Minimum Wage and God’s Law

The Federal Minimum Wage (FMW) is usually not thought of as a mechanism that oppresses the poor. Taking its intended purpose at face value (i.e. help low-skilled workers earn more income) would lead us to think the exact opposite. But that is exactly what the minimum wage accomplishes. It is a man made law that oppresses the poor by cutting off low-skilled workers from getting an entry-level job. In essence, a minimum wage is a price floor intended to regulate how low hourly workers are allowed to sell their labor. President Franklin Roosevelt’s Fair Labor Standards Act of 1939 first set the FMW at twenty-five cents per hour, has currently climbed to $7.25 per hour, and the most recent push by the 2020 Biden campaign is $15 an hour.[1] At this point God’s law and man’s are at odds. God’s word teaches that all men were endowed with the right to work (Gen 1:28) and receive payment for the labor they do for others (Lev 19:13; Deut 24:15; Matt 10:10; Luke 10:7; 1 Tim 5:18). Any man made law that prohibits two individuals from making a mutual agreement in trading labor for wages is unjust and has negative consequences.    

PRICE OF LABOR IS NOT REGULATED UNDER GOD’S LAW

God has commanded not to add or subtract from his word, in order that his laws may be kept (Deut 4:2; 12:32). Applying this principle to civil government, we can deduce that whatever functions God has mandated governments with are restricted to only what is revealed in His word. State legislatures do not have permission from God to make up any laws they want and expect God to approve of them. Nowhere in Scripture do we see God ever command the state to regulate the price of labor. Therefore, minimum wage laws should not exist. To establish such a law would be to disobey God’s command not to add to his word. 

Paul reaffirms God’s specific blue-print for the function of civil governments in the book of Romans; limiting their responsibility to “an avenger who carries out God’s wrath on the wrongdoer” (13:4). Carrying out God’s justice on criminal behavior is the sole responsibility of civil rulers—not welfare/healthcare, not disaster relief, not economic planning, not education, and certainly not regulating the price of labor. States have an inclination to step into areas of life where they are not authorized by God to do so. Case in point—the  price of labor.

MINIMUM WAGE IS IN OPPOSITION TO PROPERTY RIGHTS

Not only are minimum wage laws unauthorized in God’s word, they are in head-on collision with the property rights that are established and protected by God’s law. This is because individual’s own their labor. The moral basis for property rights is found in the biblical teaching that God, first and foremost, owns everything (Deut 10:14; Psa 24:1) and as creatures who bear His image, we also own things, according to what He has delegated to us as personal property (Gen 1:26-28). Put plainly, if God says we own something… we own it! No one can say that what God has given to someone isn’t really theirs. Those who act upon this disagreement by taking ownership away from others commits what God calls “THEFT,” hence the commandment, “Thou shalt not steal” (Exo 20:15).

The minimum wage law is, in essence, theft by taking away full control over the business owner’s money and the worker’s labor. It ultimately says to the business owner, “you do not have full ownership of your money, nor the freedom to trade it at any rate you wish for labor.” Similarly, it says to the worker, “you do not have full ownership of your labor, and you are not allowed to sell it for any rate you agree to, but only at a minimum price that we determined for you.” Even if both parties agree to an hourly rate for work that is less than what the minimum wage law requires, Federal law prohibits both parties from carrying through with their agreement. If one does not have full control over what is rightfully theirs then they don’t really own it at all, thus, two things are being robbed by the minimum wage law: the employer’s right to their money and the employee’s right to their labor. 

Minimum wage is a concept devised from a place of covetousness, envy, and greed. A fitting illustration of this is found in the twentieth chapter of Matthew where Jesus tells a parable about a landowner who, one morning, employs workers to cultivate his vineyard. He initially hires a crew to work for a whole day in his field for a denarius (approximately one day’s wage). As the land owner went out around nine a.m., he found others to work in his vineyard and promised to pay them a fair wage. He does the same with others at noon, three o’ clock, and five o’ clock. Finally, when evening came he called everyone whom he had hired to work in his vineyard to receive their wages beginning with the last hired to the first. Each worker received a denarius and was satisfied with their pay, but when it was the first crew’s turn to be paid, they expected more money because they had worked harder and longer than everyone else. They began to complain and grumbled to the landowner. His response to their grievance is profound:

Friend, I am doing you no wrong. Did you not agree with me for a denarius? Take what is yours and go your way. I wish to give to this last man the same as to you. Is it not lawful for me to do what I wish with my own things? Or is your eye evil because I am good? (Matt 20:13-15, emphasis added).

On what basis is the landowner defending his action? – on the righteous law-word of God. Under God’s precepts, the landowner was free to do with his money as he pleased. He could have given as much or as little as he wanted in exchange for labor, provided the worker agrees to the price. For this reason, the landowner could unashamedly ask the rhetorical question: “Is it not lawful for me to do what I wish with my own things?” 

This is exactly what Peter told Ananias and Sapphira (Acts 5:4). This couple lied about the proportion of money they gave from the land that they sold, and part of Peter’s grievance with what they did was the fact that private ownership of their land and money left the dishonest couple with no excuse to lie to the Holy Spirit and to God. Their lie was absurd to Peter for the reason that they were free to give as much or as little as they wanted because they owned their land, and after they sold it, were free to distribute the proceeds as they wished. 

Proper exegesis requires that we acknowledge that the parable of the workers in the vineyard is, first and foremost, teaching that God has freedom to bestow grace among the workers of His kingdom however He pleases. But parables (or parabolē – a placing of one thing by the side of another) contain deep and spiritual truths that are to be understood alongside earthly principles. The earthly principle in this story is that the landowner had the right (according to God’s law) to give generously with his own money as he pleased, much like how God freely distributes His grace.

NEGATIVE CONSEQUENCES OF THE MINIMUM WAGE

Like all of God’s commands, societies face serious consequences for breaking them. When the minimum wage is raised significantly enough, the employer is usually faced with a toss up decision between an increase in either price or unemployment. Since many firms have razor sharp profit margins, employers are inclined to raise the price of the goods or services they provide in order to make up for the extra amount of money they have to pay their employees. This usually doesn’t work out for the firm because the higher prices turn away previous customers and the firm ends up reducing output in order to avoid a surplus. 

The other route the employers are more likely to take is to lay-off some of their employees because they can’t afford to pay the new minimum wage. This increases unemployment and locks out low-skilled workers from ever getting a job. If the minimum wage is increased high enough, both employers and workers might feel the only way they can make ends meet is to break the law and agree on a wage that is below the federal minimum wage, creating an illegal black market for hourly workers. 

Sometimes large firms use the minimum wage as a way to drive out their smaller competitors. Knowing that small “mom and pop” shops can’t afford to raise their worker’s wages, firms who already pay their employees much higher will lobby for a minimum wage increase so that their smaller competitors will have to close up shop and lay-off their employees. 

For a policy that intends to help low-skilled workers only results in higher prices, unemployment, criminalizing voluntary labor, and crony capitalism. So much for the idea that minimum wage helps the poor.

COUNTER ARGUMENTS FROM THE OTHER SIDE

When these issues are brought up, we often hear progressives respond with the argument, “Well, if we didn’t have a minimum wage, employers would lower their workers’ pay to slave earnings.” But if we look back in history before the minimum wage, we see that this claim is simply not true. In order to hire and keep reliable workers, entrepreneurs during the industrial revolution paid their employees well in order to avoid employee turnover, which is more costly. John D. Rockefeller is a good example of offering fair wages as Thomas J. DiLorenzo describes in his book How Capitalism Saved America. He says,

Rockefeller was extremely generous with his employees, usually paying them significantly more than the competition did. Consequently, he was rarely slowed down by strikes or labor disputes. He also believed in rewarding his most innovative managers with bonuses and paid time off if they came up with good ideas for productivity improvements, a simple lesson that many modern corporations seem never to have learned.[2]

Another argument we might hear is, “Studies show that increases in the minimum wage does not raise unemployment by much” (notice the admission— “by much”). This claim is true, however, it is very misleading. You can bet that the studies they cite do not take into account the local cost of living. Studies that do account for this measure show that places with a low cost of living are hit pretty hard with unemployment when the minimum wage increases.[3] 

They also don’t take into account states which already have an excessively high minimum wage of their own. As of 2019, states such as California, Massachusetts, and Washington have a state minimum wage of $12.00 an hour, and of course D.C. is at $14.00.[4] Some of these are increasing this year (2020). A federal minimum wage increase wouldn’t affect these states, yet they are counted along with the others. This is a clever tactic used to deceive people into thinking that the minimum wage doesn’t affect unemployment much, but a tactic, nonetheless. When states without a state minimum wage are counted separately (as an honest researcher would do) we find that they are affected the worst with unemployment.

Putting these two fallacies aside, we aren’t talking about a measly four or five percent increase. The latest talk for both the 2016 and 2020 presidential campaign was $15.00 an hour…That’s a 107% increase! We might let minimum wage advocates get away with the “unemployment-doesn’t-go-up-much” line when we’re dealing with a four or five percent increase, but it is unarguably inevitable that a 107% increase would be detrimental to the labor force.

The Heritage Foundation constructed a simulation model that predicts the effects a $15 dollar minimum wage would have on fast food industries. Profits would be reduced by 77%, sales by 36%, hours worked by 36%, and prices would rise by 38%.[5]

APPLICATION

R.J. Rushdoony tells us of an early church practice that is directly relevant to the minimum wage. He says in an interview, 

Consider what Paul was doing: offering to alleviate the poverty of the saints during the famine in Palestine; counseling that the needy be cared for, but “He who will not work, let him not eat” (2 Thessalonians 3:10). We do know that anyone who became unemployed was given three days income. After that they found work for him. Another Christian would hire him, but at lower than his normal pay so there would be no incentive to stay under that diaconal care.[6] 

This charitable practice would have been nearly impossible had the early Christians dealt with the strict minimum wage laws we have today. There are some exceptions to having to abide by the minimum wage, but it is an inconvenience to find these loopholes. The tragedy is that charitable organizations and businesses that hire individuals with the lowest skill-sets are the only ones proven to have helped such people in unfortunate circumstances. They higher them at low wages to give them a chance to accumulate skills so that they may be more productive in the future to earn higher pay. But this process is largely killed by the minimum wage.

Getting rid of the minimum wage so that liberty in the labor market can be restored is the ultimate goal, but simply repealing the Federal Minimum Wage is not good enough. If change is to be efficacious, it must come from the bottom-up. We need to renew our own minds first. How do we do that?

Workers: be content with your wages (Luke 3:14). Know that God has placed you in your vocational job for a reason. Instead of complaining about your pay (or worse, calling on the coercive power of government to force your employer to pay more) ask God that He give you both the willingness and ability to please your employer in the work that you do. If you serve your employer as a faithful believer, don’t be surprised if he notices the image of Christ in you and increases your pay to keep you around.

Employers: Pay your workers fairly and on time (Lev 19:13; Deut 24:15; Jer 22:13; James 5:4). There is nothing wrong with maximizing profit, but don’t attempt to do so at the expense of your employee’s dignity and worth. If you treat your employees well, word will get out and you are bound to attract more competent and higher skilled workers. 

Once we submit to God’s standards for how labor ought to be conducted under Christ’s authority, only then can we see clearly to speak prophetically to the societal sin of labor oppression and how God feels about it much like the prophet Malachi did:

Then I will draw near to you for judgment … against those who oppress the hired worker in his wages, the widow and the fatherless, against those who thrust aside the sojourner, and do not fear me, says the LORD of hosts (Mal 3:5, emphasis added). 


References:

[1] “THE BIDEN PLAN FOR STRENGTHENING WORKER ORGANIZING, COLLECTIVE BARGAINING, AND UNIONS.” Joe Biden for President, December 20, 2019. https://joebiden.com/empowerworkers/.

[2] DiLorenzo, Thomas J. How Capitalism Saved America: the Untold History of Our Country, from the Pilgrims to the Present. New York: Three Rivers Press, 2005.

[3] Brunt, Christopher S., and Anthony G. Barilla. “An Evaluation of the Relationship between Minimum Wage and Unemployment: Does the Local Cost-of-Living Matter?” Applied Economics Letters 25, no. 7 (2017): 493–98. https://doi.org/10.1080/13504851.2017.1340562.

[4] “Minimum Wage By State In 2020.” Paycor, March 13, 2020. https://www.paycor.com/resource-center/minimum-wage-by-state.

[5] Sherk, James. “Higher Fast-Food Wages: Higher Fast-Food Prices.” The Heritage Foundation, September 4, 2014. https://www.heritage.org/jobs-and-labor/report/higher-fast-food-wages-higher-fast-food-prices.

[6] Rogers, Jay, ed. “AN INTERVIEW WITH R.J. RUSHDOONY.” Second American Revolution: Rousas John Rushdoony. Forerunner.com. Accessed May 16, 2020. https://www.forerunner.com/revolution/rush.html?fbclid=IwAR2xqeqnWHwErRkGC-0eWJcESLk8g6QtX1DcTvXrWr9BhhCo96_pxD5voOg.

Published by Ben Moore

Hi, I'm Ben Moore, a Christian worldview writer. This site is committed to seeing Christ's kingdom permeate throughout all of life, including the social institutions that God has designed; family, church, and civil government. While Christian churches have been focused on applying the Bible to the heart of the individual, its application to society is often neglected, lost, or even rejected. The content of this site predominately speaks into these issues and wants to discover how God's word applies beyond the life of the individual Christian and to the public square.

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