#158 The Market Gives the Poor a Raise
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Recent pay increases for the poor have out-paced inflation, which is more support for the idea that the market will take care of the poor, if we just let it operate freely.
The Democrat party has given up on caring for the poor via minimum wage, and the market has taken over that role. An article in the Wall Street Journal this week declares, “Biggest Pay Raises Went to Black Workers, Young People and Low-Wage Earners.” The subtitle reads, “Median weekly earnings rose 7.4% last year, outpacing inflation: Some groups notched double-digit gains.”
For decades, the Democrats claimed to be the patron of the poor by calling for increases in the minimum wage. Then, strangely, they went silent on the issue. Either they learned some Christian Economics, or had more fun causing inflation that harmed the poor. I don’t know.
But the economic fact is that the federal minimum wage of $7.25 an hour has been underwater for many years now. When a minimum wage is below the equilibrium wage, we call that “non-binding.” So for many semesters now, in my econ class at Dallas Baptist University, I’ve been pointing out that the Buc-ee’s starting wage of $12 is well above the federal minimum wage.
The Trump Economy Revisited
Quoting from the WSJ article again, “Black workers, young workers and people on the bottom of the income scale were among those who saw the largest pay increases last year, when employers were readily handing out raises in a tight labor market and high inflation environment.” Tight labor markets are good for the poor. The last time we saw the poor get rich at a faster rate than the rich got rich was during the incredible economic growth produced by the Trump administration’s tax-cutting. That swelled the pockets of the poor faster than any government program in history. The big difference is this: During the Trump administration, inflation was below 2%, and now it’s in the 7% range.
But The Christian Economist rejoices when the poor make progress, especially when they make more progress than the rich. More data: The median raise for Black Americans employed full time was 11.3%, compared with the prior year. Weekly pay for workers between 16- and 24-years old rose more than 10%. The bottom 10th of wage earners—those that make about $570 a week—saw their pay increase by nearly 10%.
Sorry Mr. Piketty
He’s the guy who is always reminding the nimble-minded about the gap between the rich and the poor. Well, according to the WSJ, it just narrowed. Oh, Mr. Piketty was busy in 2021, publishing the book A Brief History of Equality, hmmm maybe that history got extended since folks got MORE equal, as reported this week. And, he made another contribution to free market capitalism by offering the book for sale titled Time for Socialism. Get the hypocrisy? He’s selling a book for profit, in a free market economy titled Time for Socialism. If it really WAS time for Socialism, wouldn’t he be practicing the dicta – From each according to his ability, and to each according to his need – by offering the book for free? Don’t miss the point: If Mr. Piketty REALLY wanted to narrow economic gaps, he could start with trying to narrow the gap between his book sales and mine. That kind of inequality seems just fine with him. See, this is where Christianity and Economics cross: They both believe in self-interest, and Mr. Piketty is a perfect example.
The Christian Economist has never been concerned with the GAP between the rich and the poor, but only about the STATE of the poor. Our question is always, “Are they doing better?” And the answer, over and over again, is “yes.” You see, Thomas Sowell was right when he said, “Envy was once considered to be one of the seven deadly sins before it became one of the most admired virtues under its new name, ‘social justice.” Yep, perhaps the greatest living economist, Thomas Sowell is correct, both economically and Biblically. It was #10 on the list that God gave Moses, and it makes an appearance on the list that Sergiy Saydometov and I produced in our book Biblical Economic Policy. It’s called “don’t covet.”
The Value of Education
I just told my sophomores at Dallas Baptist University this week that each year of college education increases their pay by 10%. That historical data is correct. In the future? I’m not smart enough to make that calculation, but the market is.
Quoting the WSJ article again, “The annual rate of wage growth for workers with less than a high school diploma touched a recent peak in the second quarter of 2022, when it was up 11.1% over the prior year, higher than the 7.6% wage growth during that period for workers with a bachelor’s degree or higher.”
OK, are we finally seeing some inversion here? We’ve heard everyone from the Dirty Jobs guys Mike Rowe to tech entrepreneur Peter Theil and American Enterprise Institute scholar Charles Murray complaining about too many people going to college. Now, I have to be careful here, because education is what I produce for a living. But, you can’t fool the market. It knows where to put the wage increases, and it looks like it has finally figured out that fixing air conditioners and serving fast food are valuable professions. Those of us who follow the Christian worldview have known that for a long time.
Work is good
That’s one of the key concepts among the ten Biblical Commandments of Economics that my co-author and I discovered when writing Biblical Economic Policy.
The work done by the graduates I’ve been producing for 30 years at Dallas Baptist University is not more important than the work done by graduates of Vocational schools. If you think so, just try calling a liberal arts graduate to fix a plumbing leak or run the electric lines for that new youth building at your church. All work is good. Ok, with a few exceptions for prostitution and illegal drug-dealing. But in the whole, or ceteris paribus, as we say in social science, generally, all work is good.
You know, I’ve been saying for a long time that the market can’t discriminate. That was the theme of my podcast # 33, titled Ending Discrimination. It just makes sense, if you discriminate against a group, you lose either their supply of labor or their demand for your products and services. I will proudly quote Thomas Sowell twice in the same podcast. He points out that the bus line that discriminated against Rosa Parks was a public bus line, because they could afford it. Private bus lines could not afford it. That’s good for us to remember, as we see finger-wagging from social justice warriors, telling us that we need to cede more power to the government, where they can afford to discriminate.
Those Wealthy WalMart Employees
I will close with another data point about poor workers getting richer. The WSJ also published an article touting, “WalMart to Raise Starting Hourly Wages to $14 from $12.” The article points out that after the increase, WalMart, the largest private employer in the US, will pay its employees an average of around $17.50.
But wait, there’s more good news from Wally World. “The changes also include new higher-paying roles in its autocare centers, expanded benefits as part of its subsidized college degree program for workers and the expansion of a program that trains existing employees to become WalMart truck drivers.
So, do I understand this correctly: The largest private employer in America is showing care and concern for its employees, by offering them training that will lead to higher paying jobs? I thought this was the corporation that liberals loved to hate. Not today, apparently.
Oh, and their major competitor, Amazon. What are they doing? The article states, “Amazon, which recently announced plans to cut more than 18,000 jobs, mostly in its corporate ranks, said in September that it was increasing average starting pay for its front-line warehouse employees from $18 an hour to more than $19.” Okay, for all those bleeding-heart liberals who complain about the multiples in income earned by white-collar executives, this is time for y’all to listen: Amazon is cutting white collar jobs, so they can spend more on blue collar laborers. The market never takes a day off, if we will just let it function. And today, it is serving the poor.
As former Speaker of the House Dick Armey said in a chapel address at Dallas Baptist University, many years ago, “The market is smart. Government is dumb.” Let’s rejoice that the market just gave the poor a raise.
TELL THE TRUTH,
EARN A PROFIT.
Read along with The Christian Economist
- Biblical Economic Policy | https://amzn.to/3nn8inO
- Economics and the Christian Worldview | https://amzn.to/3tIsYYM
- Biggest Pay Raises Went to… | WSJ | https://on.wsj.com/3wI1g0D
- #33 Ending Discrimination | https://bit.ly/3QHmy7J
- Walmart to Raise Starting Hourly… | WSJ | https://on.wsj.com/3JxQDoS