Recent articles and proposals in our national political arena have inspired me to do some thinking about how one might view the minimum wage debate and how it fits within a Catholic’s duty to help the poor.
Before jumping to a stance on minimum wage legislation, it’s probably wise to keep in mind the statements of Pope John Paul II in Centesimus Annus that the “Church has no models to present” and also of Benedict XVI in Caritas in Veritate that “The Church does not have technical solutions to offer and does not claim ‘to interfere in any way in the politics of States.’” John Paul II further explained that “models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with one another.” It seems that Catholics are free to debate the most effective models of helping the poor.
Many assume the minimum wage debate is only between those on one side who want to raise the minimum wage thereby helping the poor, and those on the other side who would like to leave the minimum wage as is and are at best unconcerned about the poor. Unfortunately, the matter is not so cut and dry. These simply are not the only cards on the table.
Without getting into a lengthy microeconomics treatise, we should be open to the possibilities that raising the minimum wage can actually increase unemployment and that it can change the value of our dollars so that the purchasing power of the poor doesn’t always improve as much as one would think. These are further explained as follows:
1) In order for a sustainable employment agreement to exist, an employee must create more value for the company he or she is working for than the compensation that is received. Period. If we simply make a law that forces companies to compensate people more than the value they are able to help create, we have not changed this principle. We have simply created a distortion in the market which will have side-effects. There will be winners and there will be losers. Some will lose their jobs as those companies with already strained budgets won’t be able to afford larger payrolls. These are often the most vulnerable whom we were trying to protect in the first place. Others will keep their jobs and enjoy higher wage rates. An increasingly popular claim of minimum wage advocates is that many large employers are very profitable and could pay better. This may be true of a selection of public companies who can be used anecdotally to justify a point. But, a recent New York Times article[1] reminds us of census data which show that sixty-one percent of all business are small businesses with fewer than four workers. These small companies often aren’t able to afford higher wage mandates and will be forced to let workers go. (I spend my days working to improve returns to all stakeholders of small- and medium-sized private companies, which represent most of the companies in the United States, and my experience has been that most are not awash in cash.)
2) Furthermore, if creating prosperity were as simple as forcing companies to pay their workers more, we could raise the minimum wage to $100, create wealth for all, and be done with the issue. There is, however, the inconvenient fact that the nominal amount written on paper money is not a constant guarantee of purchasing power. If, for example, a grocery store were suddenly forced to pay its workers $100 / hr., it would need to raise the prices of its groceries to avoid going bankrupt. Those shopping at the grocery store would then need to pay higher prices in order to buy their food. Those shoppers would in the short-term be excited by their large increase in income, but quickly realize that most prices have increased by a proportionate amount. While everyone would be carrying pieces of paper with larger numbers written on them, the amount that they were able to purchase would remain relatively unchanged. If this is true of my $100 / hr. example, it is also true of the smaller $20.00 / hr. being advocated by some groups. While some workers would benefit and others would lose (more because of the industry they work in than because of their merit or need), this price inflation would cause the purchasing power of the poor to increase by far less than one would hope.
These uncertainties require us to search for better solutions.
So what is a good Catholic to do? Certainly we all have a moral duty to help the poor.
I recommend that we first consider all repercussions and side effects before jumping to support any particular policy. We can ask ourselves, “Who will be helped by this?” “Who will be hurt by this?” “Will it actually work?” “Have similar policies worked well in other places or time periods?”
And finally, no matter what our stance on minimum wage legislation, we should recognize that our duty to help the poor extends incredibly further than casting a vote and then waiting for others to do the work for us.
We are called as individuals to do much, much more.
Pope Francis reminds us in Evangelii Gaudium that “there is an inseparable bond between our faith and the poor. We must never abandon them,” and later, in a more compelling statement, “In this context we can understand Jesus’ command to his disciples: ‘You yourselves give them something to eat!’ (Mk 6:37) It means working to eliminate the structural causes of poverty and to promote the integral development of the poor, as well as small daily acts of solidarity in meeting the real needs which we encounter.”
Perhaps if we get too carried away with a legislation debate, we risk overlooking the instructions, “You yourselves give them something to eat!” and “daily acts of solidarity” (emphasis mine). Perhaps, when it comes to the clear economic problem of many in our society not earning high enough wages to live with dignity, we can take a more targeted approach. Instead of expending energy promoting policies which produce questionable results, we can focus more on working with individuals and groups to enhance their skills and thereby increase the wages they are able to earn in the workforce on their own. This is more difficult than casting a vote. Much more. It requires our precious time and begs a conversation about what “acts of solidarity” are most effective. Volunteering, tutoring, skills training, mentoring, or anything we can do to share our talents (which are all God’s after all) with those around us are all possibilities.
If we throw ourselves into this wholeheartedly, we will not only create real avenues of sustainable and dignified employment for those in our community, but we will be one step closer to being able to give a confident accounting at the final judgment of our stewardship over the gifts with which we have been entrusted.
David Cusimano works with small and lower-middle market business owners as a consultant, coach, and investor. He has taught economics and small business finance courses at two local colleges and holds Master’s degrees in Economics and Business Administration.
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