What is an 'Ethical Wage'?

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.

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Sojourners Magazine January-February 2000
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