Every few months you see a movie, a speech, or a picket about just wages and a call to elevate the minimum wage. Christians call out “greedy employers” for exploitation with the assumption that the minimum wage is never high enough. The assumption is that business are exploiting the entry level employees. A recent news article calls on McDonalds to move the minimum wage up to $15.00. So, what Would God Say About Minimum Wage? The Bumper sticker, media sound byte is often, “God loves the idea of raising the minimum wage;” but’s let’s dig deeper.
1. What is a Just Price?
Most businesses today determine the worth or just price or value based on the market. This idea of “what is a fair wage” or “fair price” has been pondered by many before us. In Ethics, Plato wrestled with how to determine a “just price.” I mention in my book Godonomics the work of both Aquinas and Calvin in determining just price: “For a long time, scholars assumed that the medieval conception of the “just price” involved calculations of cost of production and other such measurable factors, but this conception was actually a minority view. The mainstream position was that of St. Albertus Magnus (and others), who held that the just price corresponded to what “goods are worth according to the estimation of the market at the time of sale” Aquinas’s point that a seller of grain, knowing that additional supplies are on their way, has no moral obligation to disclose this information to his customers (although it may be especially virtuous for him to do so)” -Rodney Stark. Therefore, the “Just Price” is what the market determines at the time of sale. So, what is the fair, just price of an entry level job? Whatever price draws people who are willing to freely choose to give their time or the price determined by the employer and employee. If people freely enter into a free exchange of work and profit, it is impossible to be unjust or unfair. The employee agreed to work for a price. If an employer can’t hire people at a certain price (there is no supply of workers), the employer will have to raise the price of the minimum wage to find workers. While this may seem like heresy to some, this is the conclusion of the strongest Christian thinkers throughout time.
2. How can the market determine a “fair wage” when it’s not a living wage?
Entry level jobs are not intended to be payrolls for a career to provide for a family. They are designed as entry level, “get-some job experience” training for folks who are new to the work force. Often, high school students and college students take jobs at minimum wage to start their life and make some money. If a high school or college student (or anyone else for that matter) is willing to work for $3.00 an hour, and they determine that they would rather have the $3.00 rather than the hour of “free time.” It is perfectly moral and fair to enter into that arrangement. I worked as a referree in my first job for $4.40 an hour gladly trading several hours a week for twenty dollars. As a parent of two highschool students, I’d love them to work hourly for $3.00-$5.00 during the summer to learn the value of money, work, and be productive. Many of us have teens who are playing too much X-box who could be productive for a few dollars an hour. :)
When the government comes in and requires businesses to an arbitrary minimum wage, several unintended consequences occur. When businesses are required to raise the cost of their labor, they cannot necessarily raise the cost of the product. Can McDonald’s charge $3.00 more per hamburger if they are paying $3.00 more per employee? Maybe, maybe not. Usually, they can’t. Why? Businesses are required to set their price based on the “customer’s point of view.” If the price and quality of your product (in this case the hamburger) is not perfectly balanced at the customer’s desire for price and quality, they will go somewhere else. That will result in cutting of jobs, requiring longer working hours. This concept is right out of Proverbs 31. Here we see how Godonomics works. A entreprenurial woman produces by buying a vineyard. She profits. The Bible celebrates her profits and calls them, “The Fruit of her labor.” As she determines the price to sell her grapes, the Bible says that she, “discerns her merchandise is good.” Why? She must make sure the price and quality are right so that customers will freely engage. The price which is determined by the customer sets her budget, costs, and labor allowments.
When government raises the labor cost, business must respond by cutting the amount of employees. So the unintended consequence of “helping the poor” is “hurting the poor.” Now, a business that used to hire two people at $10 an hour.. .is required to pay $15.00 minimum wage. They respond by firing one employee and making the other one work twice as hard. This is why the unemployment level has been astonomically hire for high school and college students for the past few years. This is also why many college students are having trouble getting their first career since they didn’t have a low income, experience-giving, job to begin their resumes. What was intended to help actually hurts. Look at the unintended consequences of the coming Obamacare which has many businesses changing full time jobs into part time jobs to avoid the higher costs that are coming? These “helps” are now “hurts.” Princess Bride’s Inigo Montoya Might Say, “Minimum Wage Laws… I do not think they do, what you think they do”
2. Followers of Christ determine Fair Wages with the Free Market AND the golden rule.
So, what does that mean? It means the fair market value -at the time of sale or hiring- is the “just price.”… However, a Christian pays differently by saying, “Fair Market Plus the Golden Rule.” As a God follower, I want to not just mimic the world’s standards, but think deeper about it. A Christ follower employer asks, “How would I pay for this position if I want to do unto others as I would have them do unto me? An entry level job might pay X, and then a Christian says, “Is X fair? If I was this person, with their experience and ability, would I feel it was fair?” And a Christ-follower doesn’t just duplicate the culture’s “fair value” (though it’s moral), he or she asks another question. He says, “How can I pay differently by combining the fair value and the golden rule?” When profits aren’t your primary driver, you can pay differently. However, sometimes, a low wage is moral -if it’s designed not to pay for a family, but designed to be an entry position for people into the job force later in life. Supplemental jobs are moral jobs too. A good example of a business who has tried to apply this is Hobby Lobby. Rather than having the government require them to do something, they freely chose to think about wages through this lens.
Hobby Lobby made a statement last year about how their faith impacted their business decisions by putting other priorities and the golden rule to work ALONG with the free market. CEO David Green said, “We’re Christians, and we run our business on Christian principles. I’ve always said that the first two goals of our business are 1) to run our business in harmony with God’s laws, and 2) to focus on people more than money. And that’s what we’ve tried to do. We close early so our employees can see their families at night. We keep our stores closed on Sundays, one of the week’s biggest shopping days, so that our workers and their families can enjoy a day of rest. We believe that it is by God’s grace that Hobby Lobby has endured, and he has blessed us and our employees. We’ve not only added jobs in a weak economy, we’ve also raised wages for the past four years in a row. Our full-time employees start at 80% above minimum wage.” I’m not saying all companies should be closed on Sundays or do what they did, BUT, look at how he is thinking through how to do this in his business. He is “paying differently.”
For more information, check out www.godonomics.com