Inequality: Can't Live With It, Can't Live Without It

In my last post I looked at the question of how to calculate the just or living wage, using figures from Father Ryan’s classic text A Living Wage brought up to date by adjusting for inflation. Commenter Restrained Radical, however, thinks that in merely adjusting for inflation I was being too stingy:

Adjusting for inflation isn’t necessary the best way to adjust Fr. Ryan’s figures. Real GDP per capita grew faster than inflation. In other words, Americans got wealthier. Using Fr. Ryan’s figures today adjusted for inflation would be appropriate if real GDP per capita was stagnate for 89 years. In 1919, GDP per capita was $805. If you only adjust for inflation, that would be $9,897 today. That’s somewhere between Cuba and South Africa. So $6.15/hour would be an appropriate living wage for a family of 5, in Cuba.

If instead we adjust for unskilled labor wage increase (4.24% annualized since 1919), $1,400 to $1,500 then would be $56,388 to $60,416. That’s probably closer to what Fr. Ryan had in mind.

In 2008, median household income in the United States was $52,029. If Restrained Radical’s interpretation is correct, then it would seem Father Ryan was advocating a kind of Lake Wobegon society, where everyone has the right to an above average income.

On one level, the desire to make the living wage relative is understandable. After all, if in specifying how much is sufficient to support a man and his family one must use a universal standard, then the minimum level will have to be so low as to be practically irrelevant in the modern world. St. Paul says that “if we have food and clothing, we shall be content,” and presumably the quality and variety of food and clothing he had in mind are somewhat below what we today would consider adequate.

On the other hand, if the living wage is relative to the standard of living of a given society, then it is probably not possible to have a society in which everyone receives a living wage. Suppose, for example, that we say wages are unjust if they are below the tenth percentile (or, to be more in keeping with Father Ryan’s text, if they are below the forty-eighth percentile). Well, no matter how rich a society becomes there is always going to be a bottom ten percent. And by definition the wages of the bottom ten percent will be below the tenth percentile, and hence unjust. On this view, then, unjust wages are like your shadow: as you move forward it follows right behind you. Which would give new meaning to our Lord’s statement that “the poor you will always have with you.”

The only way to prevent their from being a bottom ten percent or bottom forty-eight percent, etc., is for there to be absolute equality, something which has never and can never been achieved by any society on earth. Much has been made in recent years about growing inequality or about differences in inequality between the United States and Europe, but the truth is that even the societies we think of as highly egalitarian are highly unequal. Attempts to achieve real economic equality have been uniformly disastrous, starting with murder and ending in mass misery (and, ironically, more inequality; Communist North Korea, for example, is probably the most unequal society on earth). So it seems we are stuck. We have a strong intuition that having less than average is just plain wrong, but there is nothing we can do to prevent it.

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