Who is responsible for the living wage?

Last updated on: August 13, 2013 at 11:44 am by Morning's Minion

Who is responsible for the living wage? 2013-08-13T11:44:06-05:00 Morning's Minion

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

The right to a just wage, or a living wage, is one of the cornerstones of Catholic social teaching. Blessed John XXIII probably put it best when he said that “the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful. It must be determined in accordance with justice and equity; which means that workers must be paid a wage which allows them to live a truly human life and to fulfill their family obligations in a worthy manner.”

Clearly, the responsibility to pay this wage lies with the employer, the business. And yet, this is too often given short shrift in the economic and political debate. For the right, the only just wage is the market wage – this is ethical in that in rewards effort and it is efficient in that anything higher would lead to unemployment and so hurt workers. The left is certainly more concerned with issues of justice in wages. But even here, there is a strong tendency to defer to the prerogative of business and the iron law of the market and focus instead on the role of government in “topping up” received wages with social benefits. Indeed, both sides often align in supporting in-work benefits such as the earned income tax credit – because it both boosts the wages of the poor and does not “distort” labor markets.

Now, Catholic social teaching has always defended social benefits. And prudence dictates that we should certainly support programs like the earned income tax credit that have been shown as effective in reducing poverty. But at some fundamental level, this is letting the employer off the hook. Providing workers with a living wage is a strict duty of justice. It is an obligation.

This can be seen through the prism of the different types of justice. As Thomas Storck has argued, paying a just wage is part of commutative justice, the justice of exchange and contract between two parties. The worker agrees to provide his/ her labor and the employer is “obliged strictly” to pay a just wage. This comes directly from Pius XI. Not paying a just wage is akin to not paying a contracted debt. For sure, we can easily think of extreme circumstances in which businesses will not be able to pay either debts or wages, but I want to focus here on normal times.

We can also look at this from the perspective of distributive justice, the way in which society distributes its common resources to meet the needs of all. John Medaille has written a number of thoughtful papers from this perspective, arguing that the just wage is related to the distribution of resources among the factors of production (labor, capital, land) that comes prior to any exchange. This fits with the emphasis of Blessed John Paul II on the priority of labor over capital, and his view that a just wage is the best route toward the universal destination of goods in modern society.

So the justice inherent in a “just” wage is both commutative and distributive. But social justice also comes into play – as Pius XI said so clearly, “it is of the very essence of social justice to demand for each individual all that is necessary for the common good”. But this only works if each person “is supplied with all that is necessary for the exercise of his social functions”. When it comes to wages, as Thomas Storck notes, this has a clear implication: if the employer is not able to pay a living wage owing to circumstances beyond his control, the authorities must step in and make the necessary social and institutional changes. As Pius puts it, “social justice demands that reforms be introduced without delay which will guarantee every adult workingman just such a wage”. It doesn’t get much clearer than that.

As Blessed John Paul II put it, “a just wage is the concrete means of verifying the justice of the whole socioeconomic system and, in any case, of checking that it is functioning justly”.

Note that this differs from the neoclassical approach, which assumes that workers are paid in line with marginal product and the economy is always at full employment. But we know this isn’t true in practice. Furthermore, newer approaches to labor economics see wages more as the outcomes of a bargaining process between workers and employers, with the outcome depending on the relative bargaining power of the parties.

The question really boils down to whether higher wages will lead to lower employment or lower profits. This is, of course, a prudential question. But as evidence, just look at trends in the United States over the past three decades. Real wages have fallen far behind productivity, real median income has stagnated, and the profit share has risen sharply. Most of the gains in growth went to profits and capital income. In other words, there is more evidence for the bargaining power explanation than the neoclassical explanation, especially in light the weakened position of labor in recent decades. Putting it another way, workers have been the victims of a serious injustice.

What about the role of government? Here, I believe, the principle of subsidiarity comes into play, and it is no accident that Pius XI is the intellectual force behind this principle. Subsidiarity says that wage setting is the responsibility of the employer and the worker, determined under a balanced bargaining position between employers and unions. It is the role of the state as a higher level authority to provide the underlying conditions so that the lower level authority can reach a just outcome as effectively as possible.

This includes putting in place the proper legal and institutional framework, pushing ahead with social and institutional change if necessary. It includes legislation of minimum wages – yes, employers should not pay a living wage solely because the government tells them to, but we need the force of law nonetheless. (think about it: we also have a duty not to kill, but we also need laws against murder!). And it includes the kinds of social protections that flow from our common dwelling in a market economy, such as unemployment insurance and social security.

This is not to say there is no role for direct interventions in the labor market that go beyond the minimum wage. Think about a deep recession. In such a case, a business has the choice of letting workers go, or cutting wages across the board. The second option is better for the common good, and the government is justified in providing wage subsidies for a specific period of time to help business protect workers. This is the basis of the famous German Kurzarbeit system, and it worked really well during the global financial crisis. And certainly, we can think of plenty of circumstances whereby in-work benefits like the earned income tax credit serve a useful social purpose, such as targeting assistance to certain marginalized groups.

In a globalized world, these issues have important cross-border dimensions. If one country insists on better wages, a company is too easily able to slip across borders to a more “business-friendly” jurisdiction. This is especially perilous for poorer countries. Too many poor countries have entered a ruinous race to the bottom in terms of wages and labor standards, always afraid that another country will entice away business. This is a grave injustice, brought home to us by the devastating fire in the Bangladeshi garment factory.

But no single country, or single company, can fix this kind of global injustice, which is really a structural sin on a global scale. It calls for a cooperative response at the global level. Governments need to agree on minimum labor standards, committing not to undercut each other. In turn, corporations need to agree to pay decent wages and benefits when they enter these low-income countries. For example, they could agree to a voluntary code monitored by a strictly independent entity with fully transparent processes. And because the world is globalized – as the Church has recognized – we need a supranational dimension of oversight that goes beyond the prerogatives of the nation state.

Fundamentally, we need a new attitude on the part of business, an attitude that prioritizes the welfare of workers over maximizing profits and minimizing tax liabilities. We need a better recognition that business has a duty to society, a duty that comes with ownership of the means of production. By not paying a just wage, not only is business shirking its duty in justice but is forcing the taxpayer is picking up the tab.

Catholic Social Teaching

Previous Post

August 7, 2013

Al-Qaeda and the Christian Moral Imagination

Next Post

August 13, 2013 Daniel Dennett Presents: An Argument Against Naturalism

Browse Our Archives

Select a Category 2019 A Consistent Ethic of Life Aaron Weldon Abortion absurdity Abuse Scandal Academics Adoption Advent Africa agreement/disagreement with Church teaching Alexander Schmemann Alexham Alterity America Amnesty International Anarchism angels Anglicanism Animals Annual Statistics Anthony Anxietas Apocalyptic Apophatic Appalachia Aquinas Art Atheism Atonement Augustine Authority Baptism Beauty Bible biblical criticism biblical scholarship Bioethics Bishops Black Catholics Black Theology Blackadder Blogs Books Breastfeeding Brett Salkeld Buddhism Bush administration Byzantine Catholic Calvinism Canada Canon Law Capital Punishment Capitalism Caryll Houselander Catholic Blog Awards Catholic Blogging Catholic League Catholic Social Teaching Catholic Worker Movement Catholicity CFL Charity Children Chris West Christ and Culture Christian Democracy Christian Unity Christmas Christology Church Church Doctrine Church History Climate Change Cohabitation Colbert Collegiality Communion Communism Comparative Theology Competition Conferences conscience conscience rights Consequentialism Consistent Life Ethics Consumerism Contraception Contrition Conversion Converts Coptic COVID-19 Creation Critical Thinking Cross Cuba Culture Culture of Death Culture of Life Darfur David Cruz-Uribe David Wheeler-Reed Death Death Penalty Democracy Demons Desert Fathers Devil Dialogue dignity Disability Disarmament discernment Discipleship discrimination Dissent Distributism Division Doctrine Domestic Church Dorothy Day Double Effect Doubt Down syndrome Driving Early Church Easter Eastern Churches Ecclesiology Economics Economy Ecumenism Education El Salvador Election Election 2020 Ellul Embryonic Stem Cell Research Empire Energy Enlighenment Environmentalism Ephraim Radner Episcopal Church epistemology Equality Eschatology Ethics Eucharist Europe Euthanasia Evangelization Evil Evolution Excommunication F.X. Durrwell Facism Facts Fair Trade Faith Family Fashion Feddie Feminism Feminist theology Fertility Fetal Rights Fiction Film Finances First Things flags Folk Religion Food Foreign Affairs Forgiveness Frank Sheed Free Speech Freedom gay & lesbian persons Genocide George W. Bush George Weigel Gerald L. Campbell Girard/Mimetic Theory Global Warming Globalization Gnosticism Good Friday Grace Gratitude Greed Grey Cup 2009 Guadalupe Guest Post Guest Posts Gun Control Gustave Martelet Habitat for Humanity Hans Urs von Balthasar Harry Potter Hate Speech Health Health Care Healthcare Heather King Hebrew Bible Henri de Lubac Henry Karlson Herbert McCabe Heresy HHS Mandate Controversy History Holidays Holiness Holy Spirit Homiletics Homily Homosexuality Hope Hospitality How Far Can We Go? How Far Can We Go? Human Person Human Rights Humanae Vitae Humility Humor Hunger Hunting Identity Idolatry Ignacio Ellacuría Imagination Immigration In Memoriam Income Inequality Inculturation Indigenous People Individualism Inklings Intellect Interdependence Internet Interpretation Interviews Introduction Iraq War Islam Israel Jain James Alison James Martin Jazz Jesus Christ Jews Joe Biden Joe Hargrave Johann Baptist Metz John Allen John Henry Newman John Paul II John the Baptist John XXIII Jonathan Josef Pieper Joseph (the husband of Mary) Joseph Bernardin Joseph Ratzinger Josh Brumfield Journals Joy Judgment Just War Justice Kari Lundgren Karl Rahner Katerina Ivanovna Kenya Keynes Kingdom of God Kyle R. Cupp Labor Language Latin America Law Leanne Ogasawara Legion of Christ Leisure Lent Liberalism Liberation Theology Libertarianism Libya Lies Life life & dignity & responsibility of the human person Literature Little Way Liturgical music Liturgical Year Liturgy Living Simply Living Wage Local Church Lombard Lord of the Rings Louis Dupre Love M.Z. Magic Magisterium Mark DeFrancisis Mark Gordon Marriage Martin Luther Martin Luther King Jr. Martyrdom Marxism Mary Masculinity Matt Talbot Matthew Fish Matthew Levering McCain Media Memorial Day Mennonites Mental Illness mercy Michael Iafrate Middle East militarism Miroslav Volf Mitt Romney Modesty Moral Theology Morality Mormonism Morning's Minion Mother Teresa Music Muslims Natalie Nate Wildermuth Nationalism Native Americans Nature Nazis Neuhaus New Evangelization New York City News NFP nihilism Nonviolence Not Abortion Nova's Ordo Nuclear weapons Nuns Obama Occult Old Age Opus Dei Ordination ordination of women original sin Orthodoxy Oscar Romero Other Voices Pacifism Palestine Palin Papacy Papal Peace Messages Papal Social Encyclicals Particular Affections Partisanship Patriotism Paul Paul Ryan Paul VI Peace Pentimento persecution Personalism Phantastes Philosophy PKD Planned Parenthood Pluralism Poetry Policraticus Politcal Apathy Politics Poll Pope Benedict XVI Pope Francis Pope John Paul II Pope Leo XIV Population Postcolonialsim Poverty Power Prayer Preaching Predictions Predictions for 2012 President Barack Obama priestly formation & discernment Pro-Life Progress Prophetic Witness Proportionalism Public Diplomacy Public Policy Question Quotes Rachel Maddow Racism Radical Catholic Mom Radical Catholicism Raymund Schwager Real Catholic TV Real Presence Reconciliation Reginald Garrigou-Lagrange Religion religious freedom Responsibility Ressourcement Resurrection Rick Garnett Ridiculous Crap You Never Thought You'd See Robert Barron Roe v. Wade Roman Curia Rome Russia Sacraments Saints Salvation History Sam Harris Sam Rocha Same-sex Marriage Saskatchewan Roughriders Satire School of the Americas Science Scripture Seamless Garment Second Vatican Council Seeing Sex sexual violence Sexuality Sia Sin social justice Social Security Socialism Society of Jesus Sofia Loves Wisdom Solidarity Sophia soteriology Soutenus Spirituality Sports St. Dismas St. Joseph Stanley Hauerwas Statistics Stimulus Suffering Sunday Reflections Supernatural Supreme Court Symbolism Syria Taxing Technology Terrorism The State The Tea Party The Trump Administration Theological Anthropology Theology Theotokos Thomas Merton Throwaway Culture Tim Muldoon Tim Riley Tim Tebow Time Titian Tolkien Torture Toys Trade Traditionalism Transgender Transportation Transubstantiation Trinity Truth TV U.S. Affairs Uncategorized Unions unity among people who disagree US Catholicism USCCB Usury Utilitarianism Utopia Valentine's Day Vatican Vatican II Veterans Vicarious Suffering Video Violence Virgin Mary Vocations Voluntary Associations Voluntary Poverty Voting Vox Nova vox nova blog war War and Peace War Strategy Wealth Weirdness Welfare state Women Women Priests Work Woundedness Youth

Select a Month June 2026 May 2025 February 2025 January 2025 July 2024 May 2024 April 2024 March 2024 February 2024 January 2024 December 2023 July 2023 March 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 June 2022 November 2021 September 2021 July 2021 June 2021 May 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 September 2019 August 2019 July 2019 June 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007

TAKE THE

Religious Wisdom Quiz

What happened to Jezebel as prophesied by Elijah?

Select your answer to see how you score.

Struck by lightning Eaten by dogs Drowned Burned alive