Justice and Charity in Wages

Pope John Paul II’s encyclical, Centesimus Annus, is a marvelous defense of capitalism and attack on socialism in its feudal, totalitarian, and welfare state forms. One is particularly impressed by Pope John Paul’s argument that the burdens that the welfare state places on the poor are immoral. Accordingly, this teaching does more than simply return the Catholic church to the position originally expressed by Pope Leo XIII in Rerum Novarum, whose one-hundredth anniversary it celebrates.

In Rerum Novarum, Pope Leo argued that “as a rule, workman and employer should make free agreements.” This was very much part of Pope Leo’s defense of capitalism. However, he then went on to say that if, through necessity, a worker accepts a wage that provides less than “reasonable and frugal comfort … he is the victim of force and injustice.”

A reasonably set legal, minimum wage may not be such an awful intervention in an otherwise free economy. However, subsequent encyclicals and church activism showed that what started as the exception to the rule eventually became the rule. Therefore, it is the nature of the obligation to pay a minimum wage that I wish to address in this essay.

Prior to Pope Leo’s encyclical, Catholic scholars were agreed that a just wage was determined by the consent of the parties involved. If a worker agreed to onerous wages under duress of force, the bargain was viewed as invalid. Even so, some scholars held that it was not unjust for an employer “to profit by the inner compulsion of a worker’s hunger.”

Pope Leo’s teaching on wages confirmed a consensus of Catholic opinion regarding the role of consent in determining the just wage. He broke new ground, however, in arguing that a wage below the “frugal comfort” level was unjust.

This argument reflected the romantic notion that prior to civilization, nature provided in abundance to all. The “monopolization of land” through the recognition of private property was viewed as unjust if some people were thereby denied their rightful share of the abundance provided by nature.

We have since learned that prior to civilization men lived at the borderline of subsistence. Only after years of accumulation of capital, facilitated by the recognition of property, were men able to remove themselves from the edge of survival. What men in the present generation have been deprived of, through the recognition of property, is merely the opportunity to earn a subsistence-level income.

But, as Adam Smith argued, there is a natural floor under wages at the subsistence level. A worker’s “wages must be at least sufficient to sustain him.” If, to redress possible injustice due to the recognition of property, minimum wages were designed merely to enforce a legal floor under wages at the subsistence level, there would hardly be any need, because there is already a natural economic floor under wages at that point.

The minimum wage movement’s purpose was to set a legal standard above the subsistence level, at something like Pope Leo’s “frugal comfort” standard. Father John A. Ryan, who is probably the best-known American Catholic commentator on economic issues of the early twentieth century, admitted as much when he wrote that “the worker agrees to the harsh condition because they mean for him the preservation of life.” A wage that “preserves” life is a subsistence wage. Fr. Ryan agreed that an economic floor exists under wages at this level but argued that government should set a still higher floor under wages.

How high should the legal minimum wage be? Fr. Ryan argued that this would vary in relationship with changing economic conditions. In short, “it depends.”

The arbitrariness of such a minimum wage was not lost on the U. S. Supreme court when it decided on the constitutionality of legal minimum wages in 1923 (a ruling that has since been overturned). “What is sufficient to supply the necessary cost of living … is obviously not a precise or unvarying sum–not even approximately so.” The Court considered two types of economies. The first concerned how frugal an individual can be in matters such as the preparation of meals; the second, how frugal an individual can be by entering into communal relationships, such as by being a family member.

Because of the possibility of such economies, it is impossible to say exactly what constitutes a living wage. Judgment would have to be used.

For Fr. Ryan and the others in the minimum wage movement, this judgment could be exercised through the democratic process by using statistical methods. Surveys were taken to discover income and expenditure patterns. A decision was then made as to what was a living wage. Those making less than this amount were either given raises to equal it, or else were let go.

As a result of minimum wages, the least skilled workers, including the physically and mentally handicapped, the enfeebled aged, and those with poor work habits, became unemployable. This not only created an unemployment problem–it undermined the conditioning of assistance to the poor on willingness to work.

During the nineteenth century, everyone who could work was expected to do what they could to support themselves, and assistance–primarily through church-based, private charities–was supplemental. But after the establishment of the minimum wage not everyone could work, so assistance could not be conditioned on work effort.

The very concept of poverty changed from one of not being able to provide for yourself, to one of not having a certain amount of money. Work became viewed as merely the means to an income, not as something that gives a person dignity. Eventually, welfare came to be viewed as a right, and demanding that the able-bodied poor work came to be viewed as demeaning.

While some Christians may have been naive regarding the implications of minimum wages, the Fabian socialists were explicit. Sidney Webb said that the worst way to deal with “these unfortunate parasites” was to allow them to compete as wage earners. Victor Morris, of Columbia University, said that the “crippled, infirm, aged, and slow workers” should be “segregated from the regular group of employees.”

The District of Columbia Minimum Wage Commission denied permits to work for less than the minimum wage to those it considered too old or crippled to work, saying that they “must be cared for in some other way.” The state of Oregon, in arguing for the constitutionality of its minimum wage law before the Supreme Court, said that a person who could not earn the minimum wage should “accept the status of a defective to be segregated for special treatment as a dependent of the state.”

A study of the Massachusetts minimum wage law found that it presented a problem for slow workers. “Often these employees are old, or subnormal in one way or another. For personal reasons they have been kept on at a low wage, but their employment cannot be continued if their wages must be raised.”

These advocates of minimum wages knew they were creating an underclass of people who would be denied the opportunity to demonstrate, by working at low wages, that they would provide for themselves if they could, and, by doing this, elicit the supplemental support they needed from others. These advocates of minimum wages saw the connection between legal minimum wages and the replacement of the nineteenth century, work-oriented, voluntary system of charity with the welfare state.

The issue of legal minimum wages seems to involve a terrible choice between allowing the least-skilled to work, and insuring that everyone has at least a decent level of income, i.e., what Pope Leo defined as “frugal comfort.” Yet I believe this is a false dichotomy. Remember the parable of the vineyard? The owner of a vineyard hired workers through the day and at the end of the day paid them all the same full-day’s wages. When questioned about this, the owner explained that he paid some of his workers more than they had earned because that was his privilege. “Is it not lawful for me to do what I will with my own?” As long as he paid everyone what he had agreed, he was free to pay some of them more.

The answer to the apparent dilemma involved in minimum wages is to remember that as Christians we are to be ready to go beyond the minimum requirements determined by law. Therefore, while I sympathize with Pope Leo’s argument that wages should at a minimum provide “reasonable and frugal comfort,” I believe we should view this as a moral duty, not as a legal obligation.

What exactly “frugal comfort” means, and whether–given the profitability of a business–the charity needed to provide this level of income is better extended by the employer or by someone else should be a matter of individual conscience, subject to the discipline of the church.

As I have come to understand the workings of the modern welfare state, I see that the poor are victimized by legal minimum wage laws that deny them the dignity of work and the true sympathy of those who are better off. More generally, and as argued by Pope John Paul, the poor are victimized by the state’s many interventions into the economy that prevent them from working, that price goods and services out of their reach, and that pervert natural incentives to work and otherwise act responsibly.

In the nineteenth century, when charity was essentially a church matter, the poor were viewed as brothers and sisters in Christ: that is, as equals. Working, being self-responsible, and contributing to society was viewed as good for all. The biblical admonitions to give to widows and orphans, to leave work for the poor, and to lend to the poor man who is our brother were taken seriously. As we move from merely defending capitalism to exploring the full implications of economic liberty, we will have to rediscover the subtle difference between what we owe each other as matters of justice, in which matters we are answerable to the state, and what we owe each other as matters of charity, in which matters we are answerable to a higher authority.