Abstract
This paper examines Msgr. John A. Ryan's economic thought regarding the mechanics by which an increase in the minimum wage is funded. In particular, a mathematical comparative-static model is used to explore Msgr. Ryan's economic assumptions concerning the channels by which income is redistributed to workers from other factor owners. The analysis shows that Msgr. Ryan's approach includes assumptions regarding economic relationships and implies specific values of wage elasticities.
Notes
1 An excellent discussion of Ryan in the context of the American Church can be found in Warner (Citation1995). A good biography on Ryan is in Broderick (Citation1963).
2 A comprehensive treatment of Ryan's economic thought is beyond the scope of this article. The interested reader is referred to Gearty (Citation1953).
3 Ryan's two main books on the subject are Distributive Justice and A Living Wage. The latter is his published doctoral dissertation. In Distributive Justice, he defines the just wage as based on the right to a decent livelihood. Such a wage would enable the worker to “live in a manner worthy of a human being” (Ryan Citation1942: 273).
4 There is a discussion of Hobson's views in the context of business cycle theory in Schumpeter (Citation1963).
5 Ryan's writings reveal a very eclectic list of sources, ranging from Alfred Marshall and Richard T. Ely to Sidney and Beatrice Webb.
6 At the time, Ryan's advocacy for the minimum wage and other programs was controversial. See Schmiesing (Citation2002: 145 – 159), for an account of some of the contemporary debates over Ryan's conception regarding the proper role of the state.
7 One example is that as the cost of a good or resource rises, the typical reaction of a buyer or company is to economize by acquiring less of that product or resource.
8 See the Introduction to Distributive Justice. Ryan broke with the classical (i.e. Ricardian) tradition of assigning categories of incomes to specific social and economic classes and with the Marxist idea of class conflict. Instead, he saw redistribution policy as a method of empowering the poor. In principle, he did not identify the poor exclusively with workers because he acknowledged that many workers earned a living wage while many business people did not.
9 For simplicity, complicating factors such as taxes and returns to human capital are ignored in this analysis.
10 Elasticity measures how two variables are related. It shows how a one percent change in one variable affects the percentage change in another variable. The percentage change in variable x is approximated by the expression ∂x/x. The elasticity between two variables x and y is represented by the expression ∂y/y÷∂x/x.
11 The long-run is a period of time long enough to allow firms to enter or exit the industry. Since there is enough time to acquire or dispose of all resources, there should be no fixed costs in the long run.
12 For example, an anthology of readings from Distributive Justice and A Living Wage edited by Harlan R. Beckley is referenced in the February 2005 “Minimum Wage” statement at http://www.usccb.org/sdwp/national/minimumwagebg05.htm.
13 Due to his adherence to the underconsumption theory of recessions Ryan's expectation was that most of the increase in wage compensation would be funded from interest income.