The just wage: who decides?

The Catechism of the Catholic Church calls a just wage “the legitimate fruit of work.” It sets out factors by which the fairness of a wage may be assessed. In determining a fair wage, the Church holds that the needs and the contributions of both employer and employee must be taken into account.

The Catechism teaches that wages “should guarantee man the opportunity to provide a dignified livelihood for himself and his family,” This is presented, however, as an ideal that must also take “into account the role and the productivity of each, the state of the business, and the common good.” CCC ¶ 2434.

Thus this “living wage” is constrained by realities that include the productivity of the employee and the ability of the employer to pay such a wage. Such a benchmark requires a case-by-case evaluation since every situation is different.

There is little use in consulting the scriptures on the subject of fair wages, for they deal mostly with fraud or the wrongful withholding of wages, which is not only immoral, but criminal by any standard. See Lev. 19:13; Deut. 24:14–15; Jas. 5:4.

The Catechism does not attempt to dictate whether this or that wage is morally just, but neither does it presume that a wage is just simply because the employer and employee agree to the wage. The question is two-fold: 1) is the wage just? and 2) who should be the judge of its fairness?

In the everyday world, if both parties agree to a wage, that is the end of it. What is left of the discussion mostly involves the government setting minimum wages for low-skilled workers. Doubtless, this provides higher incomes for some workers, excluding, of course, those who are terminated or have their hours cut back because employers can no longer afford to pay them. For these lowest skilled workers the minimum wage becomes a barrier between them and a job.

For argument’s sake, let us assume that some voluntarily agreed-upon wage is unfair. Perhaps other restaurants in the area pay their grill cooks a higher wage for the same work. While it may take a little time for this inequity to get sorted out, it will happen as soon as the cook figures out he can earn more at a competing business. No government intervention would be necessary.

Even if a wage is unjust and therefore immoral—and a quick fix is not just across the street—it does not follow that the remedy is government intervention. As in so many areas of morality, the Church is respectful of human freedom, all the while urging men to do what is right, but without the use of force.

As St. Pope John XXIII wrote in his Encyclical on Christianity and Social Progress, The power of the state over the economy “must never be exerted to the extent of depriving the individual citizen of his freedom of action. It must rather augment his freedom, while effectively guaranteeing the protection of everyone’s essential, personal rights.

Here is the thing: The best chance of reaching a fair wage would seem to be one agreed to by both parties who presumably know more about their respective needs than anyone else. How can a bunch of professional busybodies—in a legislature hundreds of miles away—possibly have a better handle on the terms of that agreement than the parties themselves?

It is difficult to see how any outsider to any wage agreement will have more insight to judge what is fair and just. Any outsider meddling reminds me of a courtroom judge whose conceit overpowers common sense and a proper humility.

An Unwise Judge

In a criminal case there are two parties: the state, represented by the prosecutor, and the defendant, represented by his own attorney. In most cases, they reach a settlement of the case without a trial. Each considers the evidence supporting their side and the likelihood of success and punishment. By the time they reach a plea agreement, each side has carefully weighed the issues, sometimes over a period of many months.

The deal is made and they appear before the judge. The agreement is announced. It typically involves a compromise regarding the charges, or the sentence, or both; and unless something seems dishonest or fraudulent, the judge accepts the plea and sentences the defendant according to the agreement. The judge will often accept a deal that is more harsh or more lenient than the sentence they would ordinarily give. It may not be a perfect solution, but the wise judge knows that the precious few minutes he spends with this case is dwarfed by the hours and months that the parties have invested to understand the issues and the evidence.

The foolish judge sweeps all of this aside and substitutes his own views and prejudices. His arrogance blinds him to the fact the parties to the case have far better reasons to believe that the agreement is fair. The foolish judge does not care, nor does he have to live with the result. He is pleased with his judgment, even if no one else is.

When it comes to the free market, the parties in a transaction, will do their best to reach an agreement regarding a fair wage (or price). There is no assurance that their agreement is perfect, but–absent coercion or fraud–it seems likely that neither they, nor society, will benefit from interference by the government.