A "living wage" is what The Motley Monk would characterize as a "minimum wage plus," meaning that capitalists should pay laborers at least the "cost of living." The rationale is that a living wage not only protects laborers from exploitation by capitalists, but is actually due to laborers because without them, capitalists would not be capable of producing much of anything. Hence, capitalists have a moral obligation to "share the wealth" with those who made that wealth possible.
All of this hinges, of course, upon a particular definition of capitalism, which Pope John Paul II espoused in his encyclical Laborem exercens which was critical of free market capitalism, Marxist socialism, and Stalinist communism. In summary:
- God created all things, hence all created things belong to God.
- God entrusted creation to humanity, hence no one person (or group of persons) can claim anything as one's own.
- In the natural order, laborers come before capitalists because capitalists are entirely dependent upon laborers if their enterprises are to be profitable.
- While capitalists undertook risk by investing in their enterprises and deserve to share in the profits generated, capitalists do not "own" the profits but are obligated by the natural virtue of justice to share those profits with their laborers.
For The Motley Monk, this is a meritorious argument, one that properly orders capitalism according to biblical principles as well as theological and natural virtue. This argument does not deny that capitalists, having taken risks that others have not or could not take, deserve to reap the rewards. But, this argument does constrain capitalists, according to the theological virtue of charity and the natural virtue of justice, from considering only themselves and their enterprises when allocating those profits. This argument actually provides a "moral imperative"---a vocation---for capitalists, in general, and Catholic capitalists, in particular. It is an argument The Motley Monk believes every student attending a Catholic business school should learn, know, understand, and consider very carefully. It is a form of authentic Catholic social justice.
That said, social justice advocates of all stripes are today pushing for local and state governments as well as the federal government to legislate that laborers be paid "living wages."
Consider New York City's Fair Wages for New Yorkers Act. If enacted, this law would provide 2 wage increase options to private businesses that receive at least $1M in subsidies for a given project: Either pay workers $10/hour in wages plus benefits, or pay workers $11.50/hour without benefits. That's a 58% increase in pay, similar to living wage stipulations in other locales.
According to the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, Richard A. Epstein, this secular approach to defining a living wage raises at least two facts which those secularist social justice advocates conveniently overlook:
- The alleged reform hurts the population that it is intended to help in the same way that the increase in the minimum wage from $5.15 to $7.25/hour did. Prior to the increase, 6.6M wokers were paid below $7.25/hour. With the increase, unemployment spiked as businesses responded to the significant additional cost of employing low-wage workers. Similarly, a living wage will help some low-wage workers while bringing unemployment for others.
- The living wage regulation is much more pervasive, broad, and intrusive than its advocates let on. They tout examples such as the construction of sports stadiums that state and local governments subsidize, but the simple fact is that numerous small businesses will also fall under the umbrella of the living wage regulation. This creates an economic cost in terms of increased costs of compliance. Thus, when businesses discover their construction project will require paying a living wage, many businesses drop their projects altogether as they cannot afford the additional expense of complying with requirement. This is precisely what occurred to a proposed shopping mall in the Bronx.
The Motley Monk believes that "secular" social justice advocates, lacking a sound theological grounding for their proposals, reveal themselves for what they really are: socialists who would like to replace capitalism and the free market with a planned, centralized economy. Unfortunately, the rhetoric of many of the Catholic left social "peace with justice" crowd also fails to root their proposals in a sound theological grounding, as they liken Jesus' teaching to Marx's Das Kapital.
Let the discussion begin...
To read Richard A. Epstein's article in Defining Ideas, click on the following link:
http://www.hoover.org/publications/defining-ideas/article/103636
The minimum wage is a fraud, hoisted on society by businesses who have paid off Congress. The minimum wage ensures salary cost controls for labor intensive businesses that could not be achieved in a 'free market'
ReplyDeleteIt's easier for companies to pay for legislation that establishes a 'pay rate' than compete for labor. By legislating a pay rate, the companies touting the benefits of a free market and competition - conveniently remove both elements from their hiring policies. The government manipulates the labor market in their favor.
Companies with unskilled labor avoided labor law, for years, by building a full-time work force with part-time employees. As the companies grew, they needed more employees and juggling part time employees became unmanageable and expensive.
By establishing a minimum wage, under the guise of 'helping' people, companies - with the aid of Congress set up their own, national, pay scale. As this scam was unfolding and growing, most Unions weren't concerned because these would always be lower paying jobs so the dues didn't justify the organizing costs. Moreover, the scam evolved over years and IF a Union started to organize, the company would revert back to the old 'part time worker' game. That juggling act would be more manageable and less costly than a Union.
Society didn't notice or mind because teens and part time workers didn't merit much concern. However, as the economy transformed these one time summer or part time jobs evolved into the primary occupation for many people.
If Burger King and McDonald's had to attract the 'best people' - there would be competition for the best people and wages would go up. Those companies who couldn't pay the most for the best available workers would have to train people to become better employees. Benefits would be part of the negotiation and companies could not, summarily, discontinue employee benefit programs. The result could be a better educated work force with fewer people dependent on government for health care and social assistance.
Of course... companies might not be able to offer $1 Happy Meals and the top executives might not be able to rake in mufti-million dollar bonuses based on increased sales that were gained, in part, by suppressing the cost of labor.
Shareholders might not see increased dividends and the cost of goods and services could increase for consumers.
The reason there is an illegal worker problem in the US is because businesses like an inexpensive, uneducated work force that can be manipulated into 'taking what they can get'
Whenever anyone challenges the minimum wage scam... business brings out the 'Oh... we cant grow, we cant hire...' lament.
This may or may not be the case but I would encourage all true capitalists to live by their mantra... Free Markets, Increased Competition means great grow and prosperity!
Too bad they are not so inclined to tout that mantra when it isn't so convenient.