Saturday, February 23, 2013

Jesus & Economic Life (8) Living Wage

Jesus taught employers that they should be considerate in the parable of the workers in the vineyard.

For the kingdom of heaven is like a landowner who went out early in the morning to hire workers for his vineyard. 2 He agreed to pay them a denarius for the day and sent them into his vineyard. About nine in the morning he went out and saw others standing in the marketplace doing nothing. He told them, ‘You also go and work in my vineyard, and I will pay you whatever is right. So they went. He went out again about noon and about three in the afternoon and did the same thing. 6 About five in the afternoon he went out and found still others standing around. He asked them, ‘Why have you been standing here all day long doing nothing?’‘Because no one has hired us,’ they answered. “He said to them, ‘You also go and work in my vineyard.’ “When evening came, the owner of the vineyard said to his foreman, ‘Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.’ The workers who were hired about five in the afternoon came and each received a denarius. So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. When they received it, they began to grumble against the landowner. ‘These who were hired last worked only one hour,’ they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.’ But he answered one of them, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as I gave you.(Matt 20:1-16)
The employer promised to pay the employees who only worked for part of a day. "what is right"(v. 4,7). The Greek word is dikaion, which means righteous. This employer wanted to do the right thing. For Jesus listeners, what is right would be what is specified by the law. The workers who were employed for the whole day were offered a denarius. That was the standard pay for a days work at that time.

The employer paid every worker a denarius, even though some had only worked for a few hours, while others had worked for a whole day. The reason was that a person needed a denarius to buy a day’s rations. These people were on the poverty line, living from one day to the next. The employer was considerate. He decided to pay each person enough to buy food for the day. This was a generous application of the command to pay employs each evening (Deut 24:15). An employer has an obligation to give his neighbour enough food that he will be strong enough to work the next day.
Don’t I have the right to do what I want with my own money? Or are you envious because I am generous (Matt 20:15).
Being considerate and providing for a neighbour is more important than being fair.

At the present time, a debate is taking place about a the principle of a “living wage”. One social advocacy group has estimated that $NZ18.50 per hour would be enough to live on. The legal minimum wage is $NZ13.50 per hour. Several groups are urging employers to be good citizens by voluntarily paying a living wage, rather than just the legal minimum.

In Jesus time, a denarius per day was a living wage. The employer in the parable, who did “what is right” paid all his employees a denarius, regardless of how long they had worked. He knew when the end of the day had come that they would not be able to earn any more money until the next day. Most day labourers in that time lived from day to day. This employer paid a living wage by giving his employees enough to live on until the next day, when they would have the opportunity to earn some more.

A living wage is not something new, it is a New Testament concept, based on God’s Instructions for Economic Life.


Brendan said...

Hi Ron

Good post, and I agree with you 100%.

With respect to the living wage vs the minimum wage, I think what many proponents of the living wage fail to understand is that with few exceptions, it usually only those who are 'starting out' as young people who are earning the minimum wage. Typically as their skills increase they are paid more, and usually beyond the 'living wage' they have suggested. In other words low wages for the most part are a function of youth and are transitory.

These young employees often live at home with their parents, or in flats with shared costs, so their actual income requirements are likely to be less than say, a young man with a family to support.

Second, the playing field is somewhat distorted here in New Zealand with significant tax credits available for those on low wages who have children. The net effect of any increase to a 'living wage' for a low paid married employee might well be lost as tax credits are abated. In other words, the wage increase and benefit reduction becomes a zero sum game for them.

This is one of the problems we have with middle class welfare, a highly redistributive tax system, and the distortions and disincentives it has introduced into what I imagine was once a market economy.

It's complex, but the principal of paying a living wage to all employees, is certainly a just proposition. However, I think when you look at the different living circumstances of individual employees, it makes a nonsense of attempting to place an actual dollar figure on what a living wage might be for any individual and their family.

Blessed Economist said...

Thanks for your comment, but your assumption that a living wage is only relevant for young people “starting out” is simply wrong. A large number of adult New Zealanders are working for wages just above the minimum legal wage. This is common in the service, manufacturing and agriculture sectors. Many of these adults have to work long hours, or work at anti-social times, or both to get by. Many have to hold down two jobs with extra travel costs. Those who have a slightly better hourly rate often have uncertain hours, or their work is seasonal. Many of these employees have very little prospect of promotion to better paid work.

Parents in this situation who have a partner in professional type work are okay. But where both parents are in the “just above” situation, they really struggle. We are seeing a real a gap opening out between two-salary professional families and two-low-wage families.

One way of looking at Working for Families and other benefits is that they have disguised the failure of employers to pay their employees a “living wage”. The irony of this is that the “socialists” have provided a salve for the conscience of the “conservatives” :-)

Brendan said...

Hi Ron

in the global economy in which we now live, someone with no educational qualifications, and no meaningful skills can reasonably expect to earn no more in Manurewa than they would in Mumbai. The only difference being the welfare system here in NZ that subsidises their wages.

In a global economy, what is 'just' about someone in Manurewa being paid more than someone in Mumbai for the same work, especially if both their employers can only leverage their efforts to the same extent in a global market?

You can argue that the NZ employer is subsidised by the State through WFF, but in reality it is the employee whose productive efforts are proscribed a value by the market place, and not by their employer.

In a competitive market, the employer is a price taker, not a price setter, which is why most of our low paid manufacturing jobs have disappeared to Asia.

Here in NZ I don't think we have yet mentally adjusted to this reality, but it will be forced upon us sooner or later as the economic burden of 'fairness' becomes too much for our productive sector to maintain.


Blessed Economist said...

Brendan, once again you make an assumption that is just not true. Many of the people struggling to get a “living income” do have skills and training and are doing things that society needs. Next time you are on a bus, talk to the driver about how much they get paid and the hours that they work. Better still, talk to the driver of the bus taking 40 children to skill on a busy highway. There are numerous other examples. These people, like most of the service sector, are not competing with Mumbai.

It is easy to classify these people to the “no hoper” basket, but that will not produce solutions. I find that the scriptures consistently point in the other direction.

Brendan said...


First of all, I don't catch buses so the chances of that conversation happening are slim.

However, the reason bus drivers are low paid is that there is no scarcity of them. If they retrained as computer programmers, many of them could double or triple their income overnight. I understand that Orion Health care located in this city is looking for 70 qualified programmers and cannot find them in NZ.

When sufficient bus drivers retrain and exit the industry, the scarcity will force up the wages for those who remain, and also for those who are recruited into the vacant positions. This is how market economies are supposed to work.

I'm not unsympathetic to the plight of low paid workers, but I am realistic about the economic prospects that exist for low skilled and semi skilled workers in NZ. It is their responsibility to make themselves more useful in some way, and thereby improve their economic circumstances. Simply 'demanding a living wage' from an employer who is often in no position to increase the wage bill appears to be an irrational response to me, and one that is unlikely to deliver results.


Blessed Economist said...

If you stay off the Jericho Road, the Samaritan is not your neighbour.

If you keep away from buses, the bus driver is not your neighbour.

If you employ a someone, you become their neighbour, and love your neighbour takes precedence over “supply and demand”.