Home / Economics / The Just Wage

 

Wages are surely one of the perennial economic contrivances of mankind, and, as in all human institutions and relations, questions of justice frequently arise with regard to wages. Wages exist because the relation of employer and employee exists. Although Distributists, in harmony with the command of Pope Leo XIII in Rerum Novarum, no. 46,that, “The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners,” desire to minimize the extent of the employer/employee relationship by making workers owners and owners workers, in any social order, however ideal, some aspects of the wage relationship will continue to exist, and thus the question of wage justice will likewise exist. And although since at least Leo XIII the popes have again and again reiterated the teaching that “the wage paid to the workingman should be sufficient for the support of himself and of his family” (Pius XI, Quadragesimo Anno, no. 71), many, even among those who consider themselves to be obedient and faithful Catholics, are not entirely comfortable with this repeated teaching, despite the fact that probably it can by now be said to be an infallible teaching by virtue of the ordinary magisterium. To a great extent I think that this discomfort can be attributed to the understanding of economics widespread in this country and throughout the Anglo-American cultural sphere, an understanding that by now has become widely accepted as the one, true and only version of economics in many parts of the world. This version of economics sees the economy as basically a self-regulating machine, and therefore to interject ethical constraints into this mechanism, contrary to the mechanical interplay of economic forces, endangers the successful working of the entire economy. According to this understanding of economics, wages are determined more or less automatically by the interaction of certain variables.

Those who think in this manner will argue that in the case of certain jobs, e.g., a worker in a fast food restaurant or a janitor or a farm worker, the variables of labor supply and demand determine a wage which is below a living family wage. In order to see this, let us look at part of the discussion of income distribution given by Paul Samuelson. The very title of Samuelson’s chapter, “How Markets Determine Incomes,” indicates clearly the mechanical approach to income distribution, which is simply

a special case of the theory of prices. Wages are really only the price of labor; rents are similarly the price for using land. Moreover, the prices of factors of production are primarily set by the interaction between supply and demand for different factors – just as the prices of goods are largely determined by the supply and demand for goods.

Thus the different incomes of different kinds of workers can be explained by means of a typical demand curve. Since “the supply of surgeons is severely limited [and] [d]emand for surgery is growing rapidly…surgeons earn $270,000 a year on average.” On the other hand, “fast-food…jobs have no skill or educational requirements and are open to virtually everyone. The supply is highly elastic…. Wages are close to the minimum wage because of the ease of entry into this market, and the average full-time employee makes $12,000 a year.” To many people this type of reasoning seems so obvious that one can understand their difficulties with the papal teaching on wage justice cited earlier. Within the framework of neoclassical economics it does indeed seem obvious.

There are many things one can say against such an understanding of how economies work. Here, however, I want to raise an argument for the just wage as the “economically correct wage,” a concept elaborated by Heinrich Pesch. Pesch’s argument ultimately rests upon a different understanding of both economics and economies, and the contrast in his approach with the approach of neoclassical and related economic schools can help one to see that the latter is not the only reasonable way of understanding economic phenomena, and in fact that Pesch’s approach is consonant with the Catholic understanding of man, society and the state, as well as actual economic facts.

First though, who was Heinrich Pesch? Pesch was a German Jesuit priest who lived from 1854 to 1926, studied economics at the University of Berlin, and wrote several scholarly, multi-volume works on economics and economic philosophy. His most famous work is the Lehrbuch der Nationalökonomie, which appeared in five volumes in German between 1905 and 1923, and which comprises ten volumes in its English translation. Pesch was more than an economist and a commentator on papal teaching, for in a sense he helped shape the direction of papal social doctrine itself, since his thought provided the background for Pius XI and his advisors when they drafted the 1931 encyclical Quadragesimo Anno. Furthermore his influence is very evident in the social thought of John Paul II. Pesch, in fact, coined the term solidarism or solidarity so extensively used by this pontiff.

Fr. Pesch called his economic system and program Solidarism, and although he was not a Distributist, he advocated many policies and programs akin to those of Distributists. Here however I will examine only his teaching on wage justice as seen within the context of his overall approach to economics.

Pesch’s discussion of the just wage is largely contained in the second part of volume V of his Lehrbuch, and is one of his most original and interesting contributions to economic and moral theory, for he treats of the just wage as “the economically correct wage.”

As is usual for Pesch, he first grounds his economic thought in a philosophic understanding of man and human life, and he begins his discussion of wages in this way. “The capacity to work is a natural good of man, which is destined and therefore also empowered by nature, or by the Author of nature, to provide the worker with his necessary sustenance” (p. 86). This might seem like an obvious observation, but if we unpack it a little we will find plenty of meaning in it.

If we believe that even after man’s fall into sin the providence and goodness of God continue to rule his creation, then we recognize a definite harmony still existing in the world. The fact that God has given mankind the capacity and means to work indicates that he intends work as the means of supplying our necessities. But one man has only so many hours, so much physical or mental strength, to apply to work. Moreover, there is more to human life than mere survival, including marriage and the family, and the creation, preservation and enjoyment of the human cultural patrimony. Thus it is not reasonable to expect someone to work eighteen hours a day, for if most people did that, the human race itself would perish or descend into a semi-human barbarism.

However, in fact it is rarely necessary for people to work eighteen hours in order to survive. Man’s labor does not “have only the natural destiny to acquire for the worker his subsistence…. It also has the natural capacity to do so” (p. 90), Pesch continues. In other words a normal adult person, working a reasonable number of hours a day, will generally be able to produce enough of economic value to provide not only for himself but for a family as well, provided of course that he has the tools, raw material and other necessities for whatever kind of work he does, as well as the personal habits and training required.

Distributists recognize this natural relation between a man’s labor and his ability to provide for his family, a relationship which is exhibited most clearly in an economy consisting as much as is reasonably possible of owner-workers. But even in an economy characterized by the separation of ownership and work, an economy in which the wage is the usual means of personal and familial sustenance, this natural relation should hold good. If it does not hold good, then something is wrong. Either someone is exploiting the worker by taking some of the economic value due to him, or the worker does not have enough capital (tools, land, machines) for his work to produce its naturally intended effect. This latter could even happen with a worker-owner if he did not have adequate tools or machines or if he possessed substandard or insufficient land.

If this is the case, let us look further at Fr. Pesch’s approach and how he undercuts the presuppositions of the neoclassical understanding of wage determination. “The human ability to work retains the natural capacity to provide a livelihood even when it does not succeed in doing so actually,” he begins. And he goes on to look at some examples of this type of situation which might arise in a capitalist economy.

The employer who, by his own ineptitude, uses labor in such a way that it does not come up to doing what it is capable of doing, would nevertheless be required to pay the kind of wage which labor is intended to provide. However, if labor is utilized properly in accordance with its natural purpose, and the employer pays a wage which does not provide for labor’s livelihood, then he violates commutative justice. Finally, an industry which, even under normal circumstances is not in a position to pay wages corresponding to what wages are supposed to accomplish, is lacking in economic justification. This means that the requisite consumer demand is lacking, and such an industry no longer has a place in the pattern of satisfying normal human wants. (p. 90)

Let us look at this more carefully to see its significance. Pesch considers three separate cases here. In the first place, suppose someone employed a perfectly healthy worker but from neglect gave him only inferior tools, faulty material, broken machinery to work with, and then complained that he could not produce enough each day to pay him an adequate wage. This is the “employer who, by his own ineptitude, uses labor in such a way that it does not come up to doing what it is capable of doing.” Such an employer, however, is nevertheless “required to pay the kind of wage which labor is intended to provide,” for it is the employer’s fault that the worker cannot create the economic value which his work is destined for and which he is perfectly capable of producing.

Secondly, we have the case where “labor is utilized properly in accordance with its natural purpose, [but] the employer pays a wage which does not provide for labor’s livelihood,” which is a clear case of the violation of commutative justice.

Finally, we have the most interesting case of all, “an industry which, even under normal circumstances is not in a position to pay wages corresponding to what wages are supposed to accomplish….” This industry is therefore “lacking in economic justification,” which “means that the requisite consumer demand is lacking, and such an industry no longer has a place in the pattern of satisfying normal human wants.” This latter is probably the situation of many discount chains and big-box stores, and similar businesses.

In this third scenario, we have the case in which the only way in which an employer can afford to sell his product is to make his prices so low that he cannot afford to pay his workers a living wage.

Clearly then his product lacks sufficient consumer demand. It is as if he had to bribe the public to buy his products by charging less than their genuine production cost. The products are desired only because they are cheap. Today we are inundated with cheap goods produced abroad, sometimes in conditions little better than slavery. This is a distortion of the economic process as well as a violation of justice. If the good is worth buying, it is worth paying a price that fully compensates all who are involved in its production. If someone revived legal slavery today and boasted that he could undersell his competitors because his labor costs were so low, who would doubt but that his entire enterprise was an economic as well as a moral evil, no matter how cheaply he could produce and sell his product? Or if a certain chain store sold only stolen goods and thus could largely eliminate its wholesale buying expenses, would not this constitute a violation of both justice and sound economics? The same logic must be applied to any enterprise which cannot afford to pay its workers a just wage. In all these cases employers are cheating, are seeking to avoid their full production costs. This has no place in a normal economy in which labor fulfills its intrinsic purpose of providing for human life and in which work, production, buying and selling, all cooperate toward a situation in which human persons live and work together in justice and prosperity.

If I am willing to buy certain goods only if they are produced with the advantage of low-wage labor then I effectively proclaim that such goods do not belong within a normal economic system. If I am willing to patronize certain stores or restaurants only because their labor costs are so low, what does that say about my real demand for such food? I want it only if its price is below what is necessary for the cycle of exchange to be effective. For if everyone were paid substandard wages, or if the goods of honest suppliers were regularly stolen and sold at discounts, there would eventually be no buying and selling. An economy can function only so long as there is a market for the goods and services produced, which occurs only when labor receives a share of the national income sufficient to pay for those goods and services. Now we have the situation where in fact the exchange economy is subsidized by workers in industries who themselves do not earn enough to be genuine participants in real, human economic exchange. We have an economy that depends, and thinks it must depend, on what amounts to quasi-slave labor or substandard wage labor, labor that is not reimbursed sufficiently so that it can take its own part in the cycle of buying and selling.

Since about 1980 wages in the United States have been largely stagnant or have even declined as fewer firms fulfill their responsibility of providing wages that meet the inherent purposes of human work. The share of aggregate income received by the economically lowest 20% of households declined from 4.1% in 1970 to 3.4% in 2009, while the share of income received by the top 5% went from 16.6% to 21.7% in the same period. One way that families have been able to survive economically during this time is by having both parents work. Yet what does this create? Children raised without proper supervision, increased family and marital stress, even an increased demand for cheap food outside the home because of a lack of time to make good food at home. One moral and economic evil spawns many others, as is always the case in human affairs. We cannot expect to exploit labor and have a healthy, well-functioning society.

To recapitulate, if we look at the working capacity of a normal human being, we see both its inherent tendency and its real ability to provide an adequate living for himself and his family, provided that he has sufficient capital goods to work with. In a simple owner-worker operation, this is evident. An economy consisting of such owner-workers would be characterized by a cycle of exchange in which producers received economic equivalents for the goods they produced by means of their work and which they exchanged for goods produced and sold likewise by their neighbors. The cycle of exchange would allow each producer to obtain “sufficient for the support of himself and of his family.”

With capitalism, that is, the separation of ownership and work, complexities arise. But even in a capitalist relationship this tendency and capacity of human work to provide for human needs continues. Heinrich Pesch presents three possibilities of failure on the part of capitalists to pay a just wage. In the third case we have an example of an entire industry or subset of an industry which does not fit into the cycle of exchange which characterizes a normal and healthy economy. Heinrich Pesch shows that if we look at the purpose of human work and of the economy we see that they obviously must provide a living for those who participate in economic activity. The understanding of economics typified by Paul Samuelson signally fails to do this, while Heinrich Pesch provides an alternative way of looking at an economy consistent both with Catholic teaching and with a correct understanding of the purpose of human work.

 

About the author: Thomas Storck

 

Thomas Storck is the author of Foundations of a Catholic Political Order, The Catholic Milieu, and Christendom and the West. His work has appeared in various publications including Homiletic and Pastoral Review and the book, Beyond Capitalism and Socialism. Mr. Storck is a former contributing editor of New Oxford Review and Caelum et Terra and serves on the editorial board of The Chesterton Review.An archive of Mr. Storck's writings can be found at www.thomasstorck.org.

 

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44 Comments

  1. 3 words: Fast Food Chains
    Those would be among the first to go in a Distributist economy. Don’t get me wrong, there’s a market where people can earn a decent living working in a restaurant, but it’s not in flipping burgers. My first job was for Burger King for $6/hr as a teenager. Realistically, a living wage (in my opinion as a husband and father) would be closer to $16/hr to START plus benefits. That won’t let you live large, but you can cover the basics if you’re smart with your finances. If you have children, something in the $20-30/hr range is more like it. A reasonably intelligent, able-bodied man should be able to make $40-60k each year to support his family if things were run well in our country (which, we know often are not).

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  3. But are low level jobs expected to support a family? I worked a fast food job as a teenager as well and didn’t expect to work there forever; and if one did I would expect that they would move up towards management. Is there a place for jobs for those not out on their own yet? Or is all employment suppose to be for those supporting themselves?

  4. I believe that there is room for “entry-level” jobs within Distributism, but the corporations that use these, like the fast food chains, would not fit within the mix. I constantly see, not just teenagers gaining their first job experiences, but also adults who talk of the other jobs they have to work because none of them pay enough to support them. The reason for this is that these are not just “entry-level jobs,” but are the way these corporations do business. It is one of the ways they maximize profits, along with denying full time work so they don’t have to provide benefits.

  5. Dan,
    No,but…. You see you can insert any minimum wage job into your scenario (landscaper, grass cutter, waiter, etc.) and continue to beg the question. Substituting a class of people such as teenagers does not answer the point of a lack of real demand that creates lower wages. Although no one may intend to make a career out of entry level jobs, does it justify servile wages? The eye opener in the article is point that there is a lack of real demand for the products consumed because we are only supplied with limited cheap choices so its what we buy. (What do you mean limited choices, Walmart is so big?)sarc: As long as debt for necessities is an option for low wage workers then the cycle will continue.

    God Bless,

    Jay P

  6. Society at large subsidizes low wage earners with dependents by providing Medicaid, food stamps, child care assistance, and other benefits. By raising the minimum wage to a “just wage,” would we also eliminate those public assistance programs to low wage workers?

  7. Dan,
    Paying teenagers less than a living wage is not wrong provided that this doesn’t crowd out adult workers who need those jobs. But certainly the informal system of when I was young, of teenagers doing things such as babysitting, lawn mowing, etc. in the neighborhood has nothing against it, provided that it stays within the local and neighborhood bounds.

    dmiehls,

    Yes, if workers were paid a living wage the state could eliminate all or most of the welfare programs you speak of. In fact, they are not all that generous, but they do serve to subsidize corporations paying low wages, since without them, the workers or their families would probably starve. You’re probably aware of the fact that some Wal-Mart managers were urging their employees to apply for public assistance since they were paid so little.

  8. I just noticed that somehow my endnotes dropped out in the publishing process. I’m putting them here, though without their reference in the text. Sorry about this glitch.

    1. For the repetition of this teaching, see inter alia, Leo XIII, Rerum Novarum, nos. 44-45; Pius XI, Casti Connubii, no. 117, Quadragesimo Anno, nos. 71, 110, Divini Redemptoris, no. 49; John XXIII, Mater et Magistra, no. 71; John Paul II, Centesimus Annus, no. 8.

    2. Paul Samuelson and William Nordhaus, Microeconomics, (Boston: McGraw-Hill Irwin, 17th ed., 2001).

    3. Ibid., p. 229.

    4. Ibid., p. 236.

    5. Lehrbuch der Nationalökonomie/Teaching Guide to Economics, translated by Rupert Ederer, Lewiston, N.Y. : Edwin Mellen Press, 2003. Pesch’s other works have also been translated by Rupert Ederer. A very handy volume of excerpts from the Lehrbuch, entitled Heinrich Pesch on Solidarist Economics, is available from University Press of America.

    6. For a comparison of some of Pesch’s ideas with those of Distributists, see my article, “Pesch vs. Chesterton,” Culture Wars, May 2012.

    7. Statistical Abstract of the United States, 2012, table 694.
    http://www.census.gov/compendia/statab/2012/tables/12s0694.pdf

  9. An important first step toward a just wage is establishing full employment. This will likely put upward pressure on wages in general. However, contrary to what many people believe, capitalists do not necessarily support full employment as Michal Kalecki pointed out in his 1943 article “Political Aspects of Full Employment,” which is a very interesting piece.

  10. JMJ
    While an interesting article, it seems to me that such a model is unachievable, or at best untenable given the reality of competition.
    Where in the world does such a model exist? It bears investigation.

  11. Would you be in favour of temporary wage cuts while a business attempts to recover from a downturn? I’m thinking of a situation like British Airways, where an established firm hasn’t kept pace with trends in the sector and suddenly finds itself having to cut costs. In this situation some of the workers agreed to work gratis for a time – http://news.bbc.co.uk/1/hi/business/8119388.stm The alternative would be borrowing money to subsidize a fair wage, which seems absurd.

  12. Ken,

    You are right, given pretty much unlimited competition, “such a model is unachievable.” So what is the solution? Pope Pius XI was clear, that such competition needs to be limited. The best way is by agreements among the parties concerned, but if they fail in their duty, then the state must step in and help them.

  13. David,

    In regard to wage cuts, this is not incompatible with Distributist principles, however, it should be across the board (and shouldn’t “earn” bonuses for executives). Such cuts should not reduce one set of workers below a living wage while others remain above it (especially if they are high above it).

  14. “3 words: Fast Food Chains Those would be among the first to go in a Distributist economy.”
    Matt

    I disagree. Franchised fast food restaurants make possible a great deal of small business ownership that otherwise wouldn’t exist without them. Plus, the existence of these additional restaurants adds to demand for low-skill labor thus pushing up the wage paid for it.

    “You’re probably aware of the fact that some Wal-Mart managers were urging their employees to apply for public assistance since they were paid so little.”
    Thomas Storck

    I doubt that’s a “fact”. But let’s pretend your claim is true. Then one must ask what about the people earning lower wages at the less productive small businesses so celebrated by people who love to put a hate on Walmart. What about the public assistance taxpayer-looted politician handouts going to them, hmmm?

  15. David Madeley,

    In addition to what David Cooney wrote, I would emphasize that this makes much more sense if workers have an important voice in running a firm in the first place. Then they are responsible and their stake in the firm’s health is clear. Usually however, under capitalism, the workers are asked to take cuts, the executives are rewarded, and then workers might even be let go or factories moved to some cheaper place.

  16. Is a worker never responsible for his failure in getting a living wage?
    Is it always somebody else’s fault?

  17. Gian,

    If a worker never seeks a job that pays a living wage, he can certainly be held at fault. That, however is not what we’re talking about. It used to be the case that jobs we consider menial still paid a living wage – a wage that provided a single worker to support himself and his family. Capitalism, however, always seeks to pay the least it can get away with paying to the workers. This is why, today, many people working in jobs that used to support a family, now have to work multiple jobs to do so.

    I know many families where both husband and wife work two jobs, and some where at least one of them has to work two jobs. These are not people who spend all their money on frivolous things; not one of their jobs covers food, rent, clothing, vehicles, provides medical coverage, or many of the other necessities for a family. Always remember that, when you discuss a person’s failure to “get a living wage,” that, under Capitalism, the living wage must first be offered by an employer. This is getting more rare as the Capitalists move the jobs wherever the labor is the cheapest, but what else can you expect from a system that refers to workers as “human resources?”

  18. Micha,

    Exactly why would the jobs not exist if franchised fast food chains weren’t there to create them? After all, no business can make it if the customers aren’t there. So, why must it be a franchised business instead of a locally controlled one? If these local entrepeneurs want to start a fast food restaurant, they could do so without having to bow to corporate control of their product and image.

    In regard to the people earning even lower wages than at Wal-Mart, this article criticizes low wages in general, not just those from corporate giants. However, Wal-Mart can afford to pay higher wages. Most people I know who lost their jobs because the local small business closed after Wal-Mart moved in didn’t get a higher paying job at the Wal-Mart. Most got the same or lower, however, that was because it was all the small locally-owned business could afford – which is not the case for Wal-Mart.

  19. For a worker between, say, 25 and 65, who’s making less than a living wage, I’ll posit that the subpar wage is not his or her fault if he or she:
    1. Graduated from high school;
    2. Abstained from having children before marriage;
    3. Did not commit a crime;
    4. Took advantage of whatever education or training was reasonably available;
    5. Always took a promotion if offered one;
    6. Performed reasonably well at work; and
    7. Did not abuse drugs or alcohol.

  20. dmiehls,

    High school drop-outs used to be able to make a living wage! Why is it their fault if they can no longer do so because the jobs offered to them don’t pay enough? There are many jobs that provide useful service to the community and don’t require a high school education to do them. You’re basically saying that you will only exempt them if they led basically blameless lives? If they did any of the things you listed, then it is their fault and employers who offer unjust pay are blameless?

    Also, why must they have always taken a promotion if offered? What if the promotion was to a position for which they were not suited, and they knew this when their employer did not? I know many people who have turned down job promotions because they knew they were not suited to the position offered. I know people who work two jobs to get by and did everything on your list except #5. They provide a necessary service to their employer, who not only pays them a low wage, but treats them as though they are not people with lives outside of work.

    I’m sorry, but your list is simply inadequate to be just.

  21. David:

    You can add “reasonable” to no. 5. Otherwise, I stand by the list. Each criteria involves a decision by the worker that could impact his or her future economic well-being (excluding, of course, people who are mentally or physically challenged). Many people, however, have and will overcome making a wrong decision on one or more of the criteria.

    The list is simply in response to Gian’s comment. I’m simply saying that one who makes all of the right decisions is not at fault if he or she does not make a “living wage.” For such a worker, a stupid or vindictive boss/employer, general economic conditions, the obsolescence of the worker’s particular industry, or some other reason beyond the worker’s control, may be the cause of the worker not making a “living wage.”

  22. As all good 21st century Republicans know, slavery is the best business model.

    The Emancipation Proclamation is so 19th century.

    And labor unions are just rabble-rousing radicals disturbing the peace.

  23. As all good 21st century Democrats know, Socialism is the best business model.

    The Declaration of Independence is so 18th century.

    And all corporations are just greedy robotic leviathans that have contributed nothing to the common good.

  24. The Billionaires’ Choice, and Their Legacy
    (The Deciders decide, and hand down their decrees)

    Know your place, for you must plant the fields
    and mine the coal, and when we have a war,
    send us your sons, for someone’s sons must die…
    you do not need to know the reason why.

    Just trust in us, just serve and carry on…
    work makes you free, all else is ours alone.

    Christ asked us once, which side are you on?
    for God or mammon? our craven answer’s known.

    (posted by a Christian believer in the social gospel of Jesus Christ)

  25. Dmiehls’ list above of the seven things workers must avoid if they are to expect a living wage strikes me as typical Calvinism. If you’re poor, it’s because you’re not virtuous. The funny thing is – how many of the rich have kept all the seven? Especially # 2, 3 and 7. As to #2, probably you’re right, they didn’t really have children, but killed them in the womb before birth. Evidently there is never forgiveness in capitalist society – except for the rich who are forgiven beforehand.

  26. Some further comments on dmiels’s points.

    He wrote, “one who makes all of the right decisions is not at fault if he or she does not make a `living wage.'” My comment – who among us makes all the right decisions? Are only the perfect to receive justice? I don’t deny the role of personal fault in ruining people’s lives. But personal fault on the worker’s part does not determine the rate of wages. Will a firm alter its wages on account of the character of its employees? Will they ask applicants if they’ve ever committed any of the 7 faults and if they have then offer less in wages? We’re not talking about drunkards who have no job, we’re talking about people working at jobs for which they do not receive an adequate wage.

    Then dmiehls goes on “For such a [perfect] worker, a stupid or vindictive boss/employer, general economic conditions, the obsolescence of the worker’s particular industry, or some other reason beyond the worker’s control, may be the cause of the worker not making a `living wage.’”

    Are those the only reasons why a person might not make a living wage? Never efforts by firms to lower their costs, shifting locations to non-union areas or overseas, and other anti-labor activities? According to capitalist criteria, a boss if far from “stupid” if he pays low wages since then his profits will be higher. Of course there can be exceptions, with skilled workers for example, but generally it profits an employer to pay lower wages. But according to Holy Scripture an employer will find out subsequently that his notion of profit was pretty short-term. “Behold, the wages of the laborers who have reaped your fields, which you have kept back by fraud, cry out, and the cries of those who have reaped are entered into the ears of the Lord of hosts.” James 5:4.

  27. “Is a worker never responsible for his failure in getting a living wage?
    Is it always somebody else’s fault?”

    In a market economy, even a distributist one, everyone of sound mind is responsible for his or her own economic decisions, and sometimes has to live with the consequences of those decisions. Making the wrong decision doesn’t necessarily mean that the person is not entitled to a “living wage,” it merely means that the person has done something that might detrimentally affect his or her ability to receive one. As I stated before, if someone has made the right decisions on items 1 through 7 but is not receiving a “living wage,” it’s not that person’s fault.

  28. dmiehls,

    I think you’re missing the point here. The question is not about someone who can’t hold a job. The question is about jobs that don’t pay a just wage.

  29. JMJ
    Thomas,
    The state must step in and help them? Help them not compete? So, the state controls the industry?
    Is that a fair estimate of your position? I think that’s not something I share. Currently I reside in Shanghai’s suburbs. Here state owned enterprises (soe) are slowly giving way to privately operated concerns. Slowly, as the state allows it. These people seem to be moving away from your concept, as I understand it.

  30. I don’t think that supply and demand or even negotiating power alone can explain how some wages are set below the minimum living wage for an individual renting modest quarters, and eating modest yet wholesome food. There is, of course, a difference between a living wage for a single person and that of a primary wage earner for a family.

    The basic thing is that the cost of labor must, at a minimum, include the cost of living a modest life. Otherwise there is no reason for the worker to allow him or herself to be hired in this way.

    I think the larger issue is the issue of subsidies. People are in fact paid a liveable wage, but part of this wage comes in the form of Medicaid, Food Stamps, Section 8 housing subsidies, etc. In other words, taxpayer money is spent on part of the compensation package for many employees. This is a shame and it distorts the job market. Far worse, however, it gives the state a sense of entitlement regarding intruding into very personal decisions on the part of the poor (see http://elfishpolitics.blogspot.com/2012/10/the-servile-state-and-corporate-press.html ) in ways that are just horrifying.

    I think that structural changes that make it so that the poor have more options, and are more generally empowered, would do more regarding increasing wages than government mandates which, as our history has shown, are allowed to be inflated away until they are only fit for prison workers who operate in conditions of abject slavery.

  31. Ken,

    In the article I didn’t recommend any particular approach toward dealing with low wages. State help is one way this could be remedied, and this could be via more than one way: direct payments to make up for a lack in wages or minimum wage laws. But there are many other ways of doing this beyond direct state action. I don’t know if you’re a Catholic or not, but the popes are adamant about the right to a living wage, and that where this is actually impossible for a firm to pay, then changes must be made to our economic system so that this is no longer impossible. Here is Pius XI, “71. In the first place, the worker must be paid a wage sufficient to support him and his family. That the rest of the family should also contribute to the common support, according to the capacity of each, is certainly right, as can be observed especially in the families of farmers, but also in the families of many craftsmen and small shopkeepers. But to abuse the years of childhood and the limited strength of women is grossly wrong. Mothers, concentrating on household duties, should work primarily in the home or in its immediate vicinity. It is an intolerable abuse, and to be abolished at all cost, for mothers on account of the father’s low wage to be forced to engage in gainful occupations outside the home to the neglect of their proper cares and duties, especially the training of children. Every effort must therefore be made that fathers of families receive a wage large enough to meet ordinary family needs adequately. But if this cannot always be done under existing circumstances, social justice demands that changes be introduced as soon as possible whereby such a wage will be assured to every adult workingman.” Quadragesimo Anno, no. 71.

    I never suggested state-owned firms, but I do have a question for you: In China as firms are privatized, do the workers receive a living wage? Are there minimum wage laws, and if so, is the minimum set high enough so that it affords a just wage?

  32. One other thing. I am reminded of a passage in Gorbechev’s book “Perestroika” where he discusses the problems of capitalism in the developing world based on his discussions with Francois Mitterand.

    Gorbechev notes that Mitterand noted that capitalist societies do best when workers are paid enough and have enough spare time to better their skills and value to the companies that employ them, and Gorbechev notes that this is exactly what is missing in developing nations. It is missing in the US too these days for low paying jobs.

    I have mixed feelings about this. On one hand, questing for better skills and greater capacity to work (for someone else or oneself) is vitally important and largely overlooked in these discussions, and one may see subsdiarity as based on a right to own one’s labor and hence accomplishments and as so that’s positive. On the other hand, this seems not quite to break out of the corporation as machine, with humans as commodity parts. It adds a little back in but not enough.

  33. Men working more than one job is a natural correction to the 40 hour work week which has too few hours to support a living wage in a modern society.

    Thomas Storck writes : “the right to a living wage, and that where this is actually impossible for a firm to pay, then changes must be made to our economic system so that this is no longer impossible.”

    In other words, what Thomas Storck is proposing is a wholesale restructuring of our economy because a large percentage of jobs simply do not bring in enough money to pay a living wage.

    A business that brings in less than what is required to pay a living wage to the employees, cannot in turn pay a living wage.

    Of course many businesses could pay higher wages by decreasing their greed, but many times that would not be enough to pay a living wage. In my own business, construction workers simply cannot be paid a living wage because there is not the money available in relation to consumer expectations.

  34. Thomas Storck,
    “Never efforts by firms to lower their costs, shifting locations to non-union areas or overseas, and other anti-labor activities?”

    Now you are talking Politics. Why it is wrong by Catholic principles to move jobs overseas?.
    Aren’t overseas workers or non-union workers human?

  35. ltg wrote, “Men working more than one job is a natural correction to the 40 hour work week which has too few hours to support a living wage in a modern society.” I doubt this is true, but if it is, then it’s a tremendous indictment of “modern society.” BTW, are you aware that in the late 1930s Congress came close to establishing a shorter work week as standard, I think it was 35 hours?

    Gian, you seem surprised that I brought in politics. The economy is not some closed system which has no relations with the rest of human institutions, especially with the state, which, in Catholic thought is the overarching framework for human life in this world. You ask, “Why it is wrong by Catholic principles to move jobs overseas?” You imply that firms are moving these jobs overseas from a benevolence to help foreign workers. You know that this is not the case, it’s done out of a desire to pay lower wages and make greater profits. And in many cases, these wages are not even sufficient for the lower-cost economy of those countries, i.e., they are substandard wages by Central American or Indian standards. For documentation on this, see the book by Mark and Louise Zwick, Mercy Without Borders.

    If a company wants to sell in the U.S. and produce overseas with lower costs, how does it think that U.S. workers/consumers will be able to afford to buy their products. If it want to sell chiefly overseas, then let it really move away and stop pretending to be a domestic company.

  36. Gian,

    To add a point to what Tom has already stated. It would not be a problem at all to create jobs in other countries, if you didn’t eliminate jobs in your own country to do so, and if your primary reason for creating these other jobs was not to increase your own profit at the expense of people so desperate for work that they will be glad for even a grossly underpaid job in bad working conditions.

  37. Thomas Storck writes : “I doubt this is true”

    I see it everyday, both in those out in the field pounding nails, as well myself where for me only working 40 hours a week would be virtually taking a holiday.

    Consumer expectations and the ever increasing amount of expected infrastructure make it true because materials take time and money to produce.

    Modern cars, modern homes, modern computer gadgets etc. all take a lot of effort to produce, and far more effort than in the past because of the complexity. Government requirements cost a lot of money that doesn’t make it to the paycheck and in turn to the market for buying clothing and shoes.

    As it stands, the US modern society is supporting itself on subsistence labor overseas and subsistence domestic labor.

  38. ltg, I’m not sure I understand your argument completely. Are you saying that in today’s society a worker cannot earn enough in 40 hours for what we (in the U.S. & western Europe) consider to be a reasonable standard of living? But there are many workers who do so, and some who by working more than 40 hours obtain very much more than a middle-class income. In Europe I would imagine that these are the norm. Just because many U.S. workers need to work more than 40 hours or at two jobs does not mean that the economy could not support them decently at 40 hours. Beginning in the late 1930s labor unions raised wages for pretty much everyone, and the economy did not collapse, quite the contrary. Most were able to live well enough on one job, and their wives were able to stay at home and raise their children.

    But, if the modern economy really is such that it really does require us to make working our chief activity, then so much the worse for the modern economy. Let’s return to something in the past.

  39. The perspective here seems to secure the job-holder above all and make him virtually the owner of the said job.

    A very European way and a way that has not led to social justice in those countries with a minority of privilaged job-holders among a sea of part-time workers and self-employed people that take all the risk..

    An owner takes the risk–of a downturn, a lack of demand, a technological change, govt regulations, etc.
    But the job-holder should be shielded from all risk?

  40. The argument here only works if the fundamental disagreement with Liberal Economics is made explicit.

    That Profit is not the motive for human endeavor. That the butcher does not toil for his profit but to feed the city (that is, if he is a good butcher).

    That is, one must start with denying Adam Smith.

  41. Gian,

    You cannot expect us to have a complete argument against every aspect of Capitalism (or Socialism) in each and every article. Each of our articles is intended to get people thinking of the subject it addresses, and we hope that it will encourage our readers to look at the many other articles we have written which address other aspects.

    With Distributism, the number of workers who owned their jobs, either in independent businesses or in cooperatives, would be enough to be the defining characteristic of the economy. It would ideally be a good majority of the workers. Please do not equate our views with the practices of the European states which have ranged from extreme Keyensian Capitalism to Socialism. Merely pointing out that it is unethical for business owners to live lavishly while workers are barely able to get by does not equate us with those practices. Our policies are not “egalitarian.” There would still be those who are rich, and, as Christ pointed out, there will always be the poor. Those facts, however do not justify an owner making 100 or 200 times more than his employees when those employees are struggling to get by.

  42. Gian,

    With regard to what you said about Adam Smith, the butcher and profit, I think that the term “profit” is usually used in an inexact and loose manner. Certainly a butcher, and any other worker, should rightly expect to earn enough by his work to support his family, to carry on his trade or business, including reasonable savings for contingencies. But profit in this sense is simply payment for his toil, plus (especially in a capitalist economy where risk is normal) for uncertainty, for whatever training he has undergone, etc. It is not an open-ended invitation to make as much as the market will bear or as much as he can manage to squeeze out of his fellow citizens. Most of us have a mixture of motives. Adam Smith, in the example you cite, attempted to isolate the butcher’s desire for remuneration from any desires he might have to serve the need for meat in his community. Both motives can, and often do, exist in the same person, in varying degrees. Much is determined by our culture. It used to be that a physician was expected to be motivated primarily by a desire to serve, and I daresay that this cultural expectation helped orient some physicians away from a pure desire for gain toward an ideal of service. I don’t see much difference between supplying food and supplying medicine to the community. Both are necessary for human life, and in both cases the supplier rightly expects to be able to live on his earnings, but that does not mean that he makes gain his primary aim.

  43. The article examines a question I’ve wrestled with myself for some time. My wife and I are small business owners with a growing partnership. We’ve been at the point fiscally for a few months that I can afford to hire our first outside employee for part-time work (probably 25-30 hrs/week) and pay them a very reasonable wage for our part of the country and the skill level required (probably $12-$14/hr). The issue I’ve wrestled with is whether or not this should be done at all, or whether I should wait until I can bring in a full-time employee that I can pay a living wage to with benefits or if we are looking at growth, if the idea should be to create a worker-cooperative.

    I love the ideas in the distributist movement: buy local, eat local, provide for yourself, increase self-sufficiency — but the practical (especially for the small business owner) is troubling. Does anyone know of any book length discussions on a topic related to what I mentioned?

  44. DistributistDad,

    One of the difficulties of trying to do business according to distributist principles is that we are currently living in a capitalist economy. This is not an excuse, but a reality. The transition from Capitalism to Distributism needs to be gradual and reasonable. I don’t know of books discussing your specific question, but here is my “gut reaction” to it.

    Could this position be considered, initially, as an entry level position to the work-force which would ultimately become a full-time position with a living wage? Would establishing this position now help you to make it into the full-time position more quickly in the future? If the answer is yes, then my personal opinion is that there is no problem in doing so. The only problem would be if later, when you have the ability to do so, you choose not to establish the full-time position with a just wage and benefits. If you chose, instead, to either pocket the extra profits which this person’s labor made available, or to create another part-time position because it would be more profitable for you, that would be unethical and, therefore, against distributist principles.