Daf Yomi, justice, and the minimum wage

Those of us participating in Daf Yomi are now four and a half years into the current cycle, with three years to go. Studying a page of Talmud a day, we are combing the broad expanse of the ancient rabbinal discussions that make up the Mishnah and the Gemara. In our recent studies of tractate Bava Metzia, we delved into concepts that are relevant for controversial policy issues in the news today—one of them being the minimum wage.

The issue of the minimum wage—sometimes referred to as a living wage or a just wage — continues to be a contentious issue. Presumably, we as a society would like to ensure that those who work earn a reasonable wage, one that is, at a minimum, sufficient to cover one’s basic human needs. Surely, the thinking goes, any compassionate society would do no less. But the issue is not so straightforward, and our Jewish tradition, including the Talmud, provides some guidance.

Insisting that employers pay their employees a minimum amount undoubtedly helps those who’s wages will be higher—which seems beneficial in and of itself. But it will inevitably have unintended consequences. For example, how will it affect other workers? If employers decide to hire fewer workers, will some workers lose their jobs, or not be hired in the first place? Is this compassionate?

Economists have looked into this question, but there is as yet no consensus. Some cite statistics that show that there is no marked decline in employment. Others have data to prove that the imposition of higher wages does reduce employment. The American Enterprise Institute just came out with a 48-page paper on the subject, concluding that the minimum wage does appear to reduce employment, but they also called for more research.

There is another potential unintended consequence. Many teenagers and young adults are often looking just to get started in the job market. Many are thrilled to have a job, any job, even if it pays only $7.50 an hour, in order to get some experience—ultimately enabling them to eventually move on to jobs requiring more skills and experience which will pay more. Imposing a higher minimum wage may deprive young people of these initial jobs. Is this compassionate?

These social science questions are important, but there’s actually a deeper question. Is legislating a higher minimum wage even just? In mandating higher minimum wages, government is requiring that employers pay their lower-skilled workers more than they might otherwise pay them—and more than workers might actually be willing to accept. Is this consistent with our traditional notions of justice? This question is not a new one. It comes up in ancient Jewish texts—related to property rights, labor law and charity law—including Bava Metzia.

Property rights are usually considered to be sacrosanct. As Joseph Isaac Lifshitz explains in Judaism, Law & the Free Market: An Analysis, there are numerous prohibitions in the Bible relating to the property of others — against, for instance, stealing land and acquiring property through fraud. The Eighth Commandment prohibits stealing. The Tenth Commandment prohibits even the coveting of one’s neighbor’s property. As evidence of the importance of private property, Lifshitz notes, “punishments … are meted out in the Bible to those who undermine the social order through their flagrant disregard for it.”

This presumably entails not just the private property of individuals but also that of companies. One would assume that, absent some extraordinary public purpose, government should not have the authority to coerce companies to expend their own resources, their own private property, in certain mandated ways—like paying their employees more than they otherwise would. This kind of government mandate would seem to be a violation of companies’ property rights.

Some might say that the needs of employees, particularly poor employees, should take precedence over the rights of employers. However, one could ask the question—in a potential dispute between employees and employers, should not justice be blind? As it says in Leviticus 19:15, “You shall not commit a perversion of justice; you shall not favor the poor and you shall not honor the great.”

What about labor law? Should there not be some requirement for companies to pay their employees a living wage? According to our Jewish tradition, this is a little more complicated, requiring inferences from other law.

Dealing fairly in business, including pricing things fairly, is one of the cornerstones of the law, again going back to the Bible. As it says in Leviticus 25:14, “When you make a sale to your fellow or when you buy from the hand of your fellow, do not victimize one another.” This is called the law of ona’ah—“overreaching”—which is prominently discussed and debated in Bava Metzia.

 In his 2008 Tradition article “The Living Wage and Jewish Law,” Rabbi Aaron Levine, the late Yeshiva University economics professor, explains that “The law of ona’ah prohibits an individual from concluding a transaction at a price that is more favorable to himself than the competitive norm.”

The Talmud does not explicitly discuss the idea of the minimum wage, but, extrapolating the law of ona’ah to wages, one would conclude that the wages that a company pays should not be substantially below the going rate for comparable jobs. As Levine notes, “A worker who cannot command a living wage in the marketplace cannot claim a living wage based on ona’ah.” As one can see, according to the law of ona’ah, wages should not be based on an employee’s needs.

There have been challenges to this perspective, however. For example, Jewish law stipulates that judges are to be paid a living wage. But can the case of a judge, who’s hired by a community to devote himself exclusively to his or her judicial job, be extended to the private sector?

Levine speculates that “if [the private sector employer] offers the head of a household a full-time job and stipulates with him that he may not take on outside employment, [the employer] must pay [the employee] a ‘living wage.’” This, however, is not common, particularly for lower-skilled workers, so this challenge is not a compelling one.

Another challenge comes from the Biblical law of lo talin—also discussed in Bava Metzia—the prohibition against withholding a worker’s wages. As it says in Deuteronomy 24:14-15, “You must not withhold the wages of a poor or destitute hired worker … You must give him his wages on the day they are due, and not let the sun set upon him, for he is poor, and he depends on it.”

These Biblical verses can be interpreted to mean that, if a worker does receive payment on time, then he will be able to provide for his family—thereby implying that employers are required to pay their workers enough to provide for their families. However, as Levine shows, “The inference is unwarranted.” The verses are not meant to suggest that a violation of lo talon will literally endanger the employee’s life. They’re intended to underscore the employer’s moral obligation to pay one’s workers on time.

This brings us to the law of charity. Is there a basis for a higher minimum wage as an act of charity? What exactly is required of employers?

Helping someone get out of poverty is one of the highest levels of charity. As it says in Deuteronomy 15:7-8, “If there will be among you a needy person … you shall not harden your heart, and you shall not close your hand to your needy brother. Rather, you shall surely open your hand to him, and you shall give him sufficient for his needs, which he is lacking.”

Providing a needy person with a job—with a competitive wage—is one of the best examples of charity. At the same time, is it the employer’s responsibility to ensure that employees have enough to provide for themselves and their families?

If a young adult is having difficulty making ends meet, we would expect that his or her family, not the employer, would be first in line to help out. But what about the case of a needy employee who has primary responsibility for his or her family?

Deuteronomy 15:7-8 has been interpreted to mean that the community as a whole, not one individual nor one employer, has the moral responsibility to help those in need. Referring to the responsibility as dei mahsoro—“give him sufficient”—Levine notes that Jewish law “has interpreted the dei mahsoro mandate as a collective responsibility, rather than a duty for individuals to shoulder alone when they personally encounter charity cases. Because the ‘living wage’ mandate saddles employers alone with the burden of relieving poverty for the working poor, it does not follow from dei mahsoro.”

The idea of the minimum wage, while seemingly reasonable and compassionate, raises several difficult issues. From an economic perspective, it may actually reduce employment, which would not be compassionate for those struggling to find a job. It also raises important issues of justice. Based on property rights, labor law and charity law, as defined by many of our sacred texts and sages, the idea of the minimum wage is problematic. We may have a moral obligation to help those in need, but we also have a moral obligation to deal with each other justly.