Is it not lawful for me to do what I will with mine own? Is thine eye evil, because I am good? (Matthew 20:15).
This is the most powerful affirmation of private ownership in the New Testament. The only affirmation more authoritative was God's announcement of an ownership boundary around the forbidden tree (Genesis 2:17).
In this pair of rhetorical questions, Jesus challenged the idea that an aggrieved participant in the transaction -- an early morning worker -- has a moral claim retroactively against the employer, who came to an agreement with the worker, and who then fulfilled the terms of the original agreement.
The context of this affirmation of ownership rights was a parable. Jesus described a man who owned a vineyard. The owner wanted to share the work. He wanted to bring as many workers as he could into the vineyard, so that they would have employment. Of course, he also had goals of his own. He wanted to make certain that the vineyard would be cared for and made more productive. But his initial motivation was to help others gain employment.
So, one fine morning, he came to a group of unemployed laborers and made an offer. He would hire them for a day for the payment of a penny. (This was before central banking; the offer seemed plausible to Jesus' listeners.) In the third hour, which meant 9 AM, he again went out in search of other workers. He found some of them who were idle, waiting for work. He hired them, and he promised to give them an honest day's wages. They trusted him, so they went into the vineyard to work. He did this in the sixth hour, the ninth hour, and the 11th hour. In each case, he promised to pay them fairly.
At the end of the workday, he paid each man a penny. That was what he had offered the men who had been hired early in the morning. Those who were hired later had no complaints, because they were getting paid as much for a partial day's labor as the first men who were hired received for a whole day's labor.
Those who were hired earliest complained. These others had been paid the same amount, they complained, but they had worked fewer hours. The others did not complain, although most of them did work a lot longer than the last group, who had been hired in the 11th hour, and who also received a penny. Late-comers knew that it was a good deal, because they were being paid more per hour than those who had been hired at the beginning of the workday. Why complain?
The first group did complain. The owner of the vineyard had a specific answer: "But he answered one of them, and said, Friend, I do thee no wrong: didst not thou agree with me for a penny? Take that thine is, and go thy way: I will give unto this last, even as unto thee "(vv. 13-14). Then he announced his principal ownership: he had the right to do what he wanted with that which he owned.
His goal had been to spread the work. He wanted to hire as many people as he could locate at a competitive wage. He benefitted the community, and he benefitted the individuals hired. He also benefitted himself. This was a win-win-win deal. But still, there were complaints. "It's just not fair!"
The lesson of the parable is twofold. First, the best way to spread the work is to allow voluntary negotiation. Second, the appropriate wage is the wage that clears the market. This means that there is nobody who wants to work who does not gain employment, and there is no employer standing around, looking for somebody to hire. Throughout the day, the employer in the parable had offered to hire all the men available at that hour. His offer cleared the market every time. Only the earliest employees complained at the end of the day.
In the parable, there were owners of labor to rent, and there was an owner of money to pay them. A mutually agreeable arrangement was possible. All of the labor owners got what they agreed to, hour by hour. The contract that bound them together for the day was honored by all parties.
If the owners of labor had not found a willing employer at a wage they were willing to accept, they would not have gained any money. They would also not have contributed to increased productivity to benefit specific future customers, as well as the community in general. Their skills would have been wasted in idleness. Their productivity would have been zero. This would have resulted in reduced output, which would have reduced the wealth of customers in the future. Future customers would have had a smaller array of goods to choose from.
The owner of the vineyard put his capital to good use. He had land and vines and money. By adding labor to his land, he was able to increase production. This was one of his goals. It also made possible greater income in the future, assuming that he was correct with respect to what future customers would be willing to pay for the output of his land, vines, and hired labor.
The same analysis applies to every labor contract. Someone wants to hire labor at a particular price, and he has the right to make an offer to those who might be willing to supply him with this labor at a specific price. The laborers also possess the same right of making a bid.
A would-be employer comes to a group of possible employees. He makes an offer to them: so many hours of labor of a specific kind, in exchange for a specific amount of money.
Here is what is sometimes misunderstood. This is not a job. This is a job offer. Too often, people confuse the two.
They never make this conceptual error when discussing marriage. A man may propose marriage to a woman, but this is not a marriage. There is no marriage until the two parties come together in a joint effort. The same is true of a job.
Similarly, a would-be employee may propose a job to a would-be employer. His offer to a prospective employer is just as valid legally as the would-be employer's job offer is to a group of workers. It is an offer -- a bid. It may be rejected.
The legal right to bid is the source of jobs in a free society. This legal right makes possible the division of labor. Any interference by the state with the right to bid will decrease the number of legal bids. That of course is what the state's interference in the job market is all about: to decrease the number of legal bids. This law will reduce the number of jobs because it reduces the number of legal bids. Of course, I am not talking here about black market job offers. These are illegal, and they have high risks associated with them.
Then there are the would-be customers in the future. They will have money. Customers look forward today to an increasing supply of future goods and services to purchase. They dream of economic growth. The free market is a way for societies to enable customers to match their demand with supply.
Politicians toss a stone through the window. They do so with a political promise: there will be jobs for more workers.
First, the politicians say that there are people out there who are willing to accept job offers, but there are no job offers for them. The politicians say that this law will create jobs.
Second, politicians say that if the state forces businesses to pay higher wages per hour to any employee who works more than a standard workweek, businesses will then hire new workers at the normal weekly wage per hour. Obviously, this is a subsidy from the workers who work 40 hours a week, and who also would like to work overtime at the same hourly wage in order to earn more money. They are penalized. Their bids are declared illegal. Other workers, who have not yet worked 40 hours a week, are given the right to bid for the remaining hours of the workweek.
This is a minimum-wage law. It is rarely discussed in these terms, but that is what it is. It applies to every worker who has worked 40 hours in a week in a particular job. This time, politicians accurately assess the inevitable effect of this minimum-wage law: reduced employment. They understand that the law will reduce the number of jobs for a particular group of workers: workers who work 40 hours a week so far, and who want to work longer for the same wage per hour.
Politicians argue that this law will force businesses to hire part-time workers at the same hourly wage that is being paid to the 40-hour week workers. These part-time workers will be hired to do the extra work. Politicians argue that the part-time worker will be cheaper to hire for the business, which is now compelled to pay more per hour to the worker who has already worked 40 hours in the week. By raising labor costs of overtime workers, politicians say, the law will spread the work.
What about the businessman who is ready and willing to pay an existing worker if he wants to work more hours at the same hourly wage? What about the existing worker who is willing and able to work these extra hours in order to earn more money? Each of them implicitly asks this question: "Is it not lawful for me to do what I will with mine own?" The politicians who vote for this law have an answer: "No."
If the businessman decides to pay more per hour to a worker who works beyond the initial 40 hours a week, he will make this arrangement only with his most productive workers. Such workers are always in short supply. They are worth the extra money, and they get the extra money only because the state intervenes and makes it illegal for the businessman and other members of the workforce to work out an arrangement at the standard wage per hour.
The law raises costs for the business. Businesses then have to reduce output below what they otherwise would have produced. The only alternative is to hire part-time workers, who are obviously less efficient than full-time workers, which is why they are part-time workers. Therefore, most of the 40-hour-plus workers will not get these jobs. They will have to settle for less income.
The businessman may decide to hire part-time workers at the standard wage. But part-time workers are less productive than full-time workers who are already on the payroll. These are marginal workers. This is why no one has hired them on a full-time basis. So, in this case also, costs of production rise. Less is produced. Customers lose.
Foreign manufacturers and foreign workers can now increase their output, while keeping prices low. They become more competitive in the domestic market because they are not under a similar legal restriction against hiring full-time workers for a few hours more a week. Foreigners benefit; domestic businesses and workers do not. The law spreads the work -- no question about it. It spreads the work to foreign workers. But this is not what the politicians had promised.
Because of this law, everyone in the labor markets experiences a loss of freedom, which means a reduction in the value of ownership rights of labor. This is rarely seen or mentioned in defenses of laws mandating extra pay for work beyond the normal work week. The law makes almost everyone in the society poorer. The law reduces the potential for voluntary arrangements that are mutually beneficial to employers and employees.
Hazlitt in 1946 did not see what was about to begin as a result, in part, of the overtime law: the steady reduction of blue-collar jobs. First, businesses began to buy machines to do the work that blue-collar employees otherwise would have done. The machines now became profitable because the government interfered with the labor markets, which deliberately forced up the price of overtime work. Machines are not paid overtime. This reduced the amount of piece-rate work for the federal government to spread.
Second, businessmen imported partially assembled components. Workers outside the United States were able to get the jobs that domestic workers could no longer obtain because the law restricted their ability to work overtime. This reduced the amount of piece-rate work for the federal government to spread.
The third strategy of businesses was decisive. Businesses throughout the United States began to redefine blue-collar jobs as white-collar jobs. This reduced the amount of piece-rate work for the federal government to spread. Managers are paid salaries. They are not paid by the hour. So, businesses shifted production out of manufacturing and into what is known as the service sector of the economy. Salaried workers can be pressured by competition from other workers to work longer than 40 hours a week. Because white collar workers are paid a flat salary, every additional hour that they work in the payment period lowers their hourly wage rate. This is completely legal. As long as someone is not paid by the hour, the law against working overtime at the same hourly wage no longer applies.
Labor unions in the United States have had little success in organizing workers in management positions. They have had little success in organizing white collar workers generally. Because of greater political power in Western Europe, labor unions have had greater success in controlling labor markets, but in every Western nation since 1955, the percentage of output contributed to the general economy by manufacturing has fallen. It is still falling. Labor unions, with government backing, have priced blue-collar labor out of the market. The number of blue-collar jobs has steadily declined. The influence of labor unions in the general economy has also steadily declined.
Jesus' parable of the vineyard owner and the workers had it exactly right. The way to maximize employment is to allow sellers of labor services and buyers of labor services to work out mutually beneficial terms of employment. This process of negotiation is what allows the labor markets to clear. Workers who are willing to work at the wages offered can find employment, and employers who are willing to pay these wages can hire all the workers they want.
Christian economics has an answer to this question: "Is it not lawful for me to do what I will with mine own?" The answer of Christian economics is this: "yes."
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