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Is the Minimum Wage a Living Wage?

Employers paying $7.25 an hour might satisfy legal requirements, but does it account for what God actually requires from us?

The minimum wage debate in the United States is laden with emotion. Want to enliven a cocktail party or  Zoom meeting? Ask participants where they stand on the $15 mandated hourly rate. It is into this fray—and the larger living wage conversation—that Christians can model charity and provide biblical counsel. A first step toward wisdom is understanding critical terms and context.

Defining Terms and Historical Context

Minimum wage, currently $7.25 an hour as established by the U.S. federal government, is the floor pay level required by law. This minimum falls below a living wage, understood as the pay level sufficient for a wage earner to meet basic life needs such as housing, food, medical care, transportation, childcare, clothing, insurance, and household expenses without dependence on government assistance. A justified or equitable wage reflects a pay level commensurate with market dynamics, education, experience, and larger issues of supply and demand. And finally, a sustainable wage—shifting from focus on the worker to the firm—is the pay level necessary for the ongoing economic health of an organization.

The Fair Labor Standards Act of 1938 first created the right to a minimum wage. Today, minimum wage in the U.S. has gone unaltered for nearly 12 years, representing the longest stretch of no-change since the law was enacted. This is a problem, and the reason the debate has intensified, leading to the Raise the Wage Act of 2021, which sought to increase minimum wage to $15 an hour over five years. Introduced by Congress in January as part of the $1.9 trillion COVID-19 relief bill, the Senate parliamentarian blocked its inclusion due to a decades-long budget reconciliation rule related to quick-moving legislation and congressional voting procedures.

A Case for Raising the Minimum Wage

Proponents make several strong points:

  • Belief that a $15 rate will reduce poverty in the United States. According to a study by the progressive Economic Policy Institute, a gradual increase to $15 an hour by 2025 would provide pay raises for 32 million Americans. The more conservative, nonpartisan Congressional Budget Office’s research shows raising the minimum wage to $15 over five years would increase pay for 17 million people, pulling 900,000 out of poverty, including 600,000 children.
  • Downstream advantages to raising the minimum wage would follow. More livable pay standards increase employee morale and engagement, leading to higher productivity and customer satisfaction, as well as lower turnover. When low-wage earners benefit, the argument goes, all benefit.
  • Impact of the increased rate for closing racial disparities. According to the Economic Policy Institute, a $15 minimum wage would provide 31 percent of African Americans and 26 percent of Latinos with wage increases.

A Case Against Raising the Minimum Wage

Opponents offer the following cautions:

  • A uniform minimum wage is hard to apply. Using the MIT Living Wage Calculator, compare a living wage of $12.21 an hour for a single adult in Todd County, South Dakota to $28 an hour for one in San Francisco County, California.  
  • Raising the minimum wage to $15 an hour will force employers to transfer costs to customers through more expensive goods and services. As a result, those being paid a new $15 minimum wage are no better off in the long-term.
  • A higher minimum wage will price younger and less experienced workers out of the labor market; employers would seek more qualified candidates, weakening opportunities for less experienced candidates to find jobs.
  • Small businesses—already reeling from COVID—will suffer disproportionately compared to big businesses who can more readily absorb higher wage costs.
  • When forced with wage increases, businesses will increasingly turn to automation, eliminating some jobs.
  • Minimum-wage jobs are intended to be temporary—a landing place for new entrants to the labor market. By artificially inflating entry-level wages, the government creates unhelpful incentives for employees to stay in entry-level jobs rather than develop skills and experiences that the market will reward with higher wages.

Biblical Rationale

Regardless of the federal minimum wage level, the Christian mandate is more demanding. How might leaders of faith think biblically about entry-level hourly pay? Matthew 20:1-16 offers a foundation in the parable of the vineyard workers. The landowner instructs his foreman to pay each laborer—no matter their start time—a full daily wage. Although the passage is to be interpreted at multiple levels, its economic implications should not be overlooked. The employer is compelled to pay each worker a living wage.

Matthew 25:31-46 chronicles Jesus’ teaching about his second coming, a time when the righteous and compassionate “sheep” will be separated from the unrighteous and miserly “goats” based on how they attend to “the least of these.” The implications could not be greater; how we treat those in need reflects our treatment of Jesus himself. Our actions have salvific ramifications.

Old Testament Sabbath laws are enlightening. As God rests from creative work (Gen 2:3) and instructs humanity to do the same, he sets limits to our image-bearing capacities (Ex 20:8-11; Deut 5:12-14). Our creative outputs carry purpose, but also have boundaries. As author Jeff Van Duzer observes, any employer who uses up a worker’s productive potential at levels that do not yield enough for them to live on threatens that person’s image-bearing capacity. Theologian Michael Naughton adds, “a wage that fails to meet the needs of an employee (in particular, a full-time adult) is a wage that will struggle to carry the weight of a real relationship.” Extracting energy from a person’s most productive hours without paying a livable wage is dehumanizing, goat-like behavior.

Old Testament land stewardship laws are also instructive. Ancient lands—representative of assets and profits today—were to be superintended to benefit the economically and socially marginalized. Through the practice of gleaning (Lev 19:10, 23:22), a farmer was expected to set aside part of his harvest for the orphan, widow, and “resident alien.” Failing to do so violated God’s covenant. Refusing to pay an employee a living wage when otherwise able to do so is like harvesting a field to its outermost edges, leaving nothing for anyone but yourself.

Principles to Manage Real-Life Tensions

Anyone who has managed a business recognizes that difficult tensions are always in play: balancing basic wage needs of employees; recognizing varied contribution levels of workers and the differentiated pay that should result; and stewarding the economic health of the organization.

However, the gaps among minimum, living, and sustainable wages can prompt organizational creativity and innovation. The Catholic theological principle of subsidiarity might challenge a company to push responsibility to the lowest possible level, such as the production line of a manufacturing firm or the service team at a call center. By solving problems at the grassroots level, efficiencies might be gained that outweigh costs of outside or centralized solutions, allowing a company to redirect savings into higher hourly pay rates. 

Another creative solution for Christian managers might be what Chi-Ming Chien, Principal and Cofounder of Dayspring Technologies, calls the Isaiah 40 Curve. John the Baptist in Luke 3:5, announcing the kingdom of God, quotes Isaiah 40:4, “Every valley shall be filled in, every mountain and hill made low.” Dayspring has implemented this Curve Principle by intentionally boosting lower-level pay rates and tempering higher-level salaries. Lest we err to think of these words in only prophetic terms, John the Baptist immediately follows his pronouncement with tangible examples of economic generosity and restraint: Anyone with two shirts should share, don’t collect more taxes than required, and don’t extort money.

Solutions to the minimum/living wage rate are not straightforward. Social, political, and economic forces interact. While there are pros and cons on both sides, one thing is certain: Christians are to develop and maintain a posture of generosity toward others. Paying $7.25 an hour might satisfy your legal requirements, but does it account for what God actually requires from you?

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