The Living Wage: What is it? – pulled from old blog

The last of my old living wage articles, originally posted: October 30, 2007

A question that seems to come up frequently in living wage discussions is “What is the living wage?” This is sometimes used as a (poor) rhetorical device, tossed out desperately, as if to say the fabled concept is unknowable, and therefore not worthy of debate.

Or the question is sometimes used to suggest that the “living wage” being advocated has a meaning so rediculous (McMansions, SUV’s, a television in every pot) that those who propose it are some kind of bizzare breed that answers the question of, “What do you get when you cross a socialist busybody with a greedy materialist?”.

But it is also a question that can be asked sincerely, and deserves as sincere an answer.

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First some thoughts about poverty. I have seen the “what is poverty?” philosophy from the pen of people who elsewhere have proven they really do know poverty when they see it. And there, I saw two types of confusion. First, confusing relative poverty with absolute poverty. Secondly, confusing happiness, contentment, or even resignation, with adequacy.

I think the church teaching on the living wage deals primarily with absolute poverty, not relative poverty. It isn’t about whether a worker can only afford one coat in a society where the norm is to own half a dozen. It is primarily about making sure the worker can purchase the coat he needs.

As we have seen in previous posts, the living wage does not rest with paying “the market rate”. It follows that however much a worker may be willing offer his suffering joyfully, and find happiness in life even when deprived of basic needs, the church does not allow employers to therefore pay suffering-inducing wages.

Likewise, we cannot say the worker earns an adequate living merely because he earns as much as anyone in his position always has earned. If generations before him also shivered in the cold for lack of a coat, that does not mean we of this generation are excused from paying coat-wages.

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Because the living wage deals with specific, objective human needs, it is not all that difficult to make a good approximation of what constitutes a living wage. Let us look, for example, at what kind of housing a living wage ought to be able to purchase:

Adequate housing is the kind that keeps out dangerous animals and holds up to reasonably-expected weather conditions. It needn’t be flood-proof if it is built in an area that last flooded at the time of Noah; it needn’t have its own heat supply if located in a climate where the sun provides all the heat a family could want. But yes, in an earthquake zone, it ought to be built so as to not kill its inhabitants when the earthquakes come, nor to leave them homeless afterwards. There ought to be easy access to safe drinking water, and a means of safely disposing of human waste. And so forth.

The exact construction details are going to vary from place to place. But if you live or travel in that place (as you would, if you had employees there), you could figure this out fairly readily. If you needed to, you could rely on the ever-useful “what if it were me?” questions. “What kind of housing would I need, if I were one of my workers, and lived in this place?”

And once you know what it is your workers’ wages must pay for, the calculation may be tedious, but it is doable. It is not so difficult to find out what local rents are, and see what sort of housing those rents buy. The amount of rent (or mortgage payment) it takes to inhabit safe, decent housing, that is the amount a living wage needs to cover.

The calculation is the same for the other human needs. How much does it cost to purchase clothing? To buy nutritious foods? For safe transportation?

The living wage is, in this respect, terribly simple. Financial advisors are forever telling people to make a budget for personal expenses; the living wage is the bottom line of an adequate but frugal budget.

This is the kind of the thing the local Better Business Bureau could publish. An accounting firm – the same one that audits your financial statements, for example – easily has the skills to put together such an analysis. Chances are the workers in question have a fairly good idea themselves, too.

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I don’t say that living wage calculations are an exact science; people can reasonably disagree over the precise bottom line. Witness the wide variety of housing that Habitat for Humanity builds around the world. Some of that variation must represent a margin of error, or a range of disagreement, in calculating a living wage. (Or in habitat’s case, what a living wage would buy, if it were paid – Habitat’s clients are the working poor).

But Christianity isn’t a math test. I can’t imagine that on Judgment Day Jesus is going to turn to one business owner and say, “You paid your workers too much! Who needs sneakers when sandals will do?!” and to another, “You paid too little! Anyone born after 1970 was supposed to have air-conditioning!”

On the other hand, it isn’t unreasonable to fear hearing our Savior ask, “What part of ‘the children shouldn’t have to play in untreated sewage’ didn’t you understand?”

The essential thing is that we make the effort required, and make it in good faith. And then that we carry it out. Better to be off by 5%, but to pay the wage, than to not bother in the first place for fear of an honest error.

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This moral burden falls first of all to business owners and managers. In a lesser it way, consumers, too, need to do what they can to support the living wage. The government’s part is to put into place those “structures of justice” that support, rather than undermine, this moral imperative.

Asking “What exactly is a living wage?” is a legitimate question, for those who mean to find, and live out, the answer. A good catholic can have doubts about what role minimum-wage laws should play in it all, or agree to disagree about what sort of meals a worker ought to be able to afford. But the question ought not be used as an excuse for rejecting the moral teaching the church. Rather, because the question can be answered, it behooves us to see it answered and implemented.

The Living Wage: Is something better than nothing? – from my old blog

2nd in the series, again just for background. Originally posted august 18, 2007:

A common justification for not paying workers a living wage goes something like this: “If I didn’t hire these people, they would be unemployed. It is better for them to have something, even if it is not an ideal wage, than to have nothing at all.”

I didn’t see any treatment of the “something is better than nothing” argument in the Catechism; the Church is emphatic about the need to pay workers a living wage. The Catechism does list several factors that employers must take into account when setting wages, and one of those is the “state of the business” (CCC 2434).

There are situations in which the state of the business might not allow employers to pay a living wage. Imagine, for example, if our family farm (previous post) were to suffer a dust bowl or a depression. The farm operates at a loss; even the owners are living on less than they need. Certainly in that scenario, the owners are not guilty of any injustice if they are unable to pay their workers a living wage — they cannot pay themselves a living wage!

But one cannot use the “state of the business” clause to justify paying inadequate wages under “business as usual” conditions. When the farm recovers from this temporary calamity, or the various workers find some other more profitable line of work, it is understood that the return to normalcy includes all workers earning a living wage.

This is a radical way of thinking for corporate America (and corporate elsewhere), where the market price is considered the acceptable wage under all conditions. There are many firms today which are reporting profits to shareholders, and paying sizable salaries to management, but which are not paying all workers a living wage.

The church tells us this is not acceptable. To say that a company which acts this way is “building the economies of the developing world” would be like saying that a parent who indulges himself while feeding his child concentration-camp rations is “helping his child grow”.

I think the Church is asking us to do something that is both radically big and very very small.

To pay a living wage, even if that wage is higher than the going market rate, is a big change. It costs. It means a company cannot rely on the investment capital of those whose idea of “normal” is to pay workers as little as possible in order to maximize profits, no matter how little those wages are. It likely means owners and managers must sacrifice some of their own salary in order to ensure all workers can earn a living.

On the other hand, making sure your workers can have food and shelter and clothing — how much is that too ask? Would you consider it unreasonable to ask your own employer for enough of a salary to provide for your basic needs? The moral mandate of the living wage boils down to common decency.

Under normal business conditions, the “something is better than nothing” argument is deceitful and cruel. It is an excuse to take advantage of other people’s vulnerability and poor bargaining power, in order to grow rich at their expense. Is it hard to pay a living wage? In a time and a place when the wider culture says it is normal not to pay one, yes, it is hard to go against that practice. But it isn’t meant to be. The living wage ought to be business-as-usual.

The Living Wage: An example to illustrate the concept – from my old blog

Originally posted on my old blog, August 8, 2007:

I find it easier to understand economic (and accounting) concepts by beginning with small — though realistic — scenarios. So here I am opening with a possible living wage scenario, but an intentionally uncomplicated one.

Also, I am at this time making no prescriptions. So nobody get huffy and tell me that I don’t understand the implications of minimum wage laws or what is wrong with our welfare system or any of that. If you must know, my personal opinion is that the living wage issue is far more pressing in certain other countries than it is in the United States. We have social justice problems here, of that I am sure. But primarily they are, in my opinion, of a somewhat different (though related) type.

But today, living wage. And just an introduction to what it seems to be about. That’s all. If it isn’t helpful, other people might have something more useful to you elsewhere.

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Imagine you own a farm. Some of your produce directly feeds your family, and then you sell your excess crops to purchase those things you don’t make yourself. In addition to yourself and your family members, you employ some hired hands to assist you in the work. It’s going well — you and your family have all that you need and enjoy a few extras as well. You consider yourself a successful farmer.

Now one of your hired hands is a guy named Bob, and he’s an ordinary local guy, a good enough worker. He does work that you need done around the farm — if Bob didn’t do it, someone else would have to do it instead. Bob works hours that everyone agrees are “full time”.

You pay Bob the going wage. You comply with all the relevant laws regarding his employment. Bob is happy — even grateful– to have the job you give him, for the pay you offer. Part of your view of the success of the farm is having good workers like Bob who are happy to work for you.

Now imagine that Bob, who does all that you expect of him, and who earns a wage that everyone agrees is fair, does not make enough money. The wage you pay him is not enough to pay for Bob’s basic needs. We aren’t saying “Bob can’t afford an MP3 player” or “Bob can’t eat steaks every week”. Bob’s wages force him to choose between, say, owning a pair of socks, or having a bowl of beans and rice for dinner — he can have one or the other, but not both. If he manages to have both, it is by the charity of others.

Furthermore, it is not some extraordinary personal expense that is causing this problem. His counterparts on the other local farms all share his plight. As a result they, like Bob, suffer physical loss — the toll of inadequate nutrition, shelter, clothing, and so forth. Some kind of aid program is required in order to supplement the farm workers’ wages so that their basic needs are met.

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The essence of the catholic social teaching on the living wage is this: You, the farm owner, cannot count yourself as sucessful, if your success depends on someone else’s deprivation.

CCC 2427: “The development of economic activity and growth in production are meant to provide for the needs of human beings”. An economic activity which is pursued without meeting that end simply is not a successful economic activity.

CCC 2434: “Agreement between the parties is not sufficient to justify morally the amount to be received in wages.” The fact that Bob, and his counterparts elsewhere, agree to the wage, does not mean that you, the farm owner are on solid moral ground.

This doesn’t mean you have to run the farm at a loss. CCC 2432: “Those responsible for business enterprises . . . have an obligation to consider the good of persons and not only the increase of profits. Profits are necessary, however. They make possible the investments that ensure the future of a business and they guarantee employment.”

But what it does mean is that you the owner are wrong to be taking home profits for your own consumption, above and beyond your own legitimate needs, if it means leaving your workers to go without basic necessities as a result.

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Catholic social teaching is, therefore, radically different than the going assumption in the wider culture, that if it’s legal and mutually consented to, it is acceptable.

The reality is that inadequate wages cause physical harm. Poor nutrition, exposure to the elements, unclean water supplies, all these things lead to disease and death. So if your profit model depends on some of your workers not being able to afford the essentials of life, your profit model depends on literally harming another person. That’s wrong. Even if your workers live far away, and are used to this suffering, and everyone else in their city suffers the same and always has — no, you may not profit off their willingness to suffer.

And I think that’s about the heart of it.