The minimum wage battle: What makes a wage just?
Raising the minimum wage is a mitzvah.
The Rambam says that ensuring others have work that can sustain them is the highest rung on the hierarchy of tzedakah (Mattanot Aniyim, 10:7). In Judaism, tzedakah does not mean charity but justice. We rectify social wrongs and fulfill our obligations through tzedakah. By raising the minimum wage, we are enabling others who work to escape poverty. Tzedakah is all the more important when applied to a system of legislation, as the mission of the Jewish people is to perpetuate our most precious values of the good and the just into broader society. Our messianic dream is the creation of a society where Torah values are brought into the world to create a more just and holy civilization.
The disparate gap between rich and poor is one of the most troubling moral issues in America today. Much of the problem has to do with unfair wages that block social mobility. The federal wage floor for most workers today is $7.25 an hour, paying at most around $15,000 annually for 40 hours/week (not including the millions of “invisible people” being exploited at under minimum wage). The issue of increasing the minimum wage has become muddied with partisanship, as politics, today, trumps justice. There was no increase from September 1997 until July 2007, at which point the minimum wage had fallen 22 percent in constant dollars while corporate profits had increased by 50 percent (Time magazine, July 24, 2009). Even then, the wage only rose from $5.85 in July 2007 to its current level of $7.25 in July 2009. Some have noted that the decline in value of the minimum wage has coincided with the decline of the American middle class, as previously the minimum wage offered families a chance to climb into the middle class, but now the gap is too wide. We must acknowledge just how far below subsistence the minimum wage has fallen. There has been a major decline of the real value of the minimum wage and the earned-income tax credit has been crucial in helping to fill the gap (aiming to benefit low-income families with children and not just all low-wage workers).
Some argue that raising the cost of labor will hurt workers, because employers will then hire fewer workers. In a few instances this may be true, but overall many economists and researchers have shown this to be false. Speaking to this issue, Nobel Prize-winning economist Robert Solow stated that “… the evidence of job loss is weak. And the fact that the evidence is weak suggests that the impact on jobs is small.”
Current state unemployment statistics (October 2013) tend to support Solow on this. For example, of the four states with a minimum wage below the federal standard, two (Minnesota and Wyoming) have unemployment rates below the average, while two (Arkansas and Georgia) have unemployment rates above the average. Of the five states with no minimum wage, South Carolina, Tennessee and Mississippi have unemployment rates higher than the national average, while Alabama and Louisiana have lower unemployment rates. Thus, there is no substantive evidence to support the idea that a minimum wage adversely affects employment, or that a lower wage helps employment. Nobel Prize-winning economist Paul Krugman recently helped to debunk the myth that raising the minimum wage leads to job losses. Studies have shown that when states raised their minimum wage they experienced no significant impact on employment compared to states that did not raise wages. Further, today, 76 percent of voters support raising the minimum wage. It’s a win-win because workers are empowered to sustain themselves, the government gives less “hand-outs,” and businesses flourish as that new income leads to increased spending.
Furthermore, minimum wage workers tend to work in industries that cannot be outsourced or eliminated (e.g., the fast-food and hotel industries), so it is unlikely that a rise in minimum wage would reduce these jobs. One significant study looking at the food industry found that raising the minimum wage did not result in employers trimming their workforce, and dozens of studies have confirmed these conclusions. For example, a study looking at airport employees found that not only did higher wages not lead to lower employment, but, in fact, led to reduced employee turnover.
We must consider not only the microeconomics but also the macroeconomics. There is evidence to suggest that when low-wage workers have more spending power, this creates demand for labor and employment opportunities. For example, in 2006 the Economic Policy Institute estimated that raising the minimum wage from $6.55 to $7.25 would increase consumer spending by $5.5 billion, potentially offering a much-needed boon to the economy.
A final objection to raising the minimum wage is that those who work in these largely menial jobs are teenagers who are simply trying to earn extra cash, and therefore there is no need for a wage increase. As former Labor Secretary Robert Reich pointed out, this is untrue. Among the 15 million people working in minimum wage jobs today:
• 90 percent are age 20 or older.
• 50 percent are full-time employees.
• 25 percent are parents.
But at the end of the day, minimum wage reform is not enough. A minimum wage increase will not bring low-wage-earning families out of poverty. We must embrace a living wage to truly improve the lives of the millions of our fellow Americans who are living in abject poverty. The 2010 U.S. Census revealed the extent of U.S. poverty in graphic detail:
• Nearly 47 million people live in poverty (15 percent of the population), the highest number ever recorded. Of these, more than 20 million lived in extreme poverty (i.e., an income less than half the poverty level).
• Among children, 22 percent live in poverty.
• More than 17 million households are food insecure, the highest number ever recorded.
• Some 50 million people lack medical insurance, which will increase if enrollment under the Affordable Care Act is unsuccessful.
The sheer injustice of economic inequality is overwhelming. From 2007 to 2010, the average American family lost 39 percent of its wealth, while at the same time, 95 percent of all new wealth generated was accumulated by the wealthiest 1 percent of the population. It has been estimated that six members of the Walton family (heirs to the Walmart fortune) own more wealth than 41.5 percent of Americans (nearly 49 million families). Is it too much of an encroachment on the wealth of the Walton family to encourage them to pay their workers more? Is it morally tolerable that the employee of a multibillion-dollar company is paid poverty-level wages?
It is our Jewish obligation to lead this fight for justice. The Rema, the great 16th century Polish authority, teaches that when one is involved in an issue of public monies, one must engage (act and vote) l’shem shamayim, for the sake of heaven (i.e., for reasons not based on self-interest) (Choshen Mishpat 163:1). It is crucial, and our religious duty, that Jews vociferously advocate for systemic change for the poor.
In Judaic doctrine, rabbis have limited the earning power of owners selling essential food so as to help the poor through the laws of “onaah” (fair pricing). The owner is forbidden from keeping more than one-sixth profit in order that others could be sustained as well (Bava Batra 90a, Choshen Mishpat 231:20). For the rabbis, the value of maintaining a just society where the needs of all can be met trumps the full autonomy of owners to maximize their profits to no end.
The primary wage responsibilities fall upon employers. Rebbeinu Yonah, the 13th century Spanish rabbi, taught:
“Be careful not to afflict a living creature, whether animal or fowl, and even more so not to afflict a human being, who is created in G-d’s image. If you want to hire workers and you find that they are poor, they should become like poor members of your household. You should not disgrace them, for you shall command them respectfully, and should pay their salaries (Sefer HaYirah).”
Rebbeinu Yonah teaches that when we hire a worker and find that he/she is still poor after we pay them, then we must treat them as b’nei beitecha (members of our households). If we choose to become an employer, then we must take responsibility to ensure our workers do not live in poverty.
The minimum wage, in its current state, is a collective violation of the biblical prohibition of oshek (worker oppression), as workers remain poor while they work to their full capacity (Leviticus 19:15). The previous verse tells us that we must not be enablers of lifnei iver (social wrongs), linking the two responsibilities of fair wages and Jewish activism. Now is the time for a collective Jewish intervention to ensure that those who work can live.
I have experienced the challenges of Jewish activism on this issue. Tav HaYosher (Uri L’Tzedek’s ethical seal for kosher restaurants) has encountered unique and anomalous apathy in the Los Angeles kosher community. Personal wealth and low food costs have been prioritized over proper worker compensation and dignity. What is perhaps most troubling about my experience is that Tav HaYosher is only asking for the basic law to be followed, paying workers minimum wage and nothing more, and this, tragically, is asking too much for many kosher consumers and owners. The indifference from some in the Jewish community is deeply troubling.
Today, one working on the current federal minimum wage of $7.25 an hour will have a gross annual income $12,000-$14,500, based on a 35- to 40-hour work week, after which federal and state income tax, Social Security and other taxes are then deducted. It is simply morally repugnant to argue that one working all day every day should live in poverty. As Barbara Ehrenreich, who once described her vain attempt to survive on a wage (above the minimum) in “Nickel and Dimed,” wrote in 2007: “There is no moral justification for a minimum wage lower than a living wage. And given the experience of the … states that have raised their minimum wages, there isn’t even an amoral economic justification.”
Today, change is needed and the Jewish community has a crucial role to play. We should heed the word of President Barack Obama: “… let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty.”
I believe we will get there, but I am not a total optimist. I am a possibilist. I believe we will only get there if we engage in courageous leadership. The Jewish community has a crucial role to play.
Rabbi Shmuly Yanklowitz is executive director of the Valley Beit Midrash, founder and president of Uri L’Tzedek, founder and CEO of the Shamayim V’Aretz Institute and the author of “Jewish Ethics & Social Justice: A Guide for the 21st Century.” Newsweek named Rav Shmuly one of the top 50 rabbis in America.