The Common Good
January-February 2000

What is an 'Ethical Wage'?

by Ruth Rosenbaum | January-February 2000

Participants in conversations about corporate responsibility and wages often use the
same words to mean entirely different things.

Participants in conversations about corporate responsibility and wages often use the same words to mean entirely different things. More accurate use of terminology is crucial to better understanding.

LEGAL WAGE. The legal minimum wage is the amount set by the legislative body of a state or nation. Legal minimum wages are not necessarily "livable" wages predicated on workers’ needs. More often they are based on the need to attract businesses to a country or a region for "economic development." When corporate management insists that they are paying the legal minimum wage, this means they are paying no more than what can be paid without violating the law of the country.

ETHICAL WAGE. "Ethics" within a particular business segment refers to the self-defined standard of practice within an industry. A so-called "ethical wage" therefore is the prevailing industry wage. By these standards, CEO and top management salaries are considered "ethical" even though CEO salaries are increasing at incredible rates while workers at the bottom of the corporate structure are forced by the "prevailing industry wage" to compete in a race to the bottom.

MORAL WAGE. Morality pertains to the established standards that arise from human conscience. Human beings are not machines needing a minimum amount of fuel and maintenance in order to produce. From a religious perspective, moral questions regarding wages proceed from the belief that each and all human beings are made in the image and likeness of God. To be human means to be both an individual person and a person in relationship.

As a moral standard, wages should reflect the contribution workers make to their companies. Wages and work requirements should enable them to meet their own needs and those of their dependents, and to contribute to the sustainable growth of their community.

JUST WAGE. To discuss wages in terms of justice is to examine the distribution of benefits resulting from the work that goes into the production and sale of products and services by any corporation. Justice raises the issues not only of compensation for individual workers, but also of the world-wide concentration of wealth in the hands of a few, and the consequent deprivation of the vast majority of the benefits of the world’s resources.

Excerpts from "Choosing A Starting Place," a paper delivered by Ruth Rosenbaum at an April 1999 conference in Britain on "Globalizing the Principles." Published with permission of CREA Inc.

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