How Do We Calculate a Just Wage?

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Neil_Anthony

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The Church teaches that wages should not be determined just by the market. It is wrong to pay people less than what their work is really worth. But if we aren’t using the market to determine what work is worth, how do we calculate it?
  1. Based on how much the person needs to live? Does this mean it’s okay to pay a single person less than a parent for the same job? Do we have to pay a person even more if they have lots of kids? If so, is it wrong to intentionally hire only single people?
  2. Based on how much profit the employer makes from their work? Does that mean that a company that does poorly is justified in paying its employees less for the same work they could do elsewhere?
  3. Some other criteria?
 
These salaries are the average salaries on the market. The church teaches that the market forces are not a just way to determine a wage. So how do those links help?
Federal government compensation is 50% HIGHER than private sector compensation. It doesn’t indicate whether the government compensation (intended to be LOWER than the private sector to offset the higher job security in the government) also includes the excellent government benefits package (fringe benefits and vacation) plus the retirement package which is better than the private sector benefit package.

If someone suggests that the “fair” or “just” wage is much higher than the prevailing wage then, it’s not going to happen.

If you own a butcher shop and pay yourself what you consider to be a just wage, but if it runs your selling prices so high that customers will not buy your product, then what will you do? Will you demand that customers buy your higher priced product because you are paying yourself a “fair and just” wage?

Suppose you are a self-employed miner. The stuff you are mining, coal or zinc or silver or gold, has a market price based on the international auction pricing. How will you compensate yourself?
 
The Church teaches that wages should not be determined just by the market. It is wrong to pay people less than what their work is really worth. But if we aren’t using the market to determine what work is worth, how do we calculate it?
  1. Based on how much the person needs to live? Does this mean it’s okay to pay a single person less than a parent for the same job? Do we have to pay a person even more if they have lots of kids? If so, is it wrong to intentionally hire only single people?
  2. Based on how much profit the employer makes from their work? Does that mean that a company that does poorly is justified in paying its employees less for the same work they could do elsewhere?
  3. Some other criteria?
How much does it cost to live? It depends on what you need. In 99% of places you need a car. What kind of car? A new Chevy Suburban or a very used Kia? Big difference in cost to buy and operate. Do you NEED a cell phone and cable TV? Do your kids go to public school, private school or do you home school? Some people commute two hours each way to work; others insist on being only ten minutes away. Some people travel a lot for work (airplane trips); other people think that just commuting qualifies as travel for work.

How hard are you willing to work?

If you get paid on commission, how do you determine what is fair or not? What if one year you do very well but the next year, not so well, and the year after, do very well again. Is it ok to average it out?

So, how DO you determine a living wage. if the market price for your labor is not acceptable?
 
How much does it cost to live? It depends on what you need. In 99% of places you need a car. What kind of car? A new Chevy Suburban or a very used Kia? Big difference in cost to buy and operate. Do you NEED a cell phone and cable TV? Do your kids go to public school, private school or do you home school? Some people commute two hours each way to work; others insist on being only ten minutes away. Some people travel a lot for work (airplane trips); other people think that just commuting qualifies as travel for work.

How hard are you willing to work?

If you get paid on commission, how do you determine what is fair or not? What if one year you do very well but the next year, not so well, and the year after, do very well again. Is it ok to average it out?

So, how DO you determine a living wage. if the market price for your labor is not acceptable?
Much oof the time thesedays the lowest common denominator in people determins market value.
 
The Church teaches that wages should not be determined just by the market. It is wrong to pay people less than what their work is really worth. But if we aren’t using the market to determine what work is worth, how do we calculate it?
  1. Based on how much the person needs to live? Does this mean it’s okay to pay a single person less than a parent for the same job? Do we have to pay a person even more if they have lots of kids? If so, is it wrong to intentionally hire only single people?
  2. Based on how much profit the employer makes from their work? Does that mean that a company that does poorly is justified in paying its employees less for the same work they could do elsewhere?
  3. Some other criteria?
I don’t think there can be a formula for a just wage. But I think there are formulas that can get you to a starting point. For instance using a minimum cost of living divided by 40 hours. Would be a good starting point to consider a minimum that you would pay someone. But lets say that equals 10 per hour but you can only afford to pay somene half of that, if so, is it better to pay some than to pay none?

It would have to be a wage that is freely agreed to by both parties. Another factor is the fringe bennefits. I have wondered why more companies do not offer compay housing or onsite medical, food etc.
 
Very good question by the OP.

I employ 4 people with my business partner in our small business. We pay them what we think we can afford to pay them and keep them all on. When we can afford to, we give them bonuses or pay increases. Our two full-timers don’t make enough to be able to live on, especially in our area which is relatively affluent.

Are our wages “just”? They’re in line with what other similar businesses pay. If we increased the wages, we couldn’t afford to keep all 4 people on. My business partner and I aren’t taking a lion’s share of the profits either; he has a second job (not out of necessity, but he does make extra money from it) and both our wives work, pretty much out of necessity.

So what is “Just”? I think it’s as much a matter of intent on the part of the employer as it is a matter of business economics. I want my employees to make more money than they do. I ***want ***our business to grow every year so we can give them nice bonuses, and pay them better than average. My business partner and I don’t take raises without raising our employees pay.

I guess that’s how I calculate a Just wage. 🤷
 
I don’t think you can say “X” dollars is a “living wage” without knowing anything else.

In some places, the cost of living is much cheaper than in others. In some places (here, for instance) there are ways to live decently on an extremely low “salary”, depending on what additional resources you can bring to bear in the form of your own labor, knowledge of food production, mechanics, trade skills, etc. I remember a guy who literally hunted and fished for most of his living and cut fence posts to sell for the rest of it. When he died, his estate was about a quarter million dollars.

Also, assets can mean a lot, as can access to resources at little or no cost.

It has long seemed an irony to me that employers really can’t adjust salaries to individuals. If you pay Mary, a single person, less than you pay John who has a wife and five children, for the same job, you will get in trouble. Yet, a “living wage” for Mary would almost certainly be less than a “living wage” for John.
 
It has long seemed an irony to me that employers really can’t adjust salaries to individuals. If you pay Mary, a single person, less than you pay John who has a wife and five children, for the same job, you will get in trouble. Yet, a “living wage” for Mary would almost certainly be less than a “living wage” for John.
I think that a “living wage” was considered by the Church to be a wage sufficient to support a family, with the understanding that there was only one wage earner and a mother would be staying home to care for children. The social structure underlying that idea has long since gone out the window.

On my first job, it was actually company policy to pay married men somewhat more (about 12%) than single men, as a starting salary, because they had a family to support. If they did that now, of course, the government would be all over them.
 
I think that a “living wage” was considered by the Church to be a wage sufficient to support a family, with the understanding that there was only one wage earner and a mother would be staying home to care for children. The social structure underlying that idea has long since gone out the window.

On my first job, it was actually company policy to pay married men somewhat more (about 12%) than single men, as a starting salary, because they had a family to support. If they did that now, of course, the government would be all over them.
Go back far enough all single people are in the religous life and all other adults are married. Being single is a new idea.
 
Go back far enough all single people are in the religous life and all other adults are married. Being single is a new idea.
I guess you are right. Not only that, but young people were not left to their own resources to find a husband or wife. The parents or extended family tended to work that out! Now, they have to depend on internet dating services!

On the same line, when I was first hired as a loan underwriter, the guidelines said that only one-half of a wife’s income could be counted, on the theory that it would not be permanent. Seems strange now. Are we a happier society?
 
What exactly does she say about it? Can you reference a source?

Ender
There’s something about it in Rerum Novarum, starting at section 43:
  1. We now approach a subject of great importance, and one in respect of which, if extremes are to be avoided, right notions are absolutely necessary. Wages, as we are told, are regulated by free consent, and therefore the employer, when he pays what was agreed upon, has done his part and seemingly is not called upon to do anything beyond. The only way, it is said, in which injustice might occur would be if the master refused to pay the whole of the wages, or if the workman should not complete the work undertaken; in such cases the public authority should intervene, to see that each obtains his due, but not under any other circumstances.
 
I guess you are right. Not only that, but young people were not left to their own resources to find a husband or wife. The parents or extended family tended to work that out! Now, they have to depend on internet dating services!

On the same line, when I was first hired as a loan underwriter, the guidelines said that only one-half of a wife’s income could be counted, on the theory that it would not be permanent. Seems strange now. Are we a happier society?
It’s not better now: Now its much harder to have a large family: salaries have gone down to account for the fact that most families have two working parents, but the more kids you have, the less that one parent is able to work.
 
More from Rerum Novarum: "46. If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. Nature itself would urge him to this."Seems as though, if we had followed this advice, we might have avoided a few bubbles.
 
There’s something about it in Rerum Novarum, starting at section 43:
This is a good place to start in understanding what the Church has said on the subject of wages as it makes clear that the Church has no problem with the market setting wages, what she has a problem with is when someone takes advantage of market conditions to gain wealth at the expense of his workers.
*
Doubtless, before deciding whether wages are fair, many things have to be considered; but wealthy owners and all masters of labor should be mindful of this - that to exercise pressure upon the indigent and the destitute for the sake of gain, and to gather one’s profit out of the need of another, is condemned by all laws, human and divine. *(Rerum Novarum 20)

There is no specific value that defines a just wage because what is involved are not merely the needs of the worker but the needs of the company and the conditions of the workplace as well. As Newbie2 pointed out, he pays what he can but he cannot pay more and stay in business. If another company pays more because it is more profitable does that mean Newbie2 is being unfair?

"Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice." (Ibid 45)

This is true only if the employer will afford him no better, but not if the employer cannot afford him better. The point is that the Church in no way opposes capitalism; what she opposes is one person taking advantage of another and dealing with him unfairly. I don’t believe there is anything the Church has said that imples she would support a “just wage” board that imposed wages on employers.

Ender
 
Go back far enough all single people are in the religous life and all other adults are married. Being single is a new idea.
I’m not sure that’s true. In going back into my own family history, there were single people in almost every generation. Some entered the religious life, some didn’t. The big difference, it seems to me, is that single people decades ago tended to remain within their original “family unit”, rather than going off somewhere to a single, unitary life. Generally speaking, they were also wage-earners, men and women both, and contributed significantly to the overall extended family economy.

A truly strange thing I have noticed. It’s odd how many families, large families, simply “died out” without descendants. I frequently have occasion to review chains of title in real estate, which often necessarily includes accounting for heirs. I have seen families which, in this century or the last, had perhaps eight or nine children, but are now down to perhaps one or two aged, childless people and no other descendants at all.

Even more frequently, I see families that were once large but which are now down to perhaps one or two people that have one to three children, and that’s it.

On the other hand, one sometimes runs across families that have expanded exponentially. I suppose those make up for the ones that die out totally, and also supplied those who went into the religious life. But it does give one pause to think how fragile human populations actually are. If you think about it, fifty years of universal female childlessness and the human race would disappear. Now, that’s an entirely improbable scenario, but we are going to see very significant population collapses very soon; some catastrophic for the nations in which it is happening.

One has to wonder how all of that is going to affect “living wages” in the next several decades. In Europe, for example, the die off ratio is going to mimic that of past plagues like the Black Death. Only immigration preserves the U.S. from that same future. One really has to wonder about the consequences of China’s “one child policy” as well. After the Black Death, wages skyrocketed simply because there were not enough people to do the work necessary. Prices plummeted initially because the demand for goods declined markedly. But then, because the same amount of money was around as was the case before the plague, inflation took off. More money per capita and fewer goods once the initial stock of goods was exhausted. A difference now, of course, is that it is politically expedient to “spread the wealth” by government force. Even so, it is entirely possible that during the lifetime of people now posting on CAF, we will see the able producers rebel against supporting the more numerous non-producers (except perhaps within families). In truth, if I was, say, 21 right now, I would be at least thinking of rebellion in some form or other, particularly if I wanted to have a family. Of course, people age 21 are idealistic and don’t always understand what it is to struggle. If I was age 35 today, there is no question I would be furious about the future that is being laid out for me and my children by political forces.
 
One has to wonder how all of that is going to affect “living wages” in the next several decades. In Europe, for example, the die off ratio is going to mimic that of past plagues like the Black Death. Only immigration preserves the U.S. from that same future.
This is something that is occurring right under our noses, and is being pretty much ignored. A great many parts of the Western world have created their own analog of the Black Death through widespread contraception and abortion, leaving birthrates to plummet. If in addition to this man-made plague, if we were to be hit with an actual widespread plague of some medical nature, the double whammy could doom entire countries–or civilizations.

Your point about the potential rebellion of the producers is also prescient. Medicare is a rather young program; it started in 1965. I remember wondering at the time how the government could pay all my Dad’s medical bills for the future. And he lived until age 91. Now they are doing the same for me; and are about to do it for the rest of the citizenry.

We are getting ready to hit the younger generations and their children with enormous bills for which they never bargained. And they are not having enough children to continue to support the programs through taxation. It’s not a pretty picture.
 
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