MINIMUM WAGE

Written By Baily McDaniel

SHOULD CHRISTIANS ADVOCATE FOR AN INCREASED MINIMUM WAGE?

minimum wage graph

Key Facts

  • Theoretically, the tool shown above should work to set prices in that most important of markets, the one for human labor. [1]

  • Some countries have abolished minimum wage including Sweden, Denmark, Norway, Switzerland, Singapore, and Iceland. [2]

  • In the 21 countries with a minimum wage in the EU, the average country has an unemployment rate of 11.8%. Whereas, the average unemployment rate in the seven countries without mandated minimum wages is about one third lower — at 7.9%. [3]

  • In progressive countries lacking a minimum wage, the trade unions ensure that workers are paid a reasonable wage in many cases. [4]

  • 29 US states have set a higher minimum wage than the federal 7.25/hour. [5]

  • 47% of minimum wage workers are ages 16-24 years old. [6]

Key Scriptures

  • Colossians 4:1 “Masters, grant to your slaves justice and fairness, knowing that you too have a Master in heaven.”

  • Luke 3:14 “Some soldiers were questioning him, saying, “And what about us, what shall we do?” And he said to them, “Do not take money from anyone by force, or accuse anyone falsely, and be content with your wages.”

  • Leviticus 19:16 “You shall not go about as a slanderer among your people, and you are not to act against the life of your neighbor; I am the Lord.”

  • Romans 4:4 “Now to the one who works, his wages are not counted as a gift but as his due.”

  • Acts 20:35 “In all things I have shown you that by working hard in this way we must help the weak and remember the words of the Lord Jesus, how he himself said, 'It is more blessed to give than to receive.'”

man making coffee

Application

The Argument For a Higher Minimum Wage

Many have advocated a hike in minimum wage to 15 dollars an hour. Christians who advocate for a higher minimum wage do so on the basis of seeking justice and provision for those in need. The argument rests on the biblical truth that Christians ought to see the good of their neighbors and not attempt to make profit to their neighbor’s detriment (Proverbs 28:8). The case for a higher minimum wage finds its biblical root often in the teachings of Jesus to care for the poor (Matt. 25:40; Luke 3:11) as well as ensuring that workers are paid what they deserve (Luke 10:7). Some might even argue that the government has a moral responsibility to care for the needy and poor. A higher minimum wage, in their opinion, would give those working minimum wage jobs more opportunity to effectively care for their loved ones and meet basic needs. It is because of this reason that the higher minimum wage is often equated with a living wage. Those who advocate for a higher minimum wage believe that the government regulations on wages are a good way to ensure biblical principles are carried out in fairness.

 

The Argument Against a Higher Minimum Wage

Others are concerned that a significant hike in minimum wage will have negative repercussions. Those who do not want to raise the minimum wage have a desire to care for the needy and poor as well. However, they purport that raising the minimum wage will not accomplish this mutual goal and will, in many cases, hurt the poor. A minimum wage increase can hurt those with the least skills and the least valuable labor. As business owners seek to produce a livable profit margin, they must hire employees that are of significant value to the company. Forcibly raising the price of labor through an increased minimum wage effectively prevents individuals with few skills from getting low paying jobs where they can acquire experience that could lead to higher paying jobs later. Additionally, the biblical teachings assume a free market and flexible wages (Matt. 20:1-16). This means that Christians should use their financial freedom to care for the poor and pay their workers living wages. Those who disagree with raising the minimum wage argue that the free market gives more opportunity for Christian individuals to be more generous rather than more materialistic (Acts 20:35).

 

The Research

While there is much research surrounding this subject, the interpretation of that research is far from conclusive. Where one study from UC Berkeley suggests no change in jobs as a result of higher wages, UW Seattle research argues that there are jobs lost. How does this confusion happen?

While many of the researchers attempt to address the issue holistically, their approach may fail to account for a group or include persons in the study who are receiving more than the minimum wage. When the minimum wage is increased, both minimum wage workers and those who work for slightly more than minimum wage are affected. Failing to account for these effects in research gives only a partial picture of the results of a minimum wage hike. Additionally, the research is often biased and produces the conclusions one would expect for the political leanings of the institutions that fund them. However, from the research at UW Seattle, one can reasonably infer that the minimum wage hikes in Seattle likely caused job loss in mom and pop shops.[1] While this is concerning and may give credence to the argument against wage raises, it is far from the whole picture. This research did not account for any of the major chains that employ minimum wage workers in Seattle including McDonalds. Therefore, one should study the conclusions of the research while keeping in mind that there is still much to be learned.

If we assume the minimum wage as a given in society, then how do we find balance between the needs of workers and employers? Prevalent economic theory holds that the ideal place to set the minimum wage is at the equilibrium which produces the best salary for employer and employee (pictured in the diagram below). This equilibrium could theoretically be achieved through the process of the free market. However, this does not always produce ideal results. The minimum wage can function to regulate the market equilibrium. Alternatively, though, having the government impose a minimum wage carries its own risks. A significant hike in minimum wage above the equilibrium will result in inflation and underemployment. However, setting the minimum wage too low has the potential to result in underpayment of labor based on a variety of factors (ex. age). 

waitresses serving food

Biblical Approach

The Bible does not make exclusive claims about how to address the concern of raising the minimum wage. This is one issue in which Christians can disagree in good conscience. However, Christians can examine the situation with logic and reason to best follow the biblical command to care for the needy and poor. Some may argue that this is best achieved through free market interactions of private corporations and nonprofit organizations while others assert that the government is the best agent to enforce fair wages in alignment with the biblical teachings. Following diligent research concerning the effects of minimum wage hikes, Christians can use discernment and draw conclusions to address this concern.

Baily McDaniel
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