In my last post, one commenter disagreed with my characterization that many of Mr. Biden’s approaches are ungodly. He acknowledged abortion, but found comfort that Mr. Biden is “is at least familiar with the leadings of God” since he prays. That gives me no particular comfort, as the Bible is clear that it is possible to have lips that praise God, and yet be far from him in heart. Now at one level, that is everyone of us: the most pious person still has a wicked heart and needs to trust the finished work of Jesus Christ on the cross as sufficient payment for our sins to reconcile the vast gulf between the God of our praise and the sinful condition of our hearts. Yet at another level, we are told to judge people by the fruits that they bear. And that is one of the purposes of this blog–to compare political economy policies with their consistency to the revealed word of God.

It was very sad to see Mr. Biden abusing the constitution (e.g., executive orders) to throw Keystone Pipeline workers out of a job. You can debate all day about the number of jobs affected, but the company reported that it would be more than 1,000. I’d love to see Joe Biden personally come to the dinner table of the union member who just lost their job and explain why he just threw them out of work. I’d like him to see the tears of that wife and the children who depended on that paycheck, and explain why it was more important to the good of the world that he sacrifice their jobs to the environmentalist altar. Killing the Keystone Pipeline, if anything, will likely lead to more environmental damage, as a pipeline is much safer with vastly lower risk of spillage (compared to the alternative) and, once constructed, will lead to no CO2 emissions to transmit (as will the trucks and trains that will haul this oil that will not stay in the ground). But hey, it’s the intentions that matter–and their’s are good. Right?

Yet this is not as bad as Mr. Biden’s proposed $15 minimum wage, which he has proposed in his $1.9T Covid relief bill–just a horrible idea. Who doesn’t want people to paid more? But legislating a wage that seems “fair” to the political class is highly destructive, and based on willful economic ignorance. Wages and salaries tend to get bid to the level of that value that employee can bring to the company. Not perfectly, of course, and it’s always a dynamic process. But the idea that workers provide all this extra value to the firm, and that leads to high profit levels that we can just legislatively redistribute is simply fantasy. First of all, the industries (e.g., restaurants) which use low skilled labor tend to be very competitive–there is little extra “profit” just waiting to be redistributed if we were bold enough to act. You can see this by the numerous new entrants as well as the exits to this industry. But much more importantly, let’s say I’m wrong–and there are vast profits that are being exploited out of these low-skilled workers. Then the solution is obvious: other competitors should immediately open up another restaurant, and bid away these undervalued resources, and be content with still high, but now not vast, profits. But if there are high profits, just not vast, are there not other entrepreneurs that would be greedy enough to want to steal the high profits away by bidding away those workers and starting their own business, and now make above market profits? Where does this end? Yes, you guessed it; it will end when the worker is paid according to what they bring to the table to get to an average profit level. When we do not see capital being reallocated to a particular industry, that is a clear signal that that industry is not making superior profits. And industries that use low-skilled labor are not particularly the most profitable. And did anybody explain to us why the wage rate in Lower Alabama should be the same minimum as Los Angeles? Why is that fair again?

So why do I think this is unbiblical? Because work is a gift from God, and is inherent to our dignity as image bearers. Most of us find some satisfaction in our work, even if we don’t particularly like our jobs. Very few people just enjoy being total slugs, even though most of us have some inner couch potato just waiting to come out. Going from the current minimum wage of $7.25 to $15 an hour would be a tremendous shock. The last time we had a large increase ($5.15 to $7.25) was also ironically implemented in a bad economy, and low-skilled minority youth hit ~ 50% unemployment rate. To make a law that makes it illegal for someone to work that does not have skills equal to what some special interest group thinks is fair seems to me to be an unbiblical policy.

Over at the Grumpy Economist, University of Chicago’s John Cochrane suggests people like me should not make quite so much fuss over the minimum wage:

However to my free market friends, I think we too make too much fuss about the minimum wage. There are hundreds if not thousands of labor market distortions from federal state and local levels. The whole argument about “employee” vs. “contractor” tells you about the thousands of pages of regulation attached to each. Occupational licensing, mandated benefits, comparable worth, hours and terms of service, high payroll and income tax rates, the absurd growth of HR and compliance departments, union-friendly laws, and so forth are in my view bigger labor market distortions than the minimum wage. The minimum wage attracts attention because its so simple once you understand basic econ 101, and because it attracts so much unthinking spend-other-people’s-money-to-make-me-fee-good adulation from its attractors, but that does not mean we should elevate it to the top issue in labor economics. 

I don’t disagree that there are far bigger distortions than the minimum wage–and Mr. Cochrane hits many. But the minimum wage harms the most vulnerable the hardest. If you are a low-skilled worker that is not productive enough to merit a higher wage, the best way to get those skills is to be in a job. The usual illustration of cutting off the lowest rungs of the economic ladder is thus apropos. And given that work is an inherent part of our dignity, and that increasing the minimum wage falls hardest on youth and minorities, the most economically vulnerable, I think that this is an ungodly policy. If you don’t think I’m right, the next time you are allowed back in a McDonalds, take a hard look at that electronic touch thingy that you are entering your order in. Ask yourself why that came there. Who used to do that function? Where is that person now? And ask yourself how increasing the minimum wage is going to help those forgotten rural areas of the United States? What is going to happen to low-skilled workers in those towns?

Surely more than our intentions matter.

PS: Yes, I did pray for Mr. Biden this morning per my last post. I’ll probably fail tomorrow, but I succeeded today!