There’s been some interesting conversation recently about Seattle based CEO Dan Price’s decision to pay all of his employees a minimum annual salary of $70,000 (for more see here).
Though well intentioned, Price’s business plan has evidently undermined the profitabiity of his business–this at least is what his brother claims in lawsuit (here). I think his brother is likely correct since, as the NYT’s article says, the plan has harmed worker morale, decreased productivity relative to labor costs and lead to key employees leaving the firm. Yes the company has acquired new clients but he will likely lose clients as well. We can’t judge the morality of a policy based solely on intention. Results matter and Price has likely harmed the economic health of his company, his brother as a minority shareholder and the loyal and hardworking employees that made his company a success.
Price’s decision bears a superficial resemblance to the parable of the workers in the vineyard recording in Matthew 20:1-16. In the parable, the vineyard owner pays those who came at the end of the day a full day’s wage. Not unexpectedly the workers who were there all day expected to be paid a premium for laboring all day in the sun. When they get only the wage for to which they agreed, they complain against the owner.
And when they had received it, they complained against the landowner, saying, ‘These last men have worked only one hour, and you made them equal to us who have borne the burden and the heat of the day.’ (vv. 11-12)
The vineyard owner, however, is not so easily intimidated.
…he answered one of them and said, ‘Friend, I am doing you no wrong. Did you not agree with me for a denarius? Take what is yours and go your way. I wish to give to this last man the same as to you. Is it not lawful for me to do what I wish with my own things? Or is your eye evil because I am good?’ So the last will be first, and the first last. For many are called, but few chosen.”
The first thing to not is that the parable though isn’t about business but the Kingdom of God. Yes, we should conform our business dealing to the Gospel. In the parable when the landowner is challenged he responds by reminding the workers who claim that he treated them justly and that in any case his money is his to do with as he sees fit. What Price did was not given people what they were promised; instead changed the rules of the game.
Though his intentions were good, his actions were unjust. Moreover, what he did, he did not only with his own money but (so his brother argues in his lawsuit) other people’s money.
This doesn’t mean that we shouldn’t try to help the unemployed and the working poor. There isn’t necessarily any moral or public policy problem with the government subsidizing the working poor. The fact is not every employee can generate enough profit for his or her employer to pay a living, much less middle class, wage. Actually, I think it would be a good idea to both abolish the minimum wage AND extend welfare benefits to include those whose income is below a set threshold. This could help those who otherwise would not be able to work.
Like the current Earned Income Tax Credit it would help those who, if they did work, be able to support themselves. More importantly though it would help people get into the job market and gain work experience to improve their situation.
Would this subsidize businesses? You could argue that it is, at least indirectly, it does. But I don’t think that’s quite fair.
First of all the business would be providing a demonstrable service to the community by helping people who might not otherwise be able to do so work. Given the importance of work to human dignity, this is a good for those who would otherwise be unemployed.
Second, the business owner is incurring some risk in hiring a worker who because of a lack of experience or education or personal discipline may not be able to do the job for which he or she was hired. Seen in that way, we aren’t subsidizing a company but giving them an incentive to employ someone who they might not otherwise hire.
The United States is a rich nation we can afford to do this. We subsidize all sorts of people and there’s nothing in my view wrong with this. What is wrong is judging policy or business decisions not by outcome but by intention. So the question is this: Are the people we want to help actually being helped and, if so, at what cost and to whom. Pretending that all jobs are worth the same salary, however, is morally wrong and financially calamitous.