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Acton Commentary: Flexible wages are one path to a more humane market
Acton Commentary: Flexible wages are one path to a more humane market
Oct 19, 2024 1:31 PM

In an increasingly polarized political environment, where purity of intention substitutes for successful results, some mentators have gone so far as to say that questioning the efficacy of raising the minimum wage to $15 a hour mocks God Himself. But this week’s Acton Commentary notes that those faithful to Catholic social teaching should accept wage flexibility, which reduces unemployment.

In “Flexible wages are one path to a more humane market,” Michael Szpindor Watson, an assistant professor of economics at Belmont Abbey College in North Carolina, and Grattan Brown, the academic dean of Thales College in North Carolina, write:

Most economists, left, center, or right would agree: Wage rigidities cause unemployment. When wages go above the (marginal) productivity of labor, unemployment ensues. The longer it takes for wages to adjust to the productivity of labor, the longer the unemployment will last.

The essay — which is excerpted from Profits for All: Flexible Wages in a Free Economy, the latest volume in Acton’s Christian Social Thought Series — underscores that the true danger to workers lies in prolonged joblessness:

Unemployment erodes the spiritual as well as material goods that ought to exist within these groups. Describing the elements that are essential for persons’ temporal welfare, in Evangelii Gaudium Pope Francis includes employment “above all,” for “it is through free, creative, participatory and mutually supportive labour that human beings express and enhance the dignity of their lives.” The presence mon spiritual and material goods is most readily seen in family life, which [Catholic social teaching] recognizes as the most munity within society and in which the “permanent things” are cultivated and enjoyed.

Unlike many of their critics, the authors cite the successful wage model presented by Singapore.

Despite the layoffs and business closures triggered by the higher minimum wage, their advocates press forward. On the day before the New Hampshire primary, candidate Tom Steyer outbid his rivals by promising to raise the minimum wage to $22 an hour – half again as much as the $15 on offer from other candidates. The decision to bet on voters responding to a minimum wage hike proved costly, with Steyer spending $1,837 for every single vote he received in the Granite State.

But as Watson and Brown point out, an artifically high minimum wage would inflict greater costs on society — in money, and human dignity — if it succeeds.

Read the mentary here.

Order Profits for All: Flexible Wages in a Free Economy here.

Productions/. Editorial use only.)

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