President Obama and Harry Reid want the federal minimum wage level to rise to $10.10 per hour within 3 years. Whatever else is the case with such a proposal, such as whether they are doing if for political reasons only (pandering to their base, for example), the merits of the proposal itself should be discernible. And, indeed, the Congressional Budget Office (supposedly neutral scoring agency that is supposed to tell us what the likely result of bills like this will be) has said what we should expect from a bill like this. It short, it would raise about 900,000 families above the federal poverty line, and hit about 500,000 low-wage workers with losing their job. The increase would also impact low-wage workers in high-income families: about 35% of the people benefiting directly from the wage hike would be in this class, whose family income is 3 to 6 times the poverty line.
Is that just?
I know that a minimum wage law has all sorts of arguments for and against, all sorts of goods and ills attached, touches on all sorts of bedrock principles. For the moment, let's set aside those more remote questions. In point of fact, we do actually have a federal minimum wage law, and we aren't feasibly going to get rid of it within the foreseeable future. We also don't know to what extent the CBO made unwarranted assumptions for their analysis, but they are charged with being neutral and there are a lot of smart people that work on these questions, so let's postulate for the moment that their estimates are plausible and within the realm of reasonable conclusions. Within that context, is THIS proposal a just law?
Well, that kind of begs for another kind of question: what would be the right criteria in order to decide whether it would be a just law?
One criterion might be: (1) does this improve the net wealth of the country as a whole or reduce it?
Another might be: (2) does this improve the ability of the poor to participate successfully in the economy?
A third might be: (3) does this help more people than it hurts.
According to CBO, this law would have the net effect of slightly raising the net worth of the economy in the short term, and slightly lowering it over the long term. So, to score this fairly, I would say that the answer to (1) is that this law does not raise the net wealth of the country as a whole, it reduces it. Why? Because the long term effect is the one that LASTS LONGER, and therefore has more overall impact. In this case, I believe the meaning of "long term" is, effectively, the permanent effect after the first few years.
As for (2), apparently this law would significantly benefit about 16 million workers, but about 6 million are already in higher income families (6. million are in families with total income at the 3 to 6 times poverty line. The portion whose wages are raised increases to 51% of lower-wage earners that are in families at the double or more of the poverty line), so it will have a very notable impact on about 10 million, and will raise about 900,000 above the poverty line. At the price of dropping about half a million currently employed out of their jobs. So, there is no way of saying simply yes or no: it enables some to participate more successfully in the market, it disables others from doing so. The some that it helps are a lot larger a group than the ones that it hurts like this, but the scale of help to hurt is also out of proportion: it increases the family income of the lower-wage earners by a modest amount (about 2.4%), it decreases the income of those out of a job by a catastrophic amount.
The third is probably a terrible way to ask the question. After all, it will benefit more people than it will hurt if we take my neighbor's house away from him, sell it, and split the proceeds among the 20 other families on the street. That doesn't tell us whether that benefiting more people than it hurts is a good thing or a bad thing, just or unjust. Nevertheless, if the increased wages directly help about 16 million, and another 10 to 15 million just above the $10.10 range also get their wages increased, that more or less implies many of the other 120 million workers see little change or have their gross receipts drop. But of course, 6 million of the 16 million getting their wages increased directly are ALREADY in families at 3 to 6 times the poverty level. CBO indicates that 65% of families are in the 3 times poverty level and above, and that these families will see no benefit or a drop in income from the law. Probable answer to number (3) is that this hurts more people than it helps, or comes out close to even. Though, of course, it helps poor people and hurts the (relatively) better off.
If those 3 questions were the best way to ask whether this law is good policy, the answers indicate that it would be hard to say that it is a good law. But I didn't really ask whether it was a good law being proposed, I asked whether it was a just law. To answer that, the 3 questions above don't really get at the issue. Number 3 should be the dead give-away clue for that - all sorts of things that are unjust could help more people than they hurt.
There is more than one kind of justice that the state must consider. One of them is commutative justice. For commutative justice, the state's role is that of a referee: the realm of commutative justice is that of citizen to citizen, and in each action the two parties ideally give and receive what is due from the one to the other in the specific context of their relationship. The state's role is to enforce that each carries out the obligations each owes to the other. The main way it does that is to enforce contracts - to make sure nobody says they will do X, and then reneg on the deal and not come through with the agreement to do X. Secondarily, the state has a role in making sure contracts are not unjust to begin with: outlawing some contracts (like slavery, or prostitution which is a sort of short-term slavery), and determining certain kinds of behavior for transparency so that the realities that underlie the agreements are known to both parties reasonably, and so on. The state is supposed to be a secondary actor, (contrary to Obamacare), not MAKING the contracts but telling the parties to make just contracts and to enforce them. Though contracts are not the only ways in which the citizens are related to each other: child to parent, friend to friend, etc. In all of these, the relationship is between members of the state but not primarily by reason of the state, and the state's business isn't really to construct the relationship or determine that A must choose to take on a relationship to B, but to make sure such relations and activities do not exceed norms of just behavior, where what is just is determined by other considerations than "what does the state want".
Another area of justice is different. The state has a primary role in in a form of social justice that it doesn't have in commutative justice. For example, it belongs to the state fundamentally and primarily to dole out legal honors to those whose actions deserve honor, and punishments to those who offend against the law or honor. This pertains to the polity's relationship to the members thereof, not principally between two members of society. Especially with regard to official, legal honors, this is something that belongs to society considered as a whole, not to any individual, and belongs to the state to assign on behalf of society. While it is unjust for the state to knowingly assign honors to A instead of B when the officials know for certain that A in not worthy of them and B is, nobody has a RIGHT to such honors as such, and it is not precisely B so much as society as a whole who is harmed by such unjust dealings. (If B is a soldier who did an extremely noble act of self-sacrifice but nobody knew about it, B has not suffered a loss of just deserts when the state doesn't award him honors). Likewise, if the state knowingly gives C a just punishment for a crime but withholds from D, his co-conspirator, the equal punishment, it is perhaps an injustice but not precisely an injustice to C, but rather to the whole polity.
Some people propose that there is a third kind of justice that the state must concern itself with, which is that goods be distributed justly. And this is the sort of justice that regards the minimum wage law. I hesitate to introduce this type into the discussion, because I have yet to hear someone suggest a criterion by which "distributed justly" actually makes sense. Some say "evenly", but they don't actually mean it. But we have to put this on the table, as it forms a significant element of what people think they mean when they are talking about "justice" and the state. So, looking at these 3, I ask again, what is the right criteria for deciding whether raising the minimum wage to $10.10 would be a just law? Is it merely
(4) Do the poorer have closer to the average while the richer also get closer to the average?
If that is the criterion of the sort of justice that the state must observe and attend to, then what is to prevent the state from simply taking EVERYTHING above the average away from the rich and distributing it to those who have less than the average? That, too, will achieve "justice". Or, for that matter, the state taking everything from all who are richer than the poorest, down to the level of holdings of what the poorest have right now, and simply destroying it? That will provide a "yes" answer to (4).
And, is there a specific reason that this sort of justice applies at the level of the government and not lower down?
To see what I mean, let's bring the question into a smaller scale. Suppose we have a medium-sized firm that employs 150 people, whose incomes reflect the national picture. The CEO looks over the wages of everyone, and decides that things need to be adjusted - the lowest earners need to earn more. So he calls all of the employees together and says the following: "I am going to re-vamp the wage picture. I am going to take a salary decrease, as will my 2 vice-presidents. Most of the other 10 high-wage people will see a half-percent drop as well. My estimate is that if I make deeper cuts than that we will lose critical skills to our product lines and will not keep operating well. The lower-wage earners will have their wages increase to $10.10 per hour, and some of the next rung up will see increases as well. However, we are going to have to let one of you go. I will allow the 30 lowest wage earners to vote on who among them gets released."
You can imagine most of the 30 lowest expostulating: "Hey, that's not fair! We don't want to be thrown into some lottery of being laid off. " And for the 4 or 5 of the 30 who are either least experienced, least popular, or dumbest and simply incapable of as high output as their semi-peers, they may say: Please! Don't do us any favors, just leave things the way they are."
The question isn't whether the CEO has the right to do this, the right to let go someone who probably isn't earning the company what the company is paying him. The question I have is, is it in accordance with the virtue of justice for the other 29 lowest-paid workers to be satisfied with their increase, knowing that their benefit came partly at the cost of the poor sod who got let go? Does that sit right with a just society? What kind of justice is it that aims at that sort of outcome? Would the virtuous, just-minded low-paid worker prefer to say "Hey, boss, can we just let things alone and keep everyone on the payroll?" Why or why not?