"The Biblical View on Minimum Wage, Part 3"
by Dr. Patti Amsden
by Dr. Patti Amsden
The economic case against minimum wage is simple. Employers pay a wage no higher than the value of an hour’s work. Forcing a wage higher than the value of the labor harms both the employer and the employee. As with any form of plunder, theft occurs and free will is trespassed. The employer must consider the market value of his product and the steps he must take to produce his goods or services below market price in order to make a profit. Mandated wage increase raises the cost of production. The employer must then compensate for the higher wage in another aspect of his business. Cuts must occur somewhere or he will be forced out the market. He may decide to cut quality which will hurt consumers and ultimately affect his bottom line. He may decide to produce the product with fewer workers, which will limit opportunities of workers to gain employment. One business may never expand while another business may never open. Minimum wage laws always have unseen victims.
Proponents of minimum wage determine that the result of some becoming victims is outweighed by the benefits provided to those who receive a better wage. The question remains, “Are the recipients benefited or are there also unseen victims among employees?” Minimum wage tells employers to not give the beginner a chance. If the employer is forced to pay a certain amount for an hour’s labor, that employer would look to hire only those whose skill level would be worthy of the wage. Those entering the market place who have yet to develop skills and increase their market value would be overlooked. If wages are a function of productivity, then it follows that any wage set above the workers’ productivity will omit that worker from employment. The intended beneficiaries of the legislation will be harmed.
Minimum wage hurts the lowest skilled workers. Those workers entering the market place usually possess the lower levels of skills, knowledge and experience that merit the civil mandated set wage. Such a worker has few things with which to bargain in order to obtain a contract. His main bargaining tool would be the cost of his labor. If he could convince the employer that his labor would be worth one-third the amount of minimum wage and that he would work for three hours where the more skilled would only have to work one hour for the same money, the employer might be willing to give an entry level job to a beginner. Once on the job, the new worker would gain skills, knowledge and experience. If he worked hard and learned, his labor could demand a higher wage in future contracts. He would be placed upon an upward trajectory of earnings. Without the opportunity to barter with his wages, the unskilled worker is excluded from the marketplace and limited in his ability to change his condition in life.
When the worker’s wage is set by his productivity and abilities, he is incentivized to work hard and to increase his skills. Scripture witnesses that a man’s quality of labor will be reflected in his assets, and the hard worker will have plenty but the slothful worker will suffer poverty (Prov. 10:4; 12:24, 27; 13:4). If the worker must apply himself, work diligently, and increase his wisdom to earn a higher wage, he is given an incentive to improve himself and increase his talents. We must remember that he will give an account to God for the management of his original endowment – his talent. If, however, he is given what he has not earned because plunder is the law of the land, then the worker has less motivation for upward advancement. Poverty can serve a tutorial function. It trains people to work hard to eat. Hard, honest labor gives man dignity within himself and gains him respect among those with whom he will make contracts.
Recalling the story of Ruth and Boaz found within the Book or Ruth can give insight into entry level incentives and promotions. Ruth and her mother-in-law, Naomi, had relocated from Moab to Israel; and they were without a source of income. Scripture mandated that the farmers forgo harvesting the corners of their fields so that the poor in the community could gather grain to feed themselves. If they would work, they would eat. Ruth joined the gleaners. She worked hard to gather. Her diligence and her care for Naomi caught the attention of Boaz. As the landowner and the employee, he gave additional opportunities to Ruth. Her hunger incentivized her and her diligence promoted her. Had there not been an entry level for the unskilled and the poor, her life story may have had a different outcome.
Employers should have the free will to provide wages and benefits based upon the value of the employee. Imagine a worker who is of such value to the boss that the idea of losing him to another employer or to misfortune would cause concern to the employer. That boss might choose to hedge his possible losses by providing economic incentives to keep the worker. Those incentives might be higher wages, retirement, health care or other benefits of that type. The contract offered to the employee would reflect the value of that employee. If, however, in the name of some misrepresented social justice or equality, civil laws mandated that all employees have social security or health insurance or unemployment benefits at the expense of the employer, then plunder is occurring and the worker loses his incentive to advance his position in the economic arena. Plunder, in the form of minimum wage or other civilly-mandated benefits, yields destructive effects on the employer, the employee, the market place, and the society at large.
Current Popular Views
A term that is often applied to minimum wage by advocates of the ideology is ‘living wage’, which is considered to be the amount of hourly income that must be earned for an individual to live above what the elite bureaucrats consider immoral and the amount it would take to lift the individual out of poverty. The poverty line in the United States is set at $22,350.00 per year for a family of four. See stats here. However, it must be noted that the definition of poverty has shifted from one of absolute deprivation of the necessities of life to one of having relatively less than other people. As egalitarianism has gained a larger grip on the public intellect, policy entrepreneurs have become more and more inclined to accept the relativist’s definition. According to Shawn Ritenour, among those that are officially poor, 46% own their own home, 76% have air conditioning’ 66% have more than 2 rooms of living space per person, 97% own a color TV and 62% have either cable or satellite.
By adopting the language of ‘living wage’, the consensus of the culture can be swayed by appealing to the compassionate side of the citizens. Although compassion and charity are attributes that should mark every culture, the high jacking of a term ‘living wage’ to forward a narrative based upon misrepresented facts and faulty economic analysis does not serve the culture or the poor. Appealing to the electorate serves only the politician by gaining him or her votes based upon the promise that the injustice will be corrected by civil laws and serves the politician’s future because those receiving the entitlements will be inclined to help re-elect their benefactor.
When the concept of ‘living wage’ is insufficient rhetoric to win the argument of minimum wage laws, the case is often presented in the context of single parents working to supply the needs of their household. A multitude of facts debunk the argument. Only 4% of minimum wage earners are single parents working full time. Read more here. Statistically, 70 % of all minimum wage workers live with a working spouse or relative and live in a household with the average income of $38,000.00. More here.
Only 2.8% of workers over 30 years of age receive minimum wage. Data from the Bureau of Labor Statistics and the Census Bureau show that the most minimum-wage earners are young, part-time workers and that relatively few of them live below the poverty line. Any increase to the minimum wage laws primarily raises pay for suburban teenagers, not the working poor. More here
Poverty in the United States is more a condition that results from not working rather than not receiving a ‘living wage’. Statistical analysis proves that two-thirds of all people living in poverty do not work at all. Only 10 % work full time. (www.heritage.org/research/reports) Although poverty should be a concern to any nation, solutions to humanity’s blighted conditions are not generated by plunder. The church is an agent of charity. The family unit is another agent for charity. The business sector unfettered by minimum wage laws can provide entry level employment for the poor, thus giving them an opportunity to secure gainful employment and acquire skills that will make them more marketable.
Almost all of the popular arguments that support minimum wage are false. Minimum wage does not generally lift people out of poverty because it exacerbates unemployment of lower skilled workers. The majority of the population who are helped by minimum wage are the young who already live in households that far exceed the income level to be considered poverty. Minimum wage laws fall under the sin of plunder. They forcibly steal from the employer and interfere with free will contract negotiations. A market place that not only allows plunder but facilitates plunder will suffer unseen consequences such as hindrances to a healthy economy, lack of opportunity resulting in high unemployment numbers, and adversarial working conditions rather than collaboration between employers and employees. Such a thieving society will not only incur the consequences of its ignorance but may also incur the righteous judgment of God.