DEFINITION of Economic Justice
Economic justice is a component of social justice. It is a set of moral principles for building economic institutions, the ultimate goal of which is to create an opportunity for each person to create a sufficient material foundation upon which to have a dignified, productive, and creative life.
BREAKING DOWN Economic Justice
An example of an economic justice institution is progressive taxation – a system of taxation wherein the tax percentage increases as the base income amount increases. The goal of progressive taxation is to remedy income inequality and to provide funds for social services, public infrastructure, and education. Earned income credit, affordable housing, and need-based federal financial aid for college students are other examples of economic justice institutions.
Ways Economic Justice Is Applied
The concept of economic justice intersects with the idea of overall economic prosperity. There is a belief that creating more opportunities for all members of society to earn viable wages will contribute to sustained economic growth. When more citizens are able to provide for themselves and maintain stable discretionary income, they are more likely to spend their earnings on goods, which in turn drives demand in the economy.
Achieving economic justice can include addressing wage gaps and other deficiencies in individual earnings. For instance, there may be members of the workforce employed in jobs that do not make full use of their skills. This typically leads to workers earning wages that do not reflect the full potential of their professional abilities. As a result, they do not earn the highest income they are capable of.
Such a loss of possible wages creates an inefficiency in the economy because those workers will not have the income to participate to their fullest in the economy. If this inefficiency reaches significant magnitude – wherein large portions of the population are not purchasing goods and services they might have otherwise spent their earnings on – it can slow the economy.
Actions that could serve economic justice include efforts to end gender-driven salary gaps and providing more thorough career preparation or education to low-income and at-risk segments of the population. Elevating wages for workers have been earning lower wages is another proposed method of serving economic justice. Such a strategy can be seen as a counterpoint to the idea of paying greater salaries to business executives who are associated with generating the wealth that pays the wages of others. However, when the economy sees a downturn, it is those who are among the poorest who face the most severe detriments, compared with those who are more affluent.