Income Inequality Undermines Minimum Wage Support

Higher levels of income inequality actually weaken public support for raising the minimum wage, creating a troubling psychological loop that could worsen economic disparities, according to new research analyzing more than 130,000 protests and eight controlled experiments.

The counterintuitive findings reveal what researchers call “is-to-ought” reasoning, where people look at existing wage gaps and conclude that’s how things should be. “When the rich earn dramatically more than the poor, people often infer that the rich should earn dramatically more than the poor,” said co-lead researcher M. Asher Lawson of INSEAD in France.

The Psychology Behind the Paradox

The research team found that when income inequality reaches higher levels, Americans are less likely to attend economic protests and more resistant to minimum wage increases. This creates what Lawson describes as a self-perpetuating cycle: “As a result, the presence of higher income inequality ends up legitimizing itself in the minds of the public. This, in turn, undermines support for policies such as higher minimum wages that could reduce inequality.”

The study, published in the Journal of Experimental Psychology: General, examined protest data spanning 2017 to 2023 across 823 U.S. counties. Counties with higher inequality consistently showed fewer and smaller economic protests, while non-economic demonstrations remained unaffected.

Liberal Voters More Susceptible Than Expected

Perhaps most surprising was how political ideology influenced these patterns. While conservatives consistently supported lower minimum wages regardless of inequality levels, liberals showed greater sensitivity to the inequality they observed. Co-lead researcher Daniela Goya-Tocchetto of SUNY Buffalo explained: “Conservatives consistently supported lower minimum wages regardless of the income distribution they viewed in the hypothetical societies, but liberals were more likely to support lower minimum wages when income inequality increased.”

This unexpected finding suggests that well-intentioned liberal voters, because they pay closer attention to economic conditions, become more vulnerable to the psychological trap of inferring what should be from what is.

The Federal Minimum Wage Context

The research comes as the federal minimum wage remains stuck at $7.25 per hour, unchanged since 2009 despite significant inflation. A full-time worker earning the federal minimum takes home just $15,080 annually—below the federal poverty threshold for accessing government programs like Medicaid.

The study’s mouse-tracking experiments revealed another troubling pattern: when people make minimum wage decisions, they focus disproportionately on the lowest earners’ actual wages rather than considering broader economic principles or fairness.

Beyond Anchoring and Affordability

The researchers ruled out simpler explanations for their findings. It wasn’t merely that people anchored their judgments on existing low wages, since the effect persisted even when participants considered non-monetary benefits. Nor was it about perceived affordability—participants actually believed people in high-inequality societies deserved access to fewer goods and services.

In one experiment involving 800 participants, those viewing high-inequality societies selected 1.6 fewer items from a list of 25 goods and services that minimum wage workers should afford. The gap was most pronounced for discretionary items like gym memberships and restaurant meals.

A Potential Solution

The research also uncovered a potential remedy. When people compared societies side-by-side rather than evaluating them individually, the inequality effect largely disappeared. The simple act of seeing multiple income distributions simultaneously helped people apply their stated principles more consistently.

Building on this insight, the researchers developed an intervention where participants first viewed an income distribution, then created their ideal society, and finally compared the two. This approach successfully reduced the gap between minimum wage recommendations for high and low-inequality societies.

Implications for Policy Communication

The findings suggest a strategic challenge for minimum wage advocates. “Emphasizing that levels of inequality are high may have the inadvertent effect of normalizing the higher levels,” Lawson warned. Instead, he recommends “stressing how much lower inequality could be and making salient that higher minimum wages are a key pathway to achieve that goal.”

The research adds to growing evidence that minimum wage policies can effectively reduce inequality. Historical analysis shows that minimum wage increases following the 1963 March for Jobs and Freedom contributed to a 20% reduction in the racial income gap. Similarly, Brazil’s minimum wage increases since 1994 accounted for 30% of the country’s decline in earnings inequality.

The Broader Pattern

This “is-to-ought” reasoning appears across many contexts where people conflate how things are with how they should be. The tendency evolved because existing practices often persist for good reasons, making them reasonable templates for future behavior. However, when structural factors create problematic status quos, this mental shortcut can perpetuate harmful inequalities.

The research offers both warning and hope. While our psychology may work against economic justice in subtle ways, understanding these biases can help advocates design more effective approaches to building support for policies that create a fairer society.