The Ontario government recently announced that it is planning to increase the minimum wage to $11.00 per hour from the current $10.25. Not surprisingly, this move has attracted criticism from both sides.
On the one side are those opposed to any minimum wage. Philosophically, they argue that government meddling distorts the market and falsely increases costs. Higher wages make it more difficult for smaller companies and companies in industries that work on tight margins and use more lower-wage earners (restaurants, hotels, retailers) to make money. This results in having to let go of employees or scaling back their hours. This consequence most often hits the least qualified and lowest paid workers, whom the increase is meant to help. Finally, as some 56% of minimum-wage earners are teenagers living at home, the positive effects will be muted.
On the other side are those who argue that a reasonable minimum wage is fair and necessary. It raises families above the poverty line and is good for the economy, as families with sufficient income do not need to look to the state to provide assistance. There are some that think it should be higher and others (or possibly the same people) who see this as an opportunity to redistribute wealth from the rich to poor.
I was previously opposed to any minimum wage in favor of free markets. Move recently however, I have been shifting my opinion away from that extreme position, in favour of a more central position. The has been prompted by a move from an exclusively objective valuation of work to a more subjective valuation. Proponents of free markets normally default to the objective value of work, which calculates the value of a worker based on the value of their output or the ‘object’ of their work. It doesn’t take the worker into consideration as much as it is concerned about the competitiveness of the product or service in the market. The idea of a minimum wage however, is based on the subjective value, which values the one who is doing or the ‘subject’ of the work. Proponents are more concerned with how much money workers make and whether this is ‘fair’ or enough to live on. This pushes against the free market argument, as the amount a worker needs to live may not directly correlate with how much the market is willing to pay for the product or service they produce.
My change in attitude has come from a push and a pull. In the first place, I am much less confident in the market to act as freely and efficiently as we theoretically hope it would. Distortions in the market can have a major effect on how we value the different aspects of a business. Taxes, crony capitalism, subsidies, international trade policies and other factors affect the price at which a product or service trades in the market. In some cases this unjustifiably increases the value of the output and in other cases, it under-values it.
On the other hand, I have come to a greater appreciation for the subjective value of work. I have recently been studying the Papal social encyclicals from 1891 to the present day. One the main themes that runs through these encyclicals is the ‘dignity of man’. Men and women have value because they bear the image of God and not necessarily because of what he or she does or produces. As Christians, we are called to love our neighbour and an integral part of this is to recognize the value they have as God’s creation. As I ponder this, I have become increasingly convicted that, while we can use the market to gauge value in some ways, we need to prioritize people over things. I have therefore, also become increasingly convinced by the argument for what is called a ‘living wage’. Someone working 40-50 hours a week should be able to make enough money to take care of themselves and their family. I am not advocating giving them a life of leisure, but enough to survive.
The counter-argument, is that nobody is forcing lower-wage workers to take the jobs that are being offered. But is that true? Low-wage earners are often not in a position to pick and choose jobs. A reasonable worker with real freedom of choice would not choose a wage below that which is required for they and their family to live. But if the worker does not have qualifications for higher paying jobs and/or they have little if any money saved (both of which I recognize as possibly being their own fault), they are forced by circumstances to take positions that they would not do otherwise. This is not to say that an employer is forcing them, but often they are willing to take advantage of the situation.
An employer does this for one of two reasons, they want to pocket the extra money or they cannot run the company profitably without lower costs. In the first case, an employer who is making money, but simply wants to take advantage of their employees to put more money in their own pockets is putting money over people. On the other hand, an employer who can only make profits if they use below-value inputs (employees, raw materials, etc.) is operating under the false pretence that they are actually successful. Most of us would not consider a company that needs to steal all of its raw materials in order to make money as being successful. Should we consider one that exploits their inputs as if they were?
I think we need to be more concerned with people than things and money and therefore, I believe the minimum wage is a good and justice practice. Whether it is the right amount is another question. The increase in the minimum wage in Ontario is based on the inflation rate using the minimum wage in 2010 as a benchmark. I would like to see more support for that figure as an appropriate benchmark to determine whether $11.00 is the right amount to qualify as a living wage in Ontario.
