Sep. 5 (Bloomberg) -- Fast-food joints, long inhospitable to any kind of labor activism, are suddenly beset by a surge in strikes. Over the past few months, workers at chains such as McDonalds Corp. have walked off the job in more than 60 cities, demanding a “living wage” of $15 an hour. Regardless of whether the strikes lead to better pay, they have rekindled debate over what constitutes a living wage.
That debate, however, has stranger, older and more curious origins than either proponents or detractors of the living wage might imagine.
The story begins in medieval England in the 14th century. Life, never particularly easy at this time in history, had become especially nasty, brutish and short. The preceding year, the “Great Pestilence,” better known as the Black Death, had arrived in continental Europe. The pandemic, one contemporary noted, “began in India and, raging through the whole of infidel Syria and Egypt,” reached England in 1349, “where the same mortality destroyed more than a third of the men, women and children.”
Once the dead had been buried, feudal society was shaken to its core by a startling realization. As this same chronicler complained, “there was such a shortage of servants, craftsmen, and workmen, and of agricultural workers and labourers, that a great many lords and people … were yet without all service and attendance.” Survivors could now command much higher compensation for their work, and they weren’t shy about asking for it: “The humble turned up their noses at employment, and could scarcely be persuaded to serve the eminent unless for triple wages.”
In response, King Edward III -- a wealthy landowner who was as dependent on serfs as his many lords -- issued the “Ordinance of Labourers,” which put a ceiling on how much workers could charge for their labor, setting wages at pre-plague levels. Subsequent amendments of the law -- for example, the Statute of Labourers in 1351 -- amplified the penalties for paying above set rates.
These laws effectively set what we would call a maximum wage. But the measures reflected something a bit more complicated than an attempt to stick it to the serfs. They embodied a distinctly medieval belief that one’s earnings should be commensurate with one’s station in life. The Catholic theologian Thomas Aquinas wrote that a man’s “external riches” must be sufficient “for him to live in keeping with his condition in life.” Anything less was cruel; anything more was an enticement to sin and a threat to the social order.
As the historian Kevin Blackburn has convincingly argued, while laws governing wages initially set a ceiling on compensation, they were ultimately used to set a living wage, arguably as early as 1389, when an amendment to the Statute of Labourers effectively pegged wages to the price of food.
As the centuries passed, the justices of the peace charged with setting maximum wages appear to have begun setting formal minimum wages as well, though the evidence is fragmentary. Nonetheless, the practice eventually gained statutory recognition with the passage of an “Act Fixing a Minimum Wage,” issued in 1604 during the reign of James I and aimed at workers in the textile industry.
The idea of encumbering wages with either an upper or lower limit would soon fall victim to the liberalizing tendencies of an increasingly capitalistic England. By the early 19th century, the Statutes of Labourers had been repealed. But the argument over wages didn’t disappear. As labor unrest swept many industrial nations in the 19th century, the concept of the minimum wage or living wage resurfaced in unexpected places.
The first was the Vatican. In 1891, Pope Leo XIII offered a distinctly medieval take on the labor question. In his Rerum Novarum, the pontiff called for the passage of laws to remove “the causes which lead to conflicts between employers and [the] employed.” Foremost among those causes, he averred, was the insufficiency of wages. “To defraud any one of wages that are his due is a great crime which cries to the avenging anger of Heaven,” he declared.
But there was an easier way to solve the problem than involving the Almighty. Instead, the pope counseled the revival of the medieval living wage, arguing that the compensation of a wage earner should be sufficient “to support a frugal and well-behaved wage-earner.”
The encyclical resonated in nations that had high numbers of both Catholics and aggrieved workers. Among these was Australia, which along with New Zealand would become a cradle of the modern minimum wage movement. In the 1890s, Australian Catholics began agitating for the implementation of a living wage. The year of the encyclical, Australian Cardinal Patrick Francis Moran called for wages sufficient to “yield a competence … for the frugal support of [a worker’s] wife and family.”
The first genuine minimum wage laws were established in the states of Victoria (1894) and New South Wales (1895). They dictated that unskilled workers employed by the government be paid a living wage of seven shillings a day. As one legislator declared in 1894, “the workers should have a rate of payment which would enable them to maintain themselves and their families in decent comfort.”
In the succeeding years, support for minimum wage legislation grew. Catholic reformers continued to revive the medieval idea of a living wage. Foremost among these figures was Henry Bournes Higgins, the presiding judge in the Commonwealth Court of Conciliation and Arbitration.
In 1907, Higgins heard a case involving the Sunshine Harvester Works, the largest manufacturer of farming implements in Australia. Under a newly passed law, the company would have to pay a significant tax unless it could prove that it paid its workers “fair and reasonable” wages. The law didn't set those wages; it was up to the court to decide whether Harvester met that threshold.
Higgins rejected the company’s claims that it paid reasonable wages. More important, Higgins declared that the court had the right to a set a national minimum wage in the private sector, and he did: seven shillings a day for those working at unskilled labor. Higgins declared that a living wage must be sufficient to provide a “reasonable and frugal comfort.” As Blackburn observed, Higgins effectively “secularized the living wage,” reviving a medieval concept for modern times.
Though Harvester managed to get the decision reversed by a higher court, the opinion quickly became iconic. Higgins and his judicial allies managed to secure widespread acceptance of the idea of a national minimum wage through other opinions. The minimum wage was here to stay.
Australia soon became a kind of Mecca for reformers elsewhere, who made the pilgrimage to study these and other innovations firsthand. When reformers in the U.S. proposed a minimum wage to drive wages up, they immediately went Down Under.
(Stephen Mihm, an associate professor of history at the University of Georgia, is a contributor to the Ticker. Follow him on Twitter. This article is the first of a series on the history of the minimum wage.)