Christianity 9 to 5 - Practical resources for living your faith at work

Michael Naughton is a Catholic theologian and a management professor at the University of St. Thomas in Minnesota. This article was originally delivered as a plenary talk at the Christian Business Faculty Association 2004 annual meeting.

I have found that one of the most effective statements on the meaning of a just wage comes not from a Catholic, but from a Protestant clergyman in the early nineteenth century, a man by the name of Charles C. Colton. He wrote:

Our incomes are like our shoes; if too small, they gall and pinch us. But if too large they cause us to stumble and trip.

I find this statement insightful, because it reveals a very simply truth: Wages, like most things in life, can be either defective or excessive. Just because a market produces a wage, doesn’t give it any magical status as to its moral worth.

We have seen plenty of excess in the stumbling and tripping of certain executive salaries (large publicly traded companies). We also see the defect in the galling and pinching of sub-living wages. As an example, I want to tell the story of Ruby’s pinching here in the U.S.

Seven years ago my mother died of cancer at the age of 68. While it was a good death and profound experience for my family, it was also a very difficult time.

There were two institutions that supported us and helped us as a family: the church, and in particularly our pastor from the local parish, and the medical profession, in particular, Little Company of Mary Hospital on the south side of Chicago.

While there were several people from the hospital that assisted us through this difficult event, a woman by the name of Ruby stands out. Ruby was the hospice nurse’s aid who helped take care of my mother in the final two weeks of her life in our home. She was an African American Baptist woman, who brought a tremendous amount of joy and consolation to my mother, a traditional Irish Catholic from County Offaly in Ireland. Ruby came in three days a week to physically care for my mother—bathing her, changing the bed, messaging her ailing body, and lifting the spirits of a dying woman.

Ruby was a natural, both in terms of how she physically took care of my mother as well as how she spiritually engaged her on her impending death. We would often hear them laughing together, sharing stories of their children and talking about the Lord in their lives. Ecumenism was alive and well in that room. While they would not have made much progress on doctrinal unity, they witnessed a profound spiritual union. Ruby’s work was a great gift to our family.

Yet, Ruby was not well-paid. As a nurse’s aid for hospice work, she was one of lowest paid people in the health care industry. As a single mother with a couple of children, life was not easy for Ruby, and her wages, despite her good work, were pinching and galling.

The question is whether Ruby was justly paid, and if not, what is the nature of the injustice? From a market perspective, the question is relatively clear. The buying and selling of labor is the same as the buying and selling of any other good or service, with its price being determined by the interaction of supply and demand. In the event that quantity supply and quantity demand are not equal (i.e., not in equilibrium), then the price of labor (the real wage) will adjust upward (to alleviate a shortage of labor) or downward (to alleviate a surplus) in order to re-establish the equilibrium market clearing price. From a market perspective, Ruby’s galling and pinching is of little concern here; what is of concern is whether Ruby and the hospital are able to freely contract in maximizing their self-interest.

From a justice perspective, the question is a bit more complex. First, in order to determine whether a wage is just, we need to ask whether wages create “right relationships.” Why? Let’s look at the word itself. The word justice comes from the Latin ius which means “right.” In the Christian tradition, “right” is not understood in our typical modern situation in terms of “my rights,” especially in terms of my private right to do whatever I want with my body or my property or my company, but rather, inspired by its Trinitarian roots, are we in right relationship as is the community of the Trinity.

Moreover, the Hebrew mišpāt (justice) and şĕdāqâ (righteous) in the Old Testament refer to the fulfillment of responsibilities that arise out of particular relationships within the community—relationships between employer and employee, ruler and people, husband and wife, parent and child, etc. Thus to determine whether Ruby is paid justly, we need to examine very carefully what is the nature of the exchange between Ruby and the hospital, and what relationship has been established between Ruby and the hospital.

But is it important here to get clear one of the implications of the Hebrew and Latin roots of justice, which serves as “the fundamental insight” of what a just wage is. The insight is this: work can never be reduced to the pay given; that is, the wage given can never fully account for the labor done, precisely because work is always “more” than its economic output or instrumental value.

The money given to Ruby by Little Company of Mary Hospital cannot fully account for the work—the gift—she gave to my mother and my family. When Ruby works she not only cares for my mother by making her bed, cleaning her body, etc.—that is, in the things she changes—but Ruby’s work also changes herself. This is what John Paul II calls “the subjective dimension of work.”

So when the hospital pays Ruby, the wage given to her does not equal the work she has done. There is “something more” in Ruby’s labor that cannot be accounted for by the wage. If the hospital views the wage/labor exchange as equal, Ruby’s work then begins to be increasingly seen, both by the hospital and by Ruby, in terms of a commodity, where the money given for Ruby’s work has somehow exhausted the responsibility the hospital has to Ruby.

While there is no doubt that Ruby’s work is exchanged for money and can be partially commodified by the price given for it, work is at the same time forming Ruby’s personal, social and spiritual identity that goes beyond the work itself. This is why it is better to avoid speaking of wage as primarily an exchange as one finds in economics and business, and to speak of pay instead as part of a work relationship between employer and employee, a relationship that when it is in right order can serve to strengthen a community of work.

And here we come to see more specifically what this relationship begins to look like in terms of Principles.

This understanding of justice leads us to see at least three main principles to help clarify what this “right relationship” between an employer and employee would look like as regards to pay. They are need, contribution, and order.

A wage that fails to meet the needs of an employee (in particular, a full-time adult) is a wage that will struggle to carry the weight of a real relationship. In order for this relationship to flourish, an employer must recognize that employees “surrender” their time and energy and so cannot use it for another purpose.

A living wage, then, is the minimum amount due to every independent wage earner by the mere fact that he is a human being with a life to maintain and a personality to develop.

To get a macro perspective on how well “need” is fulfilled, consider the statistics, illustrated in the form of a champagne glass in the Figure below. Twenty percent of the global population reaps more than eighty percent of the global income. When one thinks that God has given us all dominion—that creation has been gifted to all humanity—but that most of the resources are allocated to a small minority of the population, we have created an economic system that needs to be improved. What becomes less clear is exactly how to improve it.

The Principle of Contribution and an Equitable Wage

While the principle of need is necessary for determining a just wage, alone it is insufficient, since it only accounts for the consumptive needs of employees and does not factor in their productive contributions to the enterprise. Because of effort and sacrifice as well as skill, education, experience, scarcity of talent, and decision-making ability, some employees contribute more to the organization than others, and are “due” more pay. In other words, a living wage, while a minimum floor, is not necessarily an equitable wage. To honor someone in the wage relationship is to recognize her talents and efforts.

An equitable wage, then, is the contribution of an employee’s productivity and effort within the context of the existing amount of profits and resources of the organization. I have to tell you that the Pope himself runs into this problem of contribution and equity all the time. A journalist once asked him how many people worked at the Vatican. He paused, and then said “about half.” Jokes aside, as Aquinas noted over 700 years ago, it is a failure of justice when workers are paid the same wages for unequal work, or unequal wages for equal work.

One of the more striking signs of inequity we have seen lately has been the growing wage gap between executive pay and worker wages, particularly in large publicly traded organizations. While some, like Dennis Kozlowski, may justify such compensation numbers, most people realize, especially in our knowledge-based economy, that the economic value of the company is increasingly in the knowledge and skills of all its employees, and not merely in the executives.

The Principle of Economic Order and a Sustainable Wage

Pay is not only income for the worker, it is also a cost to the employer, which has a significant impact on the economic order of the organization. Without the foresight of how a living and equitable wage will affect the economic order of an organization, a just wage becomes a high-sounding moralism that is impractical. A sustainable wage, then, is the organization’s ability to pay wages that is sustainable for the economic health of the organization as a whole.

Managing the Tensions among the Principles

These principles, as well as the fundamental insight of justice, will help a manager to realize that there are at least “three bottom lines” to a just wage: (1) needs of all employees, (2) the different contributions of each of the employees, and (3) the economic order of the organization. But the manager of a company will often find these principles in tension with one another and will be tempted to emphasize one or two, but ignore a third.

Let me share with you how one company wrestled with the tensions among these three principles and how they were able to reach a certain synthesis in their compensation policy based on these principles. I must say from the outset that this synthesis is not a static one, but dynamic that can easily be lost, but difficult to regain.

The company I want to talk about is Reell Precision Manufacturing in St. Paul, Minnesota. It is a producer of hi-tech clutches and hinges for the office machine and computer industries. The company operates on the practical application of Judeo-Christian values for the “growth of people.” Based on its mission, Reell believes that all its workers should at least be paid a “living wage” or what they call a “target wage.” But because they operate within a market system, they are faced with the following situation:

The Market Wage: The actual market wage or “sustainable wage” for assemblers in the company was $7/hour ($14,000/year).

The Living Wage: In 1996 their estimate of a living wage in St. Paul was $11/hour ($22,000/year).

The Gap: How to make up the difference? The four dollar discrepancy between a living wage and a sustainable wage was a tension between two principles operating in the company: The principle of need and the principle of economic order.

While the management of Reell desired to pay its employees not only their market worth, but also the worth of who they are (persons made in the image of God who deserve at least a minimum of need), management was all-too-aware that customers would only pay for the “instrumental value” of work. If Reell would pay $11/hour to its employees while competitors paid $7, Reell’s cost disadvantage would increase their likelihood of losing customers. Realizing that the “ought” of a living wage always implies the “can” of a sustainable wage, the company had to seriously rethink how it was doing business and then act creatively. This rethinking took on several dimensions:

Living Wages and Distributors of Justice

First, Reell’s management resisted capitulating their responsibilities to the mechanical force of labor markets. They saw themselves as moral agents, as distributors of justice in the marketplace, and not as mere market technicians. Nor were they simply working toward a “target wage” because they thought it would “attract and retain” employees who would make the company more money. Nonetheless, Reell’s management enhanced morale by showing employees their commitment to establishing “right relationships,” that is, concern for their need.

Equitable Wage and the Principle of Subsidiarity

What concretely enabled Reell to pay a living wage was a whole new way of doing work at the company. Reell redesigned their assembly-line from a Command-Direct-Control management style, where management and engineers made all the decisions concerning the conception of the assembly area, to a Teach-Equip-Trust management style where employees were taught inspection procedures, equipped with quality instruments, and trusted to do things right on their own assembly-line. Employees decreased set-up times for new products, reduced the need for quality inspection, increased overall quality, and required less supervision. By reducing these costs, the company not only was able to pay a living wage, but also created more humane work.

Reell’s management began to live the theological principle of “subsidiarity,” by pushing responsibility and authority to the lowest possible level, and thereby tapping the talents of employees, providing them the resources to pay a living wage.

Sustainable Wage and Prudential Judgment

Reell’s management realized that every action has a reaction and that raising wage levels without changing the work process would have serious consequences to their cost structure. So in order to raise labor rates to pay a living wage, they would have to reduce their overall total costs. They eventually saw that low wages were merely a symptom of a much larger problem of how the company worked. When work is designed to use seven dollars of talent, it is difficult to pay people anything more than that amount.

Prudence dictated that the living or target wage could not come automatically. The reason the company called it a target wage was that it was something it worked toward. When an employee is hired with no experience and no skills, the company pays the worker the market rate ($7/hour or whatever it is at the time), but then makes a commitment to move that employee to the target or living wage ($11/hour) through training and skill development. So as employees learn the skills and gain experience, which Reell provides, their pay goes up accordingly.

There is more to be said about how Reell’s mission guided its decision-making on wages, but it is important to be clear where the company’s responsibilities lie in light of the Christian social tradition. This tradition, especially as it is articulated in Catholic social teaching, does not hold Reell (or any firm) responsible to pay employees in excess of a sustainable wage (a wage consistent with the sound financial management of the firm), even if that wage falls below a living wage. To do so would unjustly place Reell—and all the firm’s employees—at risk of economic failure. In a market economy, no firm can be obligated to pay without regard to labor costs’ effect on its competitive position, since that would amount to the imprudent choice of self-defeating means. Nevertheless, Reell does have an obligation in justice to create right relationships with employees to work toward a living wage. This is why Reell can pay less than a living wage, so long as it is working toward correcting the situation through some set of means such as training and skill development.

A Closing Word for Those Who Teach

So what does this mean for those of us who teach? I believe one of the special calls that we have as Christian teachers is to engage our students in a process that moves them from a rather private, therapeutic and achievement-driven notion of work (often described as a “career”) to a richer notion of work infused by a moral and spiritual wisdom (often described as “calling” or “vocation.”) A critical part of this entails helping our students to move from seeing themselves as maximizers of interests to distributors of justice. This is no easy task, since there are elements in our culture that cause businesspeople to bristle at terms like “justice” and “distribution.” Let me explain.

First, businesspeople are often suspicious of the language of “justice,” and for good reason. Justice has become somewhat politicized both within the wider culture and within the church in particular, making it almost unusable in business. Justice can be reduced to a bully club by which the state coerces business to do so-called “good things” or to a prophetic denunciation by which the church condemns business behavior. This has generated a certain reservation among businesspeople, both towards the church and the state. In this sense, businesspeople have good cause to be suspicious of a stunted notion of justice and its relationship to distribution. Yet, the unfortunate result is that more often than not, businesspeople give up on the language of justice and then do not have a language that can help them personalize their responsibility, as agents of the corporation, to distribute wealth within their own sphere of influence.

Second, businesspeople in general are somewhat apprehensive of the word “distribution.” Influenced by their own education in business and economics, as well as by their own experience, businesspeople will often see wealth distribution best handled as a market decision determined by mechanistic forces of supply and demand. Often, they see no relationship between, on one hand, their decisions, their behavior, and indeed, their growth in virtue, and on the other hand, their fostering a more just distribution of resources. The question of distribution is often relegated to the private sphere of individual giving. Examples like Andrew Carnegie and others tend to be the model, where distribution is promoted not in the business itself but in the charity or foundation of the corporation.

Readers of the Scriptures cannot escape the sense that distributing wealth is an important part of living a life of faith—so important that the Old Testament (see the prophets Jeremiah, Amos, Isaiah) and the New Testament alike (see in particular Mt. 25:31ff. and Lk. 12:16–21; 16:1–13, 19–31) warn that our salvation may be at risk if we fail to distribute the resources within our sphere of influence. Scriptures are abundant with the failure of those who are simply maximers and not distributors.

As Christian teachers, we are called to engage our students to understand themselves as distributors of justice. It is business more so than government and private foundations that creates and distributes wealth. But if we neglect this call as educators, we ourselves will be under the same judgment given out to the rich man who failed to see Lazarus in his midst.

Michael Naughton, Ph.D., is an associate professor at the University of St. Thomas where he holds a joint appointment in the theology department and the Graduate School of Business. He is also the director of the John A. Ryan Institute for Catholic Social Thought, which examines Catholic social thought in relationship to business, Catholic education and urban issues. You can reach him at mjnaughton@stthomas.edu