Church officials weigh in on wage debate

A person who works full time and earns the federal minimum wage — $7.25 an hour — makes about $15,000 a year to support a family.

“If you look at it from the perspective of the worker, and that worker’s family and security, the minimum wage is increasingly difficult to sustain families at the lower end of the wage spectrum,” said Tom Mulloy, a policy adviser on the economy, housing, labor and welfare for the U.S. Conference of Catholic Bishops.

The issue is complicated, with various economic factors to consider, but the nation’s Catholic bishops have continually supported increases in the minimum wage to help poor working families support themselves.

U.S. bishops’ response

In a joint Jan. 8 letter to the U.S. Senate, Archbishop Thomas G. Wenski of Miami, chairman of the USCCB’s Committee on Domestic Justice and Human Development, and Father Larry Snyder, president of Catholic Charities USA, called upon the senators to advance policies that promote decent work and just wages.

“A full-year, full-time worker making the minimum wage does not make enough money to raise a child free from poverty,” they said.

President Barack Obama is now pushing for increasing the federal minimum wage to $10.10, which works out to a full-time worker earning about $21,000 a year. In his Jan. 28 State of the Union address, Obama called upon Congress to increase the federal minimum wage, saying that the wage’s value is about 20 percent less compared to when Ronald Reagan was president. Obama also said he would sign an executive order to increase the minimum wage for federal contractors.

While saying that raising the minimum wage is not a “silver bullet” to cure all the country’s economic woes, Mulloy told Our Sunday Visitor that increasing the wage “is certainly one of the appropriate steps that [lawmakers] can take.”

“In our discussion about economic issues, we can’t lose sight that the minimum wage doesn’t allow workers to live in dignity, have security or raise a family,” he said.

The Catholic intellectual tradition and the Church’s social teaching do not specifically say that a government has to set a minimum wage, or even how that wage is to be calculated. But in several papal encyclicals dating back to Pope Leo XIII’s Rerum Novarum(“Of New Things”) in 1891, the papal magisterium has taught that a worker is due a just wage that enables him or her to support a family in comfort and to save enough money to buy property and secure the family’s long-term financial stability.

The common good

Defrauding the worker, according to Catholic teaching, is one of the four sins that cry to heaven for vengeance. The Catechism of the Catholic Church links a just wage to the common good and says that an employer who refuses to pay or withholds a just wage commits a grave injustice. An agreement between the employer and worker by itself cannot morally justify a substandard wage.

“The wage rate is an essential part of the common good,” said Charles Clark, a professor of economics and a senior fellow at the Vincentian Center for Church and Society at St. John’s University in New York. Clark told OSV that the minimum wage “clearly needs to go up” because wages have been stagnant since the early 1980s and have not even kept pace with worker productivity.

“If we kept up with productivity, the minimum wage would be up around $20 an hour right now,” Clark said, adding that the bottom 70 to 80 percent of the nation’s workforce, taking into account inflation and the rise in cost of living, essentially make less money than what it did 30 years ago.

Prudential judgment

Archbishop Wenski
Archbishop Wenski

But the apparent stagnation in wages also coincides with more generous benefits for workers such as employer-provided unemployment insurance, workers compensation and health care coverage, said Father Robert Johansen, a priest of the Diocese of Kalamazoo, Mich., who writes frequently on topics of current affairs in light of Catholic teaching. Father Johansen told OSV that the decision to set a minimum wage is a prudential judgment.

“There is no Church teaching on what the minimum wage should be. Indeed, there is no Church teaching that dictates there must be a state-defined minimum wage,” he said, adding that Church teaching places the primary burden and moral responsibility on paying a just wage to the individual employer.

Just as the employer is obligated to pay a just wage, the worker also has the moral responsibility to be diligent, productive and responsible. Pope Paul VI, in his 1971 apostolic letter Octogesima Adveniens, warned against labor unions growing so powerful as to demand high wages and other conditions that would be too burdensome for employers and the overall economy to support.

“It seems to me in these debates that we have to balance the need of employees to earn a just wage with the ability of employers to pay whatever that wage may be and still be able to make a profit and remain an ongoing business,” said Father Johansen, who noted that Hostess Brands went bankrupt in 2012. The company blamed its bankruptcy on its employees’ union refusing to accept wage and benefit concessions.

Further complicating the picture is the fact that not every worker is the same in terms of their productivity, skill level and knowledge. For example, a 19-year-old person working a fast-food job or a 22-year-old graduate fresh out of college may not have the same claim for a higher wage as an older person who has a family and is more advanced in his or her career. Also, Father Johansen notes, basic economics calls for an increase in worker productivity to offset higher labor costs or else the employer has to find the money elsewhere — “robbing Peter to pay Paul” — or raise prices, which companies are loathe to do in the modern competitive global market.

“I think the whole conversation in the political sphere about the minimum wage is very simplistic,” Father Johansen said. “The conversation almost always boils down to, ‘Raising the minimum wage is good and not raising the minimum wage is bad.’ The problem in the real world is much more complicated.”

Economic impacts

However, observers point out that wages have not kept pace with productivity and inflation due to a variety of factors that include globalization and increased competition from market economies in Asia. The pressures to keep product prices low provide incentives for companies to offshore manufacturing jobs to countries with lower wage scales and production costs.

The result, according to the Economic Policy Institute, a nonpartisan think tank in Washington, D.C., is a widening growth in income inequality in the United States that leaves the economy less vibrant. The institute suggests that raising the minimum wage and incorporating a system of automatic increases to keep pace with inflation will help address income inequality and reverse the erosion of low-wage workers’ earnings.

Raising the federal minimum wage to $10.10 by 2016 would result in the nation’s gross domestic product increasing by about $22 billion, resulting in the creation of roughly 85,000 net new jobs, according to the institute.

“By increasing the minimum wage, the minimum wage workers will spend more money, and that creates more economic activity. More workers will then need to be hired, and the evidence is pretty clear on that,” Clark said.

Despite the macroeconomic debate, Mulloy, the economics and labor adviser for the USCCB, said the focus should remain on the plight of low-income workers struggling to support their families and live in dignity. “As popes and bishops have said, ‘The worker does not exist for the economy,’” Mulloy said. “The economy exists for the worker.”

Brian Fraga writes from Massachusetts.