Acton Institute Powerblog

The economics and ethics of “just wages”

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As with the concept of the just price, the idea of the just wage combines the subjectivity of the diverse needs and preferences of individuals with the objective demands of justice, says Kishore Jayabalan, director of Istituto Acton. The teaching of the Catholic Church on the just wage avoids both the Scylla of economism and the Charybdis of moralism.

From a strictly economic point of view, wages are nothing more than the price of labor, which are determined by the free agreement of buyer and seller. From an ethical perspective, however, wages are often the sole means of income for individuals and families, and workers have a right to wages that are sufficient to provide the necessities of housing, food, and clothing.

At first glance, these perspectives seem diametrically opposed to each other. It may seem there is no way to maintain efficiency in labor markets and justice in providing for the needs of all workers and their families at the same time. We can either treat labor as one of many means of production and let supply and demand alone determine wages, arguing that a price floor would lead to an excess of labor supply (i.e. unemployment, especially among the poor and unskilled). Or we can argue that a minimum amount of income is due to each worker, regardless of the economic consequences, if we are to respect the inherent dignity of the human person.

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Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).

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