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Massachusetts' Minimum Wage Hike Is A Catholic Victory Too

Yesterday Massachusetts Gov. Deval Patrick signed legislation raising the state's minimum wage from $8.00/hour to $11.00/hour, by Janury 1, 2017.  That's the highest statewide minimum wage in the country.  It means full-time minimum wage workers in the Bay State can look forward to an additional $6,000 in annual income. 

Boston magazine's David Bernstein, one of the savviest political reporters in the commonwealth, noted earlier today that the minimum wage increase is further proof that Massachusetts has entered "a new Golden Age of Law-Making By Threat of Popular Vote", adding "I’m not sure whether that’s a good or a bad thing, but it’s definitely a thing."

It's also a sign of the Catholic Church wielding political power in a different way than it sometimes has in the past.  At the heart of the Raise Up Massachusetts coalition that gathered over 350,000 signatures to put initiatives to raise the Minimum Wage, and to create an Earned Sick Time benefit for all Massachusetts workers, before the legislature and the electorate are several faith-based community organizations affiliated with the Massachusetts Community Action Network.  Other faith-based community organizations (including the Merrimack Valley Project where---full disclosure---I do some work) also participated in the campaign.

In addition to a shared approach to organizing, these organizations---along with others like the Greater Boston Interfaith Organization (about which, more shortly)---have all been seeded with funding from the Catholic Campaign for Human Development.  CCHD isn't the only, or even the majority funder, of these organizations; but for over four decades CCHD has been perhaps the steadiest source of funding for organizations that seek to engage poor, working-class and middle-class people to act collectively on their shared values and interests.  That's true not just in Massachusetts, but in all 50 states across the country.

It's to an earlier campaign that Bernstein traces the origins of Massachusetts' current political age:

"The era properly dates to 2006, when a coalition of groups wanted to hold political feet to the fire (specifically, the tootsies of Governor Mitt Romney, Senate President Robert Travaglini, and House Speaker Salvatore DiMasi) on their promise to enact health care reform to cover the uninsured. They pushed forward with a universal health care initiative that was polling at one point at 66 percent in favor. The broad nature of the ballot measure, to put it bluntly, scared the piss out of insurance companies, health care providers, and business owners. For a long time, those folks thought they could get the do-gooders to back down, but they held firm and kept moving forward with the initiative process, and eventually the stakeholders worked out the law the country now calls RomneyCare."

GBIO was at the center of that coalition. In addition to gathering signatures to make real the threat of health care reform by referendum, GBIO leaders "consistently and persistently" (in the words of then-lead organizer Cheri Andes) turned out hundreds and thousands of ordinary citizens for legislative hearings, rallies and other events in the months and years leading up to the passage of RomneyCare.  In the years since, GBIO has continued to push other stakeholders in Massachsuetts' powerful health care industry to make health care more affordable.

To say that that all this represents a shift to a "bottom-up" political strategy in the Bay State by the Catholic Church would be going too far.  The Massachusetts Catholic Conference, statewide public policy arm of the state's four dioceses, prominently and repeatedly endorsed raising the minimum wage, for example.  Also, there are important public issues---like a narrowly defeated "death with dignity" referendum in 2012---that these faith-based community organizations do not address.  (The bishops and the MCC played a critically important and---as has become customary since Cardinal Sean O'Malley's arrival---carefully nuanced role in that campaign.) 

Cardinal O'Malley and his brother bishops across the state continue to speak out on a range of public issues when and as they see fit.  And Roman Catholics continue to be well represented in political and economic seats of power across the commonwealth.  Nonetheless, the growth of broad-based community organizations that bring Catholic parish leaders together with local leaders of other denomination and religions, as well as labor unions and other community groups is a trend worth noting.

With the making of public policy largely ground to a halt on the federal level, the next several years may be a time of increased political change on the local, state and regional level. That shift in turn may mean increased opportunities for faith-based community organizations to act powerfully on their values and in the interests of their members...and the wider society.

About the Author

Luke Hill is a writer and community organizer in Boston. He blogs at dotCommonweal and MassCommons. 

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"full-time minimum wage workers in the Bay State can look forward to an additional $6,000 in annual income. "

Or they can look forward to being fired, laid off, never hired in the first place, or replaced by technology such as self-checkout scanners in grocery stores.

But let's not think about that, because it would turn a moral crusade into a complicated empirical question that has way too much nuance. 

Those who do enjoy nuance may like to contribute their insights and sources here: https://en.wikibooks.org/wiki/Human_Nature:_Catholic_Thought_and_the_Sci...

Thanks, although the "Achieving Just Wages in Practice" section already discusses why that a moral crusade focused on very specific means rather than on ends doesn't always help the putative beneficiaries.

 Again, that requires attention to empirical reality rather than merely to self-professed and self-congratulatory intentions.  

When a theory hasn't ever stood up through 90 years of overdoing and underdoing the minimum wage it is past time to abandon the theory, Instead the theorists keep telling us to abandon the minimum wage. A minimum wage has done a lot of peope a lot of good. The theory never did anything for anybody.

@Wasting Time (6/8, 6:20 pm)  Thanks for your comment.  You may well be right.  A recent CBO study estimated (as some other studies have done in the past) that raising the minimum wage would result in a small (i.e., less than 5% of minimum wage jobs) loss of jobs. 

On the other hand, studies of job creation in New Jersey and bordering Pennsylvania counties in the 1990s when NJ had a higher minimum wage found little or no effect on job markets.  And there are other empirical studies that have similar findings.  http://www.businessforafairminimumwage.org/news/00135/research-shows-min...

Wages are often a small percentage of business costs, and employers sometimes find that the higher expenses associated with an increased minimum wage are offset by decreased employee hiring and training costs.

 

Re the title of this thread, "Massachusetts Minimum Wage Hike Is a Catholic Victory Too": Forgive me if I don't have enthusiasm for talking about "Catholic Victories." Chest-thumping fits poorly with Christian faith.

In economic theory, setting a floor for wages that is above the market-clearing wage will result in a labor surplus, "all else remaining constant".  If a business raises its wages and doesn't change anything else in its business, then something will give: the business will be less profitable, or lose (more) money.  This is what the theory says, and I believe it's pretty straightforward and pretty uncontroversial.  

Of course, in real life, things don't remain constant.  A change to one variable in a business's operating model generally will cause it to offset the change by adjusting other variables.  Establishing an artificial wage floor will cause at least some employers to make some changes elsewhere in its business.  A business may raise its prices.  It may cut costs elsewhere.  

We probably saw some of the latter in the wake of Obamacare, when some businesses cut hourly employee hours below 30 hours/week rather than take on the additional costs of health insurance. The government mandating that businesses establish or beef up employer-provided health care is similar to a minimum wage increase. 

This is not an argument for or against a minimum wage hike.  Public policies often involve trade-offs.  My own view is that businesses should try to provide a living wage.  It also doesn't seem fair that the minimum wage has stagnated or declined in real terms.  I don't know of a way to peg a minimum wage except to use our best judgment.  My instinct is that the Illinois minimum wage (current $8.25, or $1/hour higher than the federally mandated minimum wage) probably has a minimal impact on employment in Illinois.  Massachusetts' plan to ramp up to $11/hour over several years probably will have a greater negative impact, offset by the positive impacts that Luke highlights in his post.  Seattle's plan to ramp up to $15/hour probably will have a still more pronounced negative impact; it might cause some palpable unemployment in the area among those who are most vulnerable to unemployment.  But as I say, that's just my instinct, and my instinct isn't always right.

 

 

 

 

This legislation should carry a warning that there may be severe and longlasting unemployment effects for especially vulnerable populations.

According to Piketty, increasing the minimum wage will not necessarily result in more workers with fewer hours -- an employer making huge profits can afford the higher wages easily.  Further, higher min. wage can even increase the number of persons hired because some who make a living by illegal activities might prefer a legal job at decent wages.  

And consider that those earning minimum wages are likely to spend them quickly, whereas if that money had gone to the business' owners they might easily  have just put the profits in the bank (or sent them to the Caymon Islands) without investing them in new businesses, thus contributing to the general economic stagnation.

A bit more on unintended consequences: these remarks by Prof. Casey Mulligan of University of Chicago illustrate some unintended consequences of compassionate government policies.  His thesis is that the passel of Obama Administration policies to help the unemployed have unintentionally shrunk the number of people actively seeking work.  Many analysts have noted a trend over the last couple of years that has been rather atypical of American workers: the falling unemployment rate is attributable in part to fewer people actively seeking work.  Mulligan provides an explanation for this phenomenon.

Mulligan doesn't say so in this article, but it may be that raising the minimum wage could help motivate some workers to re-enter the labor force, as it would increase the differential between working wages and unemployment benefits.  That is in line with standard economic theory, which states that, when an artificial wage floor is imposed that is higher than the market-clearing wage, then (all else remaining constant) the supply of workers will exceed the demand for workers.  As more workers seek work, the unemployment rate rises.

 

Wasting Time and Patrick Molloy:

Throughout his years as a Texas congressman, Dick Armey voted against every proposed minimum wage.  Invariably, he said it was because a higher minimum wage hurts the very people it's supposed to help, the low-skilled who lose their jobs because they're too expensive for their employers to keep.

As proof, he cited his previous career as a professor at North Texas State University.  A janitor named Charlie worked in his building for years, and (said Armey) the two men got to know each other well.  Then one day Charlie didn't show up for work.  Days, then weeks, went by and Armey still didn't see Charlie.  Finally he ran into Charlie off-campus, and asked him why he wasn't coming to work any more.  Charlie told him North Texas State had laid him off, and he'd been told that it was because the state couldn't afford him after an increase in the federal minimum wage .

Armey told this story so often that the Washington Post was moved to send a reporter to North Texas State to interview Charlie himself.  This reporter found no evidence that any custodial workers had been laid off during the years Armey worked there.  Nor could he find any proof that a janitor named Charlie had ever existed, much less that he'd worked in Armey's building.  

Finally, pay scales at the university were set according to the Texas minimum wage, which was HIGHER than the federal minimum.  Even if the federal wage had been raised, it would not have affected the Texas wage or Texas state employees like Charlie.

Asked for comment, Armey had no reply other than the usual bluster that politicians resort to when they're caught in a lie.  

Jim Pauwels, two questions:

1. What's a "market-clearing" wage? Is it the lowest wage rrequired to get the work done? Anything to be said for the Stiglitz' argument in yesterday's NY Times

2. How does the economic theory you find most convincing assess the tremendous growth in executive compensation during recent years? Is there a "market-clearing" wage for top executives? If so, how is it defined and calculated? Or is this not a concern of effecient market theories?

In my view, in real life, wages for anyone, workers executives, regularly reflect power relations. Those power relations, in our system of government, are in non-trovial measure a function of the legal framework in which work is carried out. So labor relations law, workplace safety concerns and other extra-economic considerations are also at play. I know that there are legal scholars, e.g., Judge Posner, who want to assess these other factors in economic terms. This sort of economic reductionism, it seems to me, cannot satisfy any reasonable conception of what  distributive justice demands.

Bernard - "Market clearing"  wages are wages (price points for labor) at which the demand for labor equals the supply for labor.  I hadn't seen Stiglitz' argument in the NY Times.  Is this the one you mean?

http://opinionator.blogs.nytimes.com/author/joseph-e-stiglitz/

... If so, then I do agree with this snippet:

Solutions to these problems do not have to be newfangled. Far from it. Making markets act like markets would be a good place to start. We must end the rent-seeking society we have gravitated toward, in which the wealthy obtain profits by manipulating the system.

I don't think executive compensation is a notably well-performing and transparent labor market.  In other words, I think it's dysfunctional, and probably corrupt in a number of cases.

I agree with you about power relations.  Economic theory more or less subsumes the power relations, and all of the other interesting human factors that go into wage determination, into its theory of pricing.  Thus, if you and I were able to persuade, or even legislate, such that our society's economic arrangements were made more distributively just, economic analysis (at the simplistic, high level we're talking about right now) would show the demand and supply curves adjusting in response to this new, more just set of preferences, and a new price and quantity would result.  

In one sense, it might be argued that this sort of dry supply-and-demand analysis masks the true issues and problems (such as the rent-seeking that Stiglitz names).  On the other hand, though, economics describes how things *actually work*.  Getting to the root causes of injustices that Stiglitz names, and tailoring new policies to correct them, may well have economic repercussions, some of them intended, others unintended.  Economics will work as it works whether or not our social engineers, with the best of intentions (or not), foresee all the consequences of the engineering.  

One of the great perils of living in a democracy is that most of us are economically rather illiterate.  A lot of economics isn't very intuitive.  Policies that sound appealing in the realm of politics (e.g. wage and price controls), frequently are unappealing in the realm of economics.

In the main topic at hand, raising the minimum wage, I accept the economic theory that raising the minimum wage, particularly if it is a big increase (whatever "big" means), will have intended consequences (higher wages for minimum-wage workers and for others whose wages are a function of the minimum wage) and unintended consequences (lower employment).  As I said in a previous comment, every policy involves trade-offs.  That's the trade-off in this case.

 

Jim, you say, among other things" "Economics describes how things 'actually work'...." You also say: "Economics will work as it works whether our social engineers (etc.)"

Some questions:

1. Are you saying that some version of economic thought has validity throughout history?

2. If you are saying that it has omnihisorical validity, I doubt that you'd find much agreement among historians. If you are not saying that, then how did the current economic regime come to have its supposed validity? By some cosmic accidents? By some set of fortuitous non-human occurrences?

3. Why speak of "our social engineers?" Why not speak of "us" as peoplw with some capacity for agency?

On several occasions, you've talked like an economic determinist. That is, you've effectively said that economic life is a closed system. Move one piece and ther pieces will adjust to that move according to "rules." Some of those moves we may be able to anticipate, but not others. Regardles of our capacity to anticipate them, these adjustments are fated to occur. No matter how we try to modify the system, we are at the mercy of an inner necessity that is constitutive of economic activity. Is this not what you are saying? If it isnot, then what are you saying? It surely does sound like you consider economic motion to be governed by stable laws comparable in their necessity to the laws governing the motion of physical objects.

 

Hi, Bernard, the sorts of things I'm talking about here, which ultimately are rooted in people's preferences, are human behavior.  To the extent that human behavior transcends a particular macroeconomic system, I do think that the sorts of things I'm talking about here transcend the particular sort of macroeconomic system that prevails right now in the US (which I think of as a regulated free market economy).

Human behavior, motivated by preferences, certainly was visible, and predictable for those who chose to analyze it, in other systems as well - for example, in the centrally planned Soviet economy.  That particular macro system wasn't as effective, but human behavior and preferences still obtained.  It was expressed in somewhat different ways - for example, the black market for basic goods and services was much more robust in the Soviet Union than it is in the US now.  Because the macroeconomic system (which was engineered) failed to deliver the goods and services that people wanted, they found an alternative way to get them.  Human behavior triumphed, after a fashion, over the centrally engineered, planned economic blueprint.

To take an example of human behavior overcoming artificial constraints that exist in our own system: it is almost certainly the case that the minimum wage drives the demand for employment for undocumented immigrants, who are more easily exploitable than citizens.  (I was pondering this the other day as I made a blueberry pie out of blueberries that were something like $2/pint.)   Another example is the war on drugs, another failed effort to make people stop doing what they want to do.

I am not an economic determinist, but I do think that human behavior is a very difficult stream to row against.  That is true of any counter-cultural mode of living.  So, for example, you and I may think it would be virtuous if people consumed less fossil fuels in their lives.  But the human behaviors that lead to the consumption of fossil fuels are deeply ingrained, and efforts to convince people to behave otherwise have mostly failed.  Even if you and I were determined to at least live our own, personal lives in ways that would consume less fossil fuels, we'd find it difficult going. Realistically, I couldn't give up a car.  I might be able to make some incremental changes that result in my driving it less.

I do think that macroeconomic systems are designed and engineered, at least at a high level.  It's not difficult to point to the masters of the universe who set the parameters for the economic activity that prevails: the heads of state of the developed world and their finance ministries, their central banks, the IMF, Wall Street, and so on.  The behavior under discussion in this topic, employment under the conditions of a rising minimum wage, is in many ways an instance of microeconomic behavior  - a bazillion individual decisions to look for a job, quit, find another job, hire someone or lay someone off - aggregating to macroeconomic impacts.  Those individual activities aren't all centrally planned and engineered, but they operate within constraints (like the minimum wage) that are put in place by the engineers.  You're right that the body politic - all of us - impose some of those constraints through our politics.  But as I mentioned in a previous comment, I'm not very trusting of the people as a whole to get economics right.

" On the other hand, though, economics describes how things *actually work*."

Jim P. --

Keynes and Hayek respected each others' work and even corresponded, but one fundamental difference between Keynes and Hayek was that Hayek assumed that the participants in an economic system had the information they need to make the system work.  Keynes disagreed.  He thought  that the deciders sometimes lacked information needed for sure decisions.  

So who's right?  As I see it, Hayek is clearly wrong. Suppose you're head of Google, and, if you're going to launch a new product you hope that your biggest competitor is not about to launch one like it -- only better.  You lack, in other words, the knowledge that would allow you to make a wise decision about your launch.  Surely this sort of thing happens all the time.  

Hi, Ann, my view is that, in the labor market, most job seekers muddle through without perfect information.  A corporation with HR professionals who recruit all day every day throughout the year may be considerably more knowledgeable about the range of wages that prevail for an open position than an individual applicant who only does a job search for brief periods a few times in her life.  We see the same asymmetry in transactions like buying cars and houses: the auto dealer and the realtor are more knowledgeable than the buyers.  Naturally, the Internet is a great tool for leveling the playing field.  I wish it had been around when I graduated from college and went job hunting!

 

 

Jim, re your talk about "human behavior": Human behavior is not all of a piece. Some of it is automatic or non-voluntary, some is involuntary, and some is voluntary. The non-voluntary is behavior that will occur simply by virtue of the person's being alive. The involuntary is behavior that, given the practical constraints on a person, he or she cannot avoid. The voluntary is behavior that a person has the choice either to perform or not perform and, in some cases, the choice of options frim which to select.

The line between these different kinds of human behavior is conceptually clear, but is in many cases, as legal systems show, hard to apply.

All behavior that is properly called economic is either involuntary or voluntary, even though much of it has to do with enabling us to stay alive and continuing to perform the non-voluntary deeds necessary to do so.

It is only with distincitons of this sort that we can make any sense of economic policy making as opposed to economic "engineering."

Take your example of your need for a car. For simplicity's sake, let's talk about the role of your havig a car tp enable you to get food. Given the life situations in the U. S. today, many people (I'm one of them) who couldn't get food without the help of some motorized vehicle. It could be a bus or a taxi or a ride in a neighbor's car or it could be that the grocer delivers it to me. Consider the economic implications of this set of alternatives. There are choices. Food-getting of course takes place in the context of any number of other practices governed by a vaiety of policies. That complexity is undeniable. But things are not so complex that how we get our food is entirely unalterable.

Given the hunger that exists in our society  and many other societies today, we have a responsibility to , in the words of Peter Maurin, to make it easier for people to do good. That is, to make it easier for the hungry to get the food that they need. The objective of Catholic Social Thought is precisely to promote policies that make it easier for people to do right by one another.

To accept your notion that "rowing against the stream" of established practices is, I think, incompatible withthe often repeated biblical injunction to take care of the widows, children, and strangers in our midst. An essential part of fulfilling this injunction is to do whateve we can to ameliorate the policies and practices that harm the economically weak. The particular steps we take to do so may well turn out to have been mistaken, but that is no excuse for avoiding making the effort. If this is not what Pope Francis has been saying over and over? I have to say, Jim, that it's not what I think you are saying.

Hi, Bernard,

Your explication of the choices people make in determining how they get food is exactly right.  As it happens, when I first graduated from college, I didn't own a car; I lived in a dense urban area and relied on public transportation to get around.  Getting food involved all sorts of trade-offs: I could cook for myself (which involved shopping for groceries) or buy pre-prepared food (either dine out or carry in; there were quite a few restaurants in the area).  Cooking for myself was cheaper, but the pre-prepared route was more convenient.  If I did determine to buy groceries, there was an expensive, family-run grocery store across the street, and a less expensive national chain grocery store about four blocks away.  Again, I could choose convenience or economy.  If I chose the national chain, I could walk or ride a bus. It was generally quicker to walk, but if it was really hot or really cold outside, or raining, I'd wait for the bus.  Eating was an exercise in making choices.

Regarding Catholic social teaching: I'm so glad you've steered the conversation in this direction.  You and I agree that we have a responsibility to help those in neeed.  But I disagree, sharply, that it is better to try a grand policy even if it fails, particularly if the failure is foreseeable.  Advocates of Catholic social teaching have a responsibility which, if I may be candid, they too often shirk, to be literate in the laws of economics (in orther words, of predictable human behavior), and to tailor their policies to those laws.  Too many social justice advocates, finding the economic law of the articial wage floor an inconvenient obstacle, try to wish it away rather than respect it and take advantage of it.

The headline of this post claims that raising the minimum wage in Masschusetts is a Catholic victory.  Is it, though?  That's questionable.  (Note that I didn't say it is wrong, I said it is questionable).  Almost certainly, the outcome of this Massachusetts policy will be that some of the poor will be paid more, and others of the poor - quite possibly those who are even more poor and even more vulnerable - will be without a job.  Is that a good outcome or a bad outcome?  I don't think that's an easy question to answer.  It's a trade-off.  Would it be better that the minimum wage be left where it was, or even eradicated, which almost certainly would result in more people being employed, but at a lower wage?  Again, I don't think there is a clear-cut answer.  Personally, I'm ambivalent about both sets of outcomes.

Here is what I would like to see: I would like to see Catholic social advocates go take a few courses in economics.  They would learn some useful things: how the world works, and how people behave.  Then, apply their knowledge to their cause, and come up with some policy recommendations that actually leverage human behavior rather than fly in its face.  Want to reduce consumption of fossil fuels?  Come up with some policies that give people an economic incentive to reduce their consumption.  One possibility I've suggested in the past would be policies that would make electric automobiles as convenient and feature-rich, and less expensive, than fossil fuel-powered autos.   Want to raise wages?  Then promote some policies that respect the nearly immutable laws of supply and demand, rather than try to make them illegal.  Because outlawing supply and demand is like outlawing sex.

 

Jim, briefly. You talk easily, all too easily, about the "nearly immutable laws of supply and demand." I suggest that one talk more carefully about "demand." One way to do so is to resurrect thedistinctions the old Epicureans made between desires that are natural and necessary, desires that are natural but not necessary, and desires that are vain. The natural and necessary desires are for things we can't do without, things we need to live normal lives. Natural but not necessary desires are for optional extras, things we can survive without, but are nice to have if we can get them without inordinate anxiety or without depriving others of what they need. Vain desires are for things we are just not able to get, whatever efforts we make or whatever strains we place on other people.

Why can't sustained, widely encouraged reflection on this set of distinctions and what they mean in today's world not be the sort of thing we're engaged in? Take the whole notion of sustainable consumption. Try as we might, it's vain to ignore the question of susytainablliity. Think herre about climate change. Take the notion thatthe price of something like a year-round supply of blueberries (I like blueberries) would be nice to have, but it would impose heavy burdens in less developed countries. What's wrong with encouraging people to moderate their pursuit of natural but not necessary desires?

Since Hume at the latest, expanded consumption of all sorts of goods has been equated with progress. Now the sustainability of continued expansion of consumption ofa significant number of resources is by no means immune to informed challenge.

All of this has to do with "demand." I do think that this is, in substanrtial part, what Pope Francis has been talking about. Jim, I don't mean to be offensive, but you sound like you're saying Pope Francis is naive about economic reality and hence cna be written off when he talks about the poor. If I'm misreading you, then please say a bit about how you understand the pope's emphasis on alleviating poverty.

One more thing, Jim. I don't want to play the "pope says" card. Popes have said lots of things that I disagree with. But I do think that some weight has to be given to the biblical injunctions I mentioned earlier. What effect do my demands have on the supply of necessities available to the widows, children, and strangers?

Jim Pauwels,

I strongly agree that we should be mindful of economics when designing our policy agenda. Results are what matter, not good intentions. We should also be mindful of how individual issues fit into our system as a whole rather than picking sides myoptically. On the other hand, critics need to follow this same advice. Sometimes costs are worth the benefits, and only looking at the costs distorts things. Furthermore, macroeconomics and labor economics aren't just larger versions of textbook microeconomics. The effect of dealing with the system as a whole rather than a small part can be counterintuitive.

Ryan - I'm really excited that someone besides Bernard and I is following this conversation :-)

Bernard - I don't really disagree with anything you wrote in your most recent comments.  Those Epicurean distinctions (which you may have mentioned before?) are very good.  I would like nothing better than the sort of broad, sustained reflection you call for.  (If I didn't believe that people can change, then I'd be pretty much wasting my time in Catholic ministry :-)).  

Demand is driven by people's preferences (so saith the theory, and I think it is right).  But what drives people's preferences?  Most people, understandably, probably would answer "greed".  But in reality, preferences are driven by a host of things, including base need (the Epicureans' natural and necessary desires), love of family, altruism, religious faith, rationality - any or all of which can lead people to conclude, "I don't really need blueberries year-round."  I'm all for ways that can awaken the better angels of people's natures, whether that be through books, religion or prudent government policy.  All three of those things have changed the world from time to time, and I don't know why they can't again.  Economics, in a sense, is neutral as to what people's motives are, whether it's greed, altruism or some other motive; it simply notes that those motives are translated into preferences, which in turn drive economic demand.  

What I think don't work effectively are policy fixes that ignore supply and demand.  If we identify the problem as, "the wages of retail workers are too low for them to meet their basic human needs (their natural and necessary desires)", we need to recognize that that situation probably was brought about by the confluence of supply and demand.  Passing a law that tries to solve the problem by decreeing, "Henceforth, the minimum wage, rather than X, will be X * 1.3", without addressing the conditions that caused supply and demand to come together at X, may not be very effective, and may well have some unintended consequences.

 

Bernard - regarding popes (and let's include bishops, too): my view is that they are right to point to inequities and injustice in our world.  But if they are going to propose solutions, then the proposals should be credible and effective.  

Every bishop of a diocese has advisers who advise them on important matters.  Virtually all bishops have canon lawyers and moral theologians to advise them on law and morality, as those are important areas of human activity for a bishop.  They also have administrators to ensure that their books are being kept properly and their real estate investments are being prudently managed.  Do any of them have economic experts on their curia?  My modest suggestion would be: if they are going to make economic policy recommendations, then consult an economist.

Let me give you an example.  Do you recall, in the couple of years leading up to the Year 2000, the Catholic church made a big deal about the year 2000 being the Jubilee?  I remember reading that some Catholics (I don't know if it included bishops) had proposed that, to celebrate the Jubilee, the world's large banks and the developed nations forgive the debt of the developing world, which I'm sure was in the trillions of dollars.  Such a policy of forgiveness has a biblical basis, and is brimming over with a Christian virtue (the forgiveness of debt) that would make the heart of someone like me sing for joy.  But I'm sure that when the people who direct the banks and developed-world governments heard of that proposal, they probably laughed: it seems like such a business-dumb proposal.  But then some people took the proposal seriously and tried to make the case, not in terms of biblical and Christian virtues, but of dollars and cents, that forgiving debt might be the economically prudent thing to do: in the long run these developing nations, freed of the burden of debt, could develop at a faster pace and the entire world would prosper.  I don't know that anything came of that moment, but it's the sort of creative bridging of the worlds of morality and economic policy that I'd like to see a lot more of.

 

Let me illustrate some of my thoughts here by turning back to the original topic: raising the minimum wage in Massachusetts.

Following a link that Luke provided in his post, I found this statement from the Massachusetts Catholic Conference (i.e. the Massachusetts bishops, or at least the heads of the dioceses).  It's a very short read, clearly written, and is very much in line with the Catholic tradition on employment and the preferential option for the poor.  There are one or two details about which I might quibble, but on the whole I think it's pretty strong, and I'd guess that few dotCom readers would object to it - in fact, I'd think that most of us would like it very much.

That .pdf I just referred to is accessible from the Conference's Employment web page.  That page also contains the following text:

In Caritas in Varitate, Pope Benedict XVI points out: "unemployment today provokes new forms of economic marginalization, and the current crisis can only make this situation worse.  Being out of work or depending on public or private assistance for a prolonged period undermines the freedom and creativity of the person and his family and social relationships, causing great psychological and spiritual suffering."

Surely, Benedict is right about this; I'd think that anyone who has been unemployed can attest that all of this is true.

What's interesting to me is that we have encapsulated here, in the bishops' statement and the quote from Benedict, the two aspects that don't seem to mesh into a coherent whole.  On the one hand, the bishops make a strong case for paying poor people more via the minimum wage.  On the other hand, we have Benedict explaining why the predictable outcome of raising the minimum wage - fewer jobs, more unemployment - will be bad for some people.  

Life is full of ambiguities and contraditions, and at some point, we need to make a choice and pick a side, despite the consequences. In this case, the bishops, and the other Catholic and faith-based organizations that Luke referred to in his post, picked the minimum wage hike.  They traded off a higher minimum wage for some people in return for suffering for some other people.  Was that the right choice or the wrong choice?  I think it's a tough call.  

 

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