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Minimum wage laws often sound like a lifeline—helping workers earn a fair living. But what if they also create unseen harm, like pricing some out of jobs or driving up costs for everyone?
Today, we’re diving into the question: Are minimum wage laws harmful? As we unpack this topic, let’s keep Proverbs 16:8 in mind:
“Better a little with righteousness than much gain with injustice.” (NIV)
We’re going to explore wages, unions, value creation, and how all of it connects with biblical stewardship. To get us thinking, here’s a powerful quote from Henry Hazlitt’s Economics in One Lesson:
“The same sort of harmful results follow efforts to raise wages through minimum wage laws. This is not surprising, because wages are a form of prices… While minimum wage laws may help a small group create a bigger income, it has harmful effects on the rest of the population. The harmful effects exceed any possible good.” — Hazlitt
Wages & Inflation
Let’s begin by talking about wages and inflation.
Inflation typically rises faster than wages and eats away at our purchasing power. And when wages try to outpace inflation, it becomes unsustainable.
During the pandemic, we saw costs rise rapidly. Some business owners responded by raising wages—not just to help their teams financially, but also to retain good workers during the so-called “great resignation.”
But as stewards, we can’t put our trust in wages alone. Philippians 4:19 reminds us:
“And my God will meet all your needs according to the riches of his glory in Christ Jesus.” (NIV)
Even when our wages lag behind inflation, God provides. And He calls us to steward wisely what we do have.
Is Minimum Wage the Solution?
Let’s ask some economic thinkers about that.
The federal minimum wage was established in 1938—not all that long ago.
Economist Walter Williams said:
“The real problem is not that workers are underpaid, but that many are under-skilled… Congress cannot simply declare everyone’s output to be worth $7.25 an hour or more. That’s like curing a patient by declaring them healed.”
David Bahnsen adds:
“We don’t lose weight by altering our scales, and we don’t increase our output value by declaring it higher. We solve for value by improving productivity.” (No Free Lunch, p. 153)
Hazlitt continues:
“You cannot make a man worth a given amount by making it illegal to offer him anything less. You deprive him of the right to earn based on his abilities and the economy of the service he could provide. For a low wage, you substitute unemployment.”
Still, there’s an argument in favor of minimum wage laws:
If the government didn’t require employers to pay a certain amount, some would exploit workers. But here’s the thing—true capitalism involves competition. And in a free market, workers can leave for better opportunities. So, employers have to offer fair value to keep good people.
Proverbs 10:4 teaches:
“Lazy hands make for poverty, but diligent hands bring wealth.” (NIV)
This tells us that wealth and opportunity come not from mandates, but from diligence and skill development.
Are Unions Useful?
Now, what about unions?
Hazlitt admits that minimum wage laws may be necessary in rare cases—like in localities where free market forces don’t operate well. But even in those cases, he suggests unions may be a better, more flexible solution.
Let’s be honest—we often get a bad taste in our mouth about unions, especially when they’re associated with corruption or extreme political agendas. But there is a place for them.
Hazlitt says:
“Unions can serve a useful function—to improve local conditions and ensure workers receive true market value for their services.”
But here’s the catch: If raises come only because a union demands them, without a corresponding increase in value or performance, then motivation drops. That’s not healthy stewardship.
Hazlitt warns:
“The belief that labor unions can substantially raise real wages for the whole population over the long run is one of the greatest delusions of the present age.”
Real wages take inflation into account. So while unions can increase pay for one group, they often do so by raising the cost of production—which leads to price increases. That hurts everyone else, reducing their real income.
Colossians 3:23 calls us to a higher standard:
“Whatever you do, work at it with all your heart, as working for the Lord, not for human masters.” (NIV)
This reminds us that our work ethic—whether unionized or not—should honor God and reflect faithful stewardship.
Parable: Laborers in the Vineyard (Matthew 20)
Let’s take a moment to reflect on a parable Jesus told:
A landowner hires workers at different hours of the day but pays them all the same wage. Those who worked longer grumbled, but the landowner replied, “Did you not agree with me for a denarius?… Am I not allowed to do what I choose with what belongs to me?”
This is not an economic lesson. It’s a message about salvation and God’s grace.
But there is a principle here:
- Employers have the right to pay what’s agreed upon.
- The worker deserves his wages (1 Timothy 5:18, NIV).
- And Jesus is free to extend grace, even to those who come late—just like the thief on the cross.
This parable reminds us that fairness isn’t about equal outcomes, but about keeping our commitments and honoring generosity.
Stewardship Application
If you’re frustrated about your pay, start here: Increase your value.
You don’t change your worth by complaining. You change it by becoming more valuable.
Remember, you’ll likely never be paid as much as the value you generate for your employer. That’s how business works. The owner takes the risk, and they benefit from the reward.
So what can you do?
- Use free resources (like Hubspot Academy).
- Learn by doing.
- Read great books.
- Connect with wise mentors.
- Copy success and extract the principles behind it.
Proverbs 22:29 says:
“Do you see someone skilled in their work? They will serve before kings; they will not serve before officials of low rank.” (NIV)
Skillful, diligent work elevates your influence and income over time. It’s a key principle of biblical stewardship.
Closing
Are Minimum Wage Laws Harmful?
We’ve seen that while they may help some, they often limit opportunities and fuel inflation. Unions, though useful in some ways, are not a one-size-fits-all solution. But as stewards, we’re not stuck.
- Proverbs 10:4 and 22:29 urge us to diligence and skill-building.
- Philippians 4:19 reminds us that God provides.
So here’s your one step this week:
Pick one way to grow—start a free course, read a book, or connect with a mentor. Add value. Build skills. Steward well.
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