Living wage: It’s quite the loaded term, implying several things at once. According to its supporters, many companies (especially large retail corporations) pay employees less than they need to buy basic necessities – food, rent payment, etc. The solution, according to proponents of the idea, is to raise the minimum wage to an acceptable level (about 50% higher than the current rate).
It’s an idea that has caught on, especially among younger Americans more likely to be living at the poverty line. I’m all about taking care of people, but I’m also thoroughly convinced that the idea won’t work. Presently, Washington D.C. is considering the idea, leaving concerns that many businesses will leave the area.
When one small area adopts the plan, businesses may close down or avoid building there. When adopted on a national scale, here’s what happens when the minimum wage is raised:
- Companies’ expenses rise due to higher wages.
- Companies raise prices to compensate for the extra expense.
- Higher expenses drive up inflation, devaluing the dollar.
- Workers making minimum wage effectively make the same amount of money as before (income compared to expenses), and everyone else ends up making less money (as their wages remain the same but expenses rise.
What living wage supporters fail to recognize is that the root problem isn’t the structure of American laws but greed. Greed is the ugly side of capitalism. A controlled market (socialism) will ultimately fail or at best leave most people in poverty, as currently seen in Cuba and previously demonstrated in the Soviet Union. Capitalism solves this problem as it rewards those who work hard, but it also opens itself up to greed. CEOs and others at the top of the corporate food chain make six or seven figures while low-level employees scrape by.
Just over a century ago, Walter Rauschenbusch and others began a push to change the shift Christianity’s emphasis on individual sin to “social sins.” His was a push against social corruption, institutionalized evil, mob actions, and so forth. He saw the problem of evil as one not rooted in individual hearts but in “suprapersonal entities” – namely socio-economic and political entities. Specifically, he named four “major loci” of evil: militarism, individualism, capitalism and nationalism. Finding capitalism to be inherently evil and pushing for socialism as an alternative, he found the working conditions Americans faced to be deplorable and unacceptable. To better understand the time period about which he was writing, consider that Upton Sinclair published The Jungle in 1906; Rauschenbusch released Christianity and the Social Crisis in 1907. Rauschenbusch fought for changes to working conditions, including a fair minimum wage.
It’s honestly not fair to compare the conditions of 100 years ago with those of today, but it’s fair to assume Rauschenbusch would likely be pleased with progress that has been made but still dissatisfied with the “social evil” that still exists today.
I’m convinced that the push for a “living wage,” if successful, will end up creating more problems than it solves; raising minimum wage has a proven recent track record of ineffectiveness (although I’d be the first to agree that it was necessary during Rauschenbusch’s time). I’m also convinced that corporate greed is at an all-time high and something must be done. I don’t claim to have all the answers, and I’d be curious to hear your answers in the comments below.
What should be done to help those with low-income jobs? What is the Christian response to corporate greed? I’m excited to hear your answers.