Economics for Church Leaders: How Minimum-Wage Laws Affect the Poor

"Because both sides have noble intentions, the merits of the debate on minimum-wage laws and minimum-wage increases should be judged by Christians on empirical evidence that it will help, rather than harm, the poor." - TGC

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josh p's picture

Pretty good article. However, it was pretty sparse on the effect of minimum wage increases on inflation. Particularly how the raise itself takes money out of the pocket of those it’s supposed to help.

On Matthew 20, I think it’s pretty obvious that the parable is not an economics lesson. Nevertheless, it’s hard to read it any other way than that Christ is arguing from the right of the man to pay what he wants. The parable doesn’t make any sense if that is not the case. How would the parable work if it was possibly wrong for the man to pay different wages? I commend the author for being careful to assert only the main point of the parable but in this case the point of the parable hinges on a particular interpretation of verse 15.

Bert Perry's picture

Yes, I confess my views of economics are closest to the Austrian school, and there's a fact of life that ought to be presented; no matter what the government does, the real minimum wage is zero.  If anyone's productivity is perceived to be less than the legal minimum wage, they will earn the real minimum wage.

Regarding those whose labor is worth more than the legal minimum wage, there is the real issue that sometimes employers will use "market power" to pay less than a truly free market would pay--and the best remedy for that is not an increased legal minimum wage, but rather to make sure government policy does not favor large employers that get market power.

In short, the exact opposite of what both major parties, but especially that of equus asinus, have been doing for decades.

Aspiring to be a stick in the mud.

josh p's picture

In a way we really lost something with the minimum wage and (WARNING: UNPOPULAR OPINION) child labor laws. If it’s cheap to pay a young person to work, they can learn a lot before entering the adult work force. At my last job I trained dozens of 20-25 year olds. It was astonishing how little they knew about how to work. I’m not thinking here of work ethic (although that was sometimes true) as much as “how do I make my body do this quicker”.

Bert Perry's picture

I actually get frustrated with how difficult it is to get my own children going on work, but when they get outside the house and work with others, most adults are impressed with how well they can work.  So I agree with Josh's comments about many young people simply not having the pattern of working down.

Child labor?  Dunno about that, but it would help if more parents had their children mow the lawn, do laundry, cook, and wash the dishes.

Aspiring to be a stick in the mud.

josh p's picture

Haha my parents always said that about me. I complained about doing chores but then started a lawn care/tree service business and worked like an animal. Incentives are good.

JD Miller's picture

I love the comments on children learning to work.  I grew up on a farm, so I had a lot of opportunity to learn to work.  I am self employed so there are times that my boys are able to come along and learn basic work skills.  They also do most of the dishes and laundry at home as well as a lot of the cooking (we don't have any girls, but even if we did, our boys would still be expected to help). 

They do not get paid for the work they do at home, so when they work for others, no matter how much they are paid, they are suddenly very motivated.  There is something to be said about motivation as well.  For example, my oldest came along to Menards the other day and helped me load lumber, so we stopped at the Burger King drive through for ice cream on the way home.  Another time all 3 of the older boys helped me out in the field so I took them to an all you can eat buffet.  Further, when the lawn mower for their mowing business quit working, I bought them a new one because they had helped me in the field.   

You could say that my boy's work opportunities with me have already given them privilege for their future.  It even got them a new push lawn mower for their own business.  A lot of kids do not have the opportunities that I or my boys had.  Even if new workers were never expected to do any chores at home, they can still learn once they get their first jobs.  I want all people in this country to be able to get their first jobs and to learn, even if they don't know how to do the job or even know how to show up on time.  We all have to start somewhere.  Grace is about giving someone a chance.  A reasonable minimum wage gives an economic incentive to give people a chance.