Living Standards and Social Well-Being

Deborah M. Figart, John Marangos

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317983323
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

Too many of the world's citizens face impoverished living standards. The economic and financial crises have made matters worse. The viewpoint of Living Standards and Social Well-Being is that the fundamental objective for an economy is provisioning, not simply efficiency. The chapters in this volume examine how economies across the globe come to understand what constitutes a living and how they can improve living standards, including balancing paid work with family life and civic responsibility.

The authors provide historical, theoretical, and empirical studies of moving economies at the macro level and households at the micro level toward improved living standards. It is argued that achieving well-being and decent living standards, through work and welfare state policies, is a social responsibility.Such improvementscould be delivered through basic income policies, family support, job guarantees, decent work, shorter work weeks, and support from social welfare. These issues are important for economics and the other social sciences and in particular for social economics.

This book was published as a special issue ofthe Review of Social Economy.

Introduction to Living Standards and Social Well-Being

Deborah M. Figart and John Marangos

Richard Stockton College of New Jersey, USA and University of
Crete, Greece

 

 

 

 

 

In March 2008, we edited a special issue of the Review of Social Economy on the theme “Living Standards and Social Well-Being” (Volume 66, Number 1), with articles that explicitly dealt with the topic from a social economics perspective. Here we add new, original contributions to produce a longer book volume. The subject of appropriate living standards and well-being was central in economics as we prepared the special issue in late 2007 and demands even more attention during the current economic and fiscal crises. Households and families are struggling to make ends meet. Businesses, including banks, have failed. Countries are facing debt crises and ballooning budget deficits. Market economies are being reshaped as we think about public policy for provisioning. That's where this volume, Living Standards and Social Well-Being, fits in.

The chapter authors examine how economies across the globe come to understand what constitutes a living and how we can improve living standards and social well-being, including balancing paid work with family life and civic responsibility. The contributions include an evaluation of the work of social economists who address living standards, and policy proposals to reduce work time, reconcile work and family, improve earnings, reduce inequality and discrimination, alleviate underemployment, provide food and health security, sustain children's well-being, and enrich work life. What unites this volume is a vision of living standards and social well-being that addresses both material and non-material aspects of social provisioning.

Martha A. Starr opens the volume with “Consumption, Work Hours, and Values in the Writings of John A. Ryan: Is it Possible to Return to the Road Not Taken?” Starr discusses Ryan's views of consumption and work hours in the 1920s, which were far broader and richer than today's perspective. Ryan thought that working time could and should decline in the interests of “industrial sanity, social well-being, and desirable human life.” Ryan's writings clarify that if contemporary projects are to engender the sort of fundamental changes in everyday life, they need to consider social as well as individual values and the obligatory distributional dimensions of the consumerist lifestyle; otherwise their effects may be confined to promoting improvements in the standard of living among better-off groups. Ryan's insights into the high-consumption-full-workday economy remain valuable for understanding its social dimensions today and for imagining ways in which it could be reconfigured to improve its orientation to human well-being. A few generations later, the work-and-spend lifestyle has become solidly entrenched as culture, even in an economic recession. An interest in shorter work hours persists, along with efforts to reform business ethics and promote corporate responsibility; this suggests some possibility of returning to the “road not taken”—that is, of realizing Ryan's vision of reorganizing economic activity around a concept of human welfare that emphasizes material comfort, social involvement, and time for higher pursuits, rather than high material living standards for their own sake. But as his thinking underlines, if the distributional dimensions of changes in consumption and work hours are not considered, there is no guarantee that their effects would necessarily be as intended: positive and broad-based.

The following chapter, “Overtime Work and Well Being at Home,” by Lonnie Golden and Barbara Wiens-Tuers, finds that working beyond one's usual schedule is associated with higher absolute and relative family income. However, working extra hours also leads to greater work-family interference, i.e., less ability to take time off from work for family needs. There are additional detrimental effects on worker well-being, such as slightly more fatigue from work when the extra work is required by the employer than when it is not. Specifically, when overtime is required, it markedly compounds the extent to which work times places stress on family life. Therefore, Golden and Wiens-Tuers argue that models of economic well-being should incorporate whether or not extra work is imposed; mandatory and non-mandatory overtime hours should be treated in labor supply models as distinct risks to living standards of individuals and families. Further, policies intended to improve social well-being should focus on limiting the incidence, frequency and specific repercussions of overtime work that is mandatory as well as enhancing workers' ability to avoid it. In fact, the authors add, there is a case for corrective policy measures even if the extra work hours are not mandatory, as long as they reflect individually or socially costly “workaholic” behavior that developed over time either because of the social reinforcements present, tolerance developed, or addiction to consumer goods and services. These corrective policies could focus less on defining new standards that limit the length of daily or weekly overtime hours and more on facilitating a legal right and workplace norm permitting employees to refuse without penalty mandatory overtime, particularly that with little advance notice. To the extent that greater income would compensate for the welfare loss associated with mandatory overtime, there also may be a case for requiring employers to pay a wage premium beyond the current time-and-a-half (for nonexempt or perhaps straight-time for exempt workers).

In “Family Friendly Policies: Helping Mothers Make Ends Meet,” Heather Boushey examines how family friendly policies affect mothers' wages. Standard economic theory predicts that workers who desire family friendly policies would accept lower wages, all else equal. However, in the U.S. labor market, the workers who have access to these policies tend to be in higher-prestige and higher-earning occupations. Boushey's study examines the effects on wages of having had access to maternity leave and the ability to control one's schedule. The present-day wages of mothers who were working prior to the birth of their first child and received pay during their maternity leave are nine percent higher compared to other mothers, controlling for other personal and job-related characteristics. Mothers who report working their current schedule because it helps them address their caring responsibilities—child care, elder care, or care for a sick family member—do not suffer a wage penalty as a result. This study finds that, in the U.S., having access to family-friendly policies at best, raises women's earnings, and at worst, does not hurt them. Only half of women in the U.S. labor market currently have access to unpaid leave for the birth or adoption of a child or to care for a sick family member under the Family and Medical Leave Act. Moving towards universality in access to leave could help to close the gap in women's pay and could help more women stay in the labor market over time. In addition, workers need access to workplace flexibility to allow them to coordinate their personal lives with their work lives. And, adds Boushey, employers need policies that create a level playing field, so that a few employers do not have to bear the full costs of implementing good workplace practices, while other employers simply ignore their employees' needs.

Andrea Fumagalli and Stefano Lucarelli advocate a “Basic Income” (BI) as an indispensable structural policy. In “Basic Income and Productivity in Cognitive Capitalism,” the authors embrace the French Regulation School approach, focusing on the socioeconomic transformation that has overtaken the Fordist paradigm within Western countries and propose the term “cognitive capitalism” to describe the new economic system. In this framework, BI can be seen as a viable economic policy able to contrast the instability generated by the present form(s) of accumulation, as it increases productivity through network and learning processes. The transition from Fordist capitalism to cognitive capitalism has been characterized by the shift from a stable, although confiictual, structure of accumulation to an unstable one. This instability is mainly due to the absence of a relationship between supply conditions (affecting productivity trends) and demand conditions (affecting a fair income distribution), which in the Fordist regime was able to guarantee a dynamic equilibrium. The introduction of BI can be the first step towards a positive solution. If BI were to be introduced, we could witness two positive effects on demand and output, under certain assumptions presented in the chapter. The authors also show that since BI is able to improve network and learning processes, it is positively correlated to investment activity, thanks to the increase in productivity. The increase in productivity can affect the level of demand through investment, and the function of the output growth rate can become positive thus completing the circuit.

In “Living Wage and Optimal Inequality in a Sarkarian Framework” by Mark Friedman, principles from the social thought of the Indian philosopher P.R. Sarkar are employed to show that there exists an optimal level of economic inequality that joins the values of economic justice and efficiency. Sarkar favored establishing a living wage as well as a maximum wage that allows for work incentives. It is argued that the primary justification for inequality is to provide incentives for individual productivity, and that the value of those incentives should not exceed the economic contributions they produce. To determine the relative importance of income incentives in motivating individual economic contributions, it is found necessary to develop a multifaceted model of human productivity. Such a model is developed using concepts from humanistic psychology. A Sarkarian individual productivity curve is introduced to demonstrate the existence of an optimal level of inequality, and also to explain the persistence of extreme income inequality. In the context of the Sarkarian framework presented in the chapter, it has been acknowledged that some degree of economic inequality is needed to provide the incentives that encourage the high volume and quality of human effort needed to produce a level of material abundance consistent with a high standard of human welfare. However, there is a point where the incentives cease to make economic sense, and have high opportunity costs in terms of other economic priorities, such as improving the well-being of the lowest-income workers and providing incentives where they have a greater impact on productivity. Analysis was used to demonstrate that such a point must exist. The Sarkarian framework can be especially fruitful in social economics, where excessive inequality has been a perennial concern but a means of defining what is excessive has not been found.

The last European Union (EU) enlargement of 2004 and 2007 extends the Union from 15 to 27 member states, creating a huge market, with a population more than 500 million. New to this volume is “The European Union Enlargement and Well-Being: A Comparative Approach” by Nikos Astroulakis and John Marangos. Astroulakis and Marangos use spatial economic analysis in conjunction with a social economics perspective in order to investigate living standards and social well-being within the new member states. Their study compares and ranks the cluster of EU-12 based on their economic development as it is reflected by GDP per capita and their social development by a social indicator, named Well-Being Index. The Well-Being Index is consistent with a social economics perspective by assessing not only economic factors but also social, demographical, educational, health conditions as well as technological and environmental issues. The final result is a thorough assessment of EU-12 under a hedonic model of regional comparative evaluation by positioning the countries in a “Well-Being Income Matrix.” In the spatial economics frame, the application determines equilibrium conditions between consumers-employees' and firms-producers' location decisions in terms of consumers' utility maximization and firms' production cost minimization. Furthermore, this empirical evaluation reveals significant differences among the EU-12 not only in terms of per capita GDP but also in the level of living standards and social well-being. The implications of the results relate directly to the quality of life and living standards with the level of social development and the rate of growth in each country and indirectly with the migration of the labor force and firms' mobility within these countries and across the European Union.

Hyun H. Son, an economist with the Asian Development Bank, adds “A Cross-Regional Analysis of Living Standards, with a Focus on Asia” to this volume. Son's chapter compares achievements and inequities in standards of living at different stages of economic development across countries. In particular, she assesses the performance of countries in different regions of Asia over the period 2000–2007. Son tests for the statistical relationship between indicators of the countries' standards of living and per capita GDP. Among the questions the chapter investigates are: “To what extent can aggregate income measures such as per capita GDP explain people's standards of living?” and “Can growth in per capita GDP alone bring about significant improvements in people's standards of living in a reasonable period of time?” After the applied analysis, the author concludes that the lack of a systematic relationship between progress in human development and economic growth suggests that in order to achieve social progress, patterns of investment in human development matter more than economic growth per se. Regarding the second question, results show that the convergence in standards of living would take longer than the convergence in per capita incomes. From a social economics viewpoint, both research outcomes are important. Son evidentially determines that economic growth should be complemented by an improvement in living standards in order for human and social development to be achieved. In her words “while economic growth is essential, it is not enough to improve citizens' well-being.” Son's study proposes not only the enlargement of the economic pie and the allocation of resources toward basic services but also the development of policies and institutions that will enable the continuous and efficient delivery of quality basic social services. The analysis implies that the quality of public social services, in health and education is important to growth.

Living Standards and Social Well-Being concludes with an argument for “Social Responsibility for Living Standards” by Deborah M. Figart. From 2006–2007, Figart served as President of the Association for Social Economics. This chapter was her Presidential Address, originally published in the Review of Social Economy (Volume 65, Number 4). This address presents a vision of economics—drawing upon social, institutional, and feminist economics—that supports the assertion that there should be social responsibility for living standards. Alternative definitions of what an economy is and what economics should study are related to three definitions of living standards presented in Amartya Sen's 1985 Tanner Lectures on the topic. A social provisioning approach to economic life emphasizes that provisioning needs to be organized to promote human flourishing. One contemporary challenge is to do this in a manner that sustains caring and promotes gender equity. Figart concludes by suggesting some ways ahead, including how we teach principles of economics to introductory students.

Consumption, Work Hours, and Values in the Writings of John A. Ryan: Is it Possible to Return to the Road Not Taken?

Martha A. Starr

American University, Washington, DC, USA

INTRODUCTION

An important dimension of US industrial growth in the 19^th century was a reduction in work hours: early in the century the manufacturing workday extended from sunrise to sunset, but successive waves of labor protest succeeded in bringing it down to 10 and then 9 hours. Work-time reductions are a natural use of a large “productivity dividend”: when a society can produce much more output from its scarce productive resources, a valuable use of the fruits would be to make work less physically and spiritually grueling. However, after figuring into discussions of the 1920s “economy of abundance” and plans for reducing the hardship of the Great Depression, the idea of further scaling back work time went onto the backburner, and the downtrend in average hours stalled.

While the idea of improving social wellbeing by reducing work hours never died out, several developments have contributed to its rejuvenation in recent years. One was Juliet Schor's best-selling book, the Overworked American, which argued that average work hours in the US are on their way up. While the validity of this claim is debated,¹ the book's portrayal of time stress as a key feature of contemporary lifestyle clearly resonated for many people. A second and integrally related issue concerns problems of work/family balance associated with women's increased labor force participation: at the end of the day many women go from the workplace to a full set of family and domestic responsibilities at home, in what amounts to a “second shift” (Hochschild 1989). Third, overhauls of economic policy in Europe have called attention to international differences in work time, in which Americans stand out as singularly hardworking.² Finally, environmental issues like global warming raise questions about the sustainability of present consumption growth, given the pressures it imposes on the earth's resources and ability to support future generations. These negative aspects of the high-consumption, full-workday lifestyles have fueled an eclectic ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• About the Authors
• 1. Introduction to Living Standards and Social Well-Being
• 2. Consumption, Work Hours, and Values in the Writings of John A. Ryan: Is it Possible to Return to the Road Not Taken?
• 3. Overtime Work and Wellbeing at Home
• 4. Family Friendly Policies: Helping Mothers Make Ends Meet
• 5. Basic Income and Productivity in Cognitive Capitalism
• 6. Living Wage and Optimal Inequality in a Sarkarian Framework
• 7. The European Union Enlargement and Well-Being: A Comparative Approach
• 8. A Cross-Regional Analysis of Living Standards, with a Focus on Asia
• 9. Social Responsibility for Living Standards: Presidential Address, Association for Social Economics, 2007
• Index