no apparent reason

just what the world needs (part 1)

A giant economic treatise by me, the length of which is in direct proportion to my lack of knowledge of the subject. This is inspired by an awesome post on ThinkChristian and the subsequent discussion. I commented a couple of times there, but I don’t think even my in with the moderators would let me get away with this long a comment.

On the Living Wage debate: While I acknowledge paying more in wages is a burden on some business owners, this causes me to ask the question--why is $5.15/hour the magic number? If employers only had to pay $3/hour instead of $5.15, they could employ even more people and reward good workers even more. For that matter, if employers didn't have to pay low-level workers at all but only issue them grain rations or something, all the better from this point of view. So why pay wages at all? What is their purpose?

The value of labor and the individual as a free economic actor

As neat as the theory that increased wages causes increased prices sounds; no one can argue with the empirical fact that once in our country there were no labor laws to speak of, and the result was a large number of adults and children in virtual enslavement. In terms of anti-government regulation arguments, this is how much the labor was “worth to” employers in the free market, so employers shouldn’t be expected to pay more.

But what does this really mean—the “market worth” of labor? I’ve used this argument myself, but how does one actually calculate what that is? I would argue that in the pre-labor law sweatshops of America, the “market value” of labor was in fact irrelevant, employers paid as little as they could get away with, paying people whose only option other than accepting the pittance was no income at all.

This is simply not acceptable in a free country and a democracy. In this society, we want everyone to be able to participate in both the economic and political realms, and without sufficient economic resources an individual can’t do either. We are all allowed to vote, but without labor laws, people aren’t even able to get to the polls because they’re at work, and they certainly don’t have the leisure time to become educated voters or to participate in the system personally.

At the same time as I defend the right of business owners to run their businesses themselves (and that includes setting wages), not have the government run it for them, I would have to admit that many employers still pay as little as they can get away with. The conservative argument is that if people don’t like that they shouldn’t take the job. The conservative position is that every individual is a free economic actor: if they take a job they are agreeing, as free agents, to these terms.

This is simply one of the silliest arguments I’ve ever heard. It ignores three basic facts of life in the modern world: (1) One needs money to survive, (2) the only legal way to get money is to take a job, and (3) you can only take a job that is offered to you. If low-level jobs are the only ones offered you, you do indeed still have the option whether to take it. Your other two options are: (1), acquire money illegally, or (2) start looking for a nice cardboard box adjacent to a soup kitchen.

Freedom isn't free

One of the great things about this country is the economic freedom we have, which I think could become squashed by too much government regulation. The low-level worker mentioned above isn’t stuck in her low-level job status, whether the status level is the result of mistakes made by that person or by forces outside his or her control. He or she can pursue an education, advance by working hard, or, indeed, become “self-employed” as many people so glibly suggest. But all of these things require a certain base level of economic security: all college, job, and loan applications at least require a home address as a bare minimum, so our cardboard-box dweller doesn’t have much of a chance.

These things also require time, a luxury many people don’t have. A single person can take a lot of risks if they want to; they can take a cheap apartment in a shifty neighborhood, survive on Ramen noodles or dumpster gleanings, and forgo medical care. I personally don’t think it acceptable that we ask people to take these risks in order to start out in our economy. However, I think that if a person is that poor, their family, church community, etc. has more responsibility for them than the government—but there are cases in which the family or church can’t or won’t help.

On the other hand, once someone has a family, all the rules change: these options are no longer acceptable. The ideal is for a person to be responsible and to make themselves able to care for a family before having one. But if we acknowledge none of us conducts our lives perfectly, and that sometimes people find themselves in such a situation due to forces outside their control, what do we suggest that those who do have children to care for do?

Let’s get back to the question of “what is minimum wage.” I think that we can all agree that it’s not acceptable to own slaves—in other words, we can’t pay employees with only food and housing (or less), they must be paid a wage. This implies that we believe each individual is ideally an independent economic actor; the conservative arguments that workers “agree” to work for low wages “freely” reinforces that this is the ideal situation.

But the workers’ “agreement” isn’t always as “free” as we might like to think. One needs money in order to stay alive; and if one’s choice is a low wage versus no money at all, I don’t see how anyone can argue that that’s a real choice. Sure, the unskilled worker has many options to improve his or her lot, but these all require at least a certain amount of time and money.

What is "minimum wage"? What is it for?

So we return to the question—“what is a minimum wage”? One possible definition is that it is the lowest possible amount of money an employer can pay and be called an “employer” rather than a “slaveowner." I think that if you pay an employer one cent an hour—and despite arguments to the contrary, I believe you might be able to find someone to work on those terms out of desperation rather than “free choice”—that what you have there is a slave. So, we come up with a number which seems to us is a sufficient amount that a person can do something with it, be an independent actor as want to believe that they are. Why is this $5.15 an hour? People working full-time at that amount are under the federal poverty line, so by official standards this is not a “living wage.” So, should the minimum wage be a living wage?

The trouble with the “living wage” is that that’s a different amount for different people. Obviously, it’s different in different parts of the country, so I support local solutions. But it’s also different for different economic actors. Teenagers who have no expenses and are saving for college, a car, or spending money, don’t need $10/hour. By definition they are low-skilled workers, even if they do have marketable skills, they are prevented from taking skilled jobs because they have to go to school. There are also plenty of other people who are, in fact, independent economic actors by virtue of having few or no expenses; such as graduate students, people who are primarily homemakers but want to make some extra money, etc. If these people want a job that doesn’t require a high level of commitment-the expectation they’ll still be working there in five years or even one, that they need to work more than a few hours a week or take work home with them-and are willing to accept low wages in return, they can be said to be freely accepting the terms of a low-level job.

In these cases, low-wage jobs contribute to, rather than take from, economic freedom. I feel that if the minimum wage were raised too high, this freedom would be taken away. If my job were suddenly required to pay $2 more per hour than it currently does, my employer might not be able to afford to employ me at all. If they could, they would probably want more of a commitment from me to make the investment of their money worthwhile. If the only jobs that were available were 40 hour a week jobs paying $10 an hour with medical benefits; then I would either have to drop out of school, take out more loans to meet my expenses, or work illegally.

I will have to admit here that of recent years, most of my jobs have been within the $9-11 range suggested for a “living wage,” but they have also required a few more skills than the cashier etc. jobs that we are mostly talking about. If the minimum was raised, however, I have no doubt that people in jobs like mine would be upset at getting paid no more than those in lower-skilled jobs. Thus, the expected salary for my level of clerical jobs would either increase, perhaps pricing me out, or such jobs would be “downgraded” and employers would have trouble getting skilled people to fill them.

So where's the problem?

I think the problem is not that relatively low-paying jobs exist, but that there are too many people who find themselves stuck in them, attempting to live on them even though they were never intended to provide a “living wage,” and unable to move upwards in the economic system.

Why is this, and what should we do about it? I believe few of us can say all of our problems were caused by someone else, but few of them are entirely self-created either. That’s why I don’t think a simple solution would work—either “living wage” legislation on one side, or telling people to learn to live on less or find a better job on the other.

First, I think we really need to take a look at our lifestyle expectations. Many have pointed out that the poorest in our country are far richer than an average person in many countries. Well, that only goes so far: if a person is able to live indoors but doesn’t have adequate medical care, are we supposed to think that’s acceptable because somewhere someone else doesn’t have either?

On the other hand, I do think our society suffers from an “assumption of affluence.” We assume that we all should be able to afford what are really luxuries: cable TV, cell phones, multiple cars, gym memberships. If we can't afford them, we think the problem is with the system rather than with our spending habits. This assmption is supported by our suroundings: try going online or flipping through a magazine for advice on one of your new year’s resolutions: eating healthier for example. All of the suggestions you will find will be expensive: the food items these sources will want you to invest your hard-earned cash in will start with the eternal Boneless Skinless Chicken Breasts, and that’s the cheapest of the ingredients you’ll see.

Now try looking for suggestions on reducing your grocery bill: all of the suggestions you’ll find are guaranteed to harden up your arteries in short order.

We all seem to believe that a good life—not only in terms of material goods, but in terms of bettering ourselves—cost money. And this is the least of our unrealistic expectations.

As I noted above, we all make mistakes in our lives—none of us conduct our lives perfectly. But at the same time, I’m afraid we think that mistakes we make “shouldn’t” have consequences, when in fact “shouldn’t” doesn’t enter into it, the fact is that they do. Getting addicted to drugs, not taking advantage of the free education we have in this country, having a child before one is able to financially take care of it, are all going to have consequences. Of course, people should be given opportunities to overcome these consequences, but no government program can erase them completely.

But on the other side, there are other factors to take into account. One is that people don’t always have the support they need to overcome these consequences. I believe that the individual’s family, church, etc. have the primary responsibility for helping these people, but a government component is needed too, especially for those who don’t have family or community support.

Second, we can scale back our expenses to just the necessities, but we can't scale back to zero. It does cost money to live inside, to eat food, to wear clothes, to pay the doctor to keep us alive. If we find a way to reduce these expenses beyond a certain limit, somebody somewhere is going to have to pick up the tab, either directly or indirectly.

Further our concept of the "bare minimum" needed has increased over time-and not in ways that are entirely unreasonable. One hundred years ago, few people have phones. Now, I don't think it's reasonable to call a phone a "luxury": everyone should have at least the ability to call 911 in an emergency--more than one life could be at stake in case of a fire or other disaster. We have more access to medical care than used to be the standard, and much better medical care is available now. Sure, anyone can get emergency care at a hospital; but lesser medical conditions can also be life-threatening or disabling. It sounds harsh put in these terms, but even if one doesn't consider an individual's life or health worth society's investment in saving it for its own sake, remember that person is being prevented from contributing to society by that health condition as well.

Another is that there is, in fact, a “working poor” class in this country: people who work hard, full-time or more for years, and never manage to get above poverty level. Not only is this a problem for taxpayers, who often have to take up the slack through government programs, it’s a problem for society. If we believe that all people are created equal, and that as free society we do best when we have the full contribution of every member of society; if there are factors which prevent some members from contributing, then we are losing out. If these factors stem from unfair economic practices, as a society we’re committing at least one of the two big sins mentioned by the Biblical prophets. This is a problem for us as Christians.

Labor relations and the Bible (to be continued)

I believe that the Bible has a lot to say in both Old and New Testaments about the how employers should behave towards employees and vice versa. These messages are somewhat indirect because the ancient economy was fundamentally different from ours, however, I think there are a lot of lessons we can learn. Naturally, I’m going to be telling you of those opinions, but I have to go do stuff for my actual jobs right now, so that’ll wait till later. And if anyone has actually read this far—thanks, I appreciate it!

Posted by michele at January 27, 2006 1:09 PM