within the field of positive psychology itself, Robert Biswas-Diener’s recent edited volume Positive Psychology as Social Change does a wonderful job of showing us that happiness is more complicated than thinking happy thoughts. It depends on our economic opportunities, treatment by others, community cohesion, and the services and social policies that shape our day-to-day interactions with a world that is either fair or marginalizing.

Resilience researchers have been arguing much the same of late. My own edited volume, The Social Ecology of Resilience, brings together international experts who argue that we can only be resilient to the extent that our environments help to make us so. And that means ensuring our economic wellbeing is just as certain as our psychological. In other words, if we raised the minimum wage we’d being taking a right step towards making people more resilient.