“One who rules through the power of Virtue is analogous to the Pole Star: it simply remains in its place and receives the homage of the myriad lesser stars.” (2.1, Confucious, 4, Slingerland)
“The way does nothing yet nothing is left undone. Should barons and kings be able to preserve it the myriad creatures will transform themselves.” (37, Laozhi, 180, Ivanhoe)
In the thoughts of many of the early Chinese philosophers, there seems to be a consensus that a benevolent and virtuous leader will positively influence his ministers and his people to be the same. While we largely agree with this idea and have constructed our government around a similar albeit more objective concept, it is inevitable that some business owners or managers will either intentionally or unintentionally underpay their workers. However, balancing wages is like balancing taxes; a common misconception is that higher wages are always better for the workers and less beneficial for the employer. If we were to look at a simple scenario between a production line and a retail store, it quickly becomes evident that it is indeed a tricky matter for the government to deal with. If the owner of a candy production line receives a sudden notice to increase the salary of all minimum wage workers by two dollars per hour, he would be struck with a scenario where he either fires employees to cut down production costs or to simply sell his candy for more. What usually happens is a balance of both where workers are laid off until the owner can no longer afford to do so and then the price of items start increasing. The same thing happens to the owners of the candy shop; where they can only choose to increase the consumer retail price candy because they require a certain amount of employees to run the place at all times. In the end the average consumer who should be happy about an increase in wages, is buying products that are further inflated in prices.
Ideally, we want our minimum wage to allow the working class to sustain a reasonable standard of living. It is up to the ministry to evaluate the monthly requirement in order to sustain this standard, establish a proper minimum wage and adjust it periodically according to the annual inflation rate. The current Canadian minimum wage is around $10-$11 per hour. While we believe that this is adequate to sustain a reasonable standard of living, these wages often prevent lower class workers from ever finding a stable residence due to the constantly increasing real estate prices. In order to solve this issue we are presented with the options of increasing the minimum wage or the construction of government housing which will be made available to these workers at affordable prices well below the market rate. We refer to chapter twenty of the Mozi where Mozi discusses the moderation of expenditure. He primarily focuses two concepts; the efficient allocation of resources and complete discarding of all luxuries. He also talks about the necessities of the people such as clothes to keep people warm, shelter to protect people from the weather and transportation so people can actively trade. (78, Ivanhoe) While we completely disagree with discarding all luxuries and entertainment on the grounds that humans require a certain amount of entertainment to maintain a healthy mentality, what we are doing here is very much attempting to provide housing (necessities) to the people while allocating resources as efficiently as possible.
When we evaluate the two available options, increasing minimum wage seems like the easy solution that would please a large part of the population. However as previously demonstrated, sudden increases in minimum wage could result in an increase in unemployment and further inflation. Also there is no guarantee that monetary resources allocated to the working class from the pockets of the owners will actually go into solving the problem. For example, a lot of people working off minimum or low wages don’t necessarily need housing. While they might be happy with their pay increase, from a societal standpoint, it is purely transfer of funds from the employer to the workers. Also we must consider the possibility of the real estate market continuing to rise to the point where even with increased wages these people can’t afford the monthly mortgage. The second solution requires time to locate the land and actually construct the housing but proves to be more efficient in terms of resource expenditure. First, we’re building houses to provide housing for those who can’t afford it which means all the resources allocated are directly towards solving the problem. Second, we have full control over the pricing of the units making them immune to the increasing market price. Lastly, the construction of these houses open up various job opportunities for manual laborers and materials manufacturers alike and thus encourages further economic activity.