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October 2004 Just Say No: Why Christians should oppose the minimum wage |
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 by James Sherk | email | print version |
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| What
is a fair day's wage? Many Christians, looking at the working poor,
at people who work hard at a full time job but are still below the
poverty line, conclude that employers are exploiting these workers.
Looking to the Bible they find verses like Deuteronomy 24:14-15 in
which the Lord tells the Israelites that they "shall not oppress
a hired servant who is poor and needy, whether he is one of your countrymen
or one of your aliens who is in your land in your towns. You shall
give him his wages on his day before the sun sets." Again the
Lord warns "I will draw near to you for judgment; and I will
be a swift witness against … those who oppress the wage earner
in his wages …" (Malachi 3:5). Seeing a Biblical command
to avoid oppressing wage earners, many Christians conclude that the
government should force employers to pay their workers more by raising
the minimum wage. Other Christians go even farther and support "living
wage" requirements, requiring employers to pay a wage that lifts
full time workers above the Federal poverty level for a family of
four, usually requiring raising the minimum wage to between $9 and
$12 an hour.
Christians who support raising the minimum wage or imposing living wage requirements do so because they believe that this will help the working poor. While it is clear that God instructs his servants to willingly help the poor, nothing in the New Testament suggests that this Christian duty can or should be written into the law. There are good reasons not to pass such laws. Unlike charitable donations, government regulations have unavoidable side effects on the economy. Christians truly concerned with helping the poor should oppose minimum wage laws, not attempt to increase them.
Take the example of a restaurant owner considering hiring someone to help the cook prepare the meals each night. Jim applies for the position, but has no prior job experience. The restaurant owner knows that hiring an inexperienced employee like Jim will increase her profits by $6 an hour. The owner will be willing to pay Jim any wage up to $6 an hour, since at those wages she still earns more money by hiring Jim than by not hiring him. If Jim is willing to work for less than $6 an hour the owner will hire him, he will have a job, her restaurant will earn more money, and they will both be better off. If, however, the state has living wage regulations that force the owner to pay her workers at least $10 an hour, she will never offer Jim a job. Hiring Jim would mean she would have to pay him $10 each hour he worked when his labor had only increased revenue by $6. Despite Jim's willingness to work hard, the owner would still lose $4 an hour by hiring him, and thus she will not offer him a job at those wages. The example of the restaurant owner may seem trivial but it illustrates a fundamental economic truth: companies will not pay their employees more than they are worth. Government regulations that force businesses to pay workers a minimum wage guarantee that no company will hire anyone whose does not increase revenue by at least the minimum wage. Instead, the companies find other ways to get the jobs done. In some cases they hire more skilled and productive workers (4). In others they purchase machines to do the work instead. Or they might outsource the labor to overseas workers who aren't covered by minimum wage laws. At other times they reduce benefits like health coverage that aren't counted towards minimum wage requirements. Other companies simply cut back and make do with fewer workers. In no case, however, will businesses hire additional workers if it means losing money. Raising the minimum wage inevitably means raising unemployment. The belief that raising the minimum wage reduces employment is more than an economic theory - it is a fact. Over 80 economic studies have shown that increases in the minimum wage result in fewer jobs (5). Economic studies further demonstrate that, on average, a ten percent increase in wages causes employment among workers earning those wages to drop by five percent (6). Sen. Kerry's proposal to raise the federal minimum wage to $7.00 from the current $5.15, a 36 percent increase, would cause 18 percent of current minimum wage workers to lose their jobs. Forcing companies to pay a living wage of $10.30 an hour would only allow half of all current minimum wage workers to live off of it. The other half would lose their jobs. The Minimum Wage Stops the Poor From Gaining Work Experience
Additionally, the government spends tens of billions of dollars each year to help the lower income Americans who are poor. The Earned Income Tax Credit program provides virtually every minimum wage earner in a poor household with substantial cash rebates. President Bush has passed a $1,000 a child refundable tax credit, which means that for each child in their family, impoverished parents who don't earn enough to pay income taxes will still receive $1,000 in cash refunds from the government (9). The government spends hundreds of billions of dollars more each year to provide poor Americans with subsidized food, housing, and health care. It makes little sense to support living wage laws, which destroy hundreds of thousands of jobs and only indirectly help poor families, when programs like these directly benefit the poor without increasing unemployment.
Sen. Kerry and Christians who support higher minimum wage or living
wage laws want to help the poor earn more, not throw them out of
work. But good intentions are not enough. In the words of James,
"If a brother or sister is without clothing and in need of
daily food, and one of you says to them, 'Go in peace, be warmed
and be filled,' and yet you do not give them what is necessary for
their body, what use is that"(11)? Similarly,
Christians should not support policies intended to help the poor
if they actually make the poor worse off. The poor do not need a
legislated minimum wage because workers already earn substantial
raises as they gain experience. The poor do not receive most of
the benefits from raising the minimum wage - the middle class families
with at least one family member working a minimum wage job do. But
the poor are the ones who suffer the most when the minimum wage
destroys jobs. And the poor are the very people who most desperately
need the entry-level jobs that the minimum wage eliminates. Christians
who want to help the poor should look beyond their intentions to
the actual effects of their actions, and oppose minimum wage and
living wage regulations.
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