Friday, July 24, 2009

Minimum Wage Increases: do they help?

Today across the nation minimum wage increases from $6.55 to $7.25. Before taxes that can add another $28 per week into your paycheck of low income families or about $1,450 per year. That is a nice 10% increase in their wages.

As a Christian, I believe that it is the obligation of the Christian community to care for their poor and widows. The Bible gives us many examples of ways the poor were to be cared for in both the Old Testament and the New. There were commands to leave some of the harvest on the ground for the poor to glean. There was the practice of releasing the poor from their debts every 7 years and the year of Jubilee where their possessions were restored every 50 years.

As a budget coach and a volunteer with Crown Financial Ministries, I have great compassion for the financial struggles. I believe the challenges are greater now than they were even several years ago. More and more constraints to the budget degrade the American lifestyle and even force families into financial instability.

Studies show that families need hourly wages of $12 - $16 per hour (depending on the number in your family and where you live) just to live independently. In my ministry work and now in my profession, my goal is to help families get the education and skills they need to sustain them. As God's people we should invest our efforts in pleasing Him by using our skills and our wealth wisely I hope to encourage families to do just that. I recognize that there are circumstances in which individuals are not able to overcome their poverty and that is where the church needs to be much more active than it has been. That will be a topic for another blog.

Raising minimum wage has some significant negative consequences that dramatically affect the welfare of the low income worker:

  1. Employers pass their increased costs on as increased prices for product. Let's say you work for a retailer that pays minimum wage. They sell low cost products to families like you. Since minimum wage is increased 10%, the employer needs to pass on that cost increase to its customers. This has a compounding effect as the product they purchase from wholesalers is also now increased because their employees got an increase in salary. The wholesalers also had to pay more for their product because the manufacturers had an increase. The manufacturers had to pay more for their parts because their suppliers had an increase. You can see that the increases grow.
  2. Cost increases do not stop at the minimum wage worker: The employer must consider the performance and seniority increases that other workers have received over time as well in order to maintain an incentive to employees to strive to move up the wage scale through hard work and diligence. If you were making $7.25 because of your hard work prior to the increase, is it fair to now bring all employees up to your wage scale and not keep your incentive in place? The employer must give wage increases across the wage scale to keep the incentives in place so their costs don't just increase for the minimum wage workers but for all costs.
  3. New incentives exist to use foreign inputs: If all the manufacturers have a 10% increase in the cost of materials and their wages increased by 10%, they need to sell their products now for even more than 10% perhaps up to 20% more. As a wholesaler who has to pay for this increase, I am now incentivized to look to a less costly product to fill that need. Where can I look? Overseas. Because we are more and more a global economy, foreign products are more easily exchanged for those that were American made. That means the supply inputs and the manufacturing work goes to foreign workers and more Americans are out of work; Americans who used to work for low wages now find they are unable to find work at any price.
  4. Quality of products are degraded: In order to remain competitive, your retailer may be forced to purchase lesser quality products in order to keep business. That means that the things you purchase every day now may have less value but they cost the same. Everyone's quality of life becomes degraded as a result. Quality products are less affordable, so merchants who sell higher quality products may have to either choose to degrade their inventory or close their doors.
  5. Products purchased by low income workers are more expensive: The low income worker may find that they are not any better off than they were in the first place because they need to now pay more for their burger, groceries, household goods, services, and utilities. If they received a 10% increase, but the cost of products go up in price by 10% they are actually worse off, because of the taxes that are paid on top of the purchase are greater and further reduce the amount of money in the low income worker's pocket.
Raising minimum wage is meant to help the low income worker, but it cannot serve it's purpose. The working poor are not helped by minimum wage increases. The only way they are helped is to improve their education and skills so they can qualify for higher paying positions. Minimum wage should be a beginning point for a wage earner not the level at which they exist long term. The American dream of opportunity for all people was based on that concept.

I believe that Christians need to become more involved in the lives of the poor and the struggling widows. We need to support them in their time of need and help them to get more opportunity. Churches can develop better outreach in their neighborhoods if they are extending the love of Christ in practical ways that the unbelieving community around them can see. Consider how you can put Christ's love in action today. If you want to find out how your church can become more involved reaching the needs of your members and beginning an outreach to the community, feel free to contact me at

Tuesday, July 7, 2009

Where are you going?

Hello gentle reader,

I have been pondering why in these days when we have so much information available to us why there are so many people who struggle with financial affairs. It should just be a matter of math, right? At its core, financial management begins with spending less than you make. To balance the equation, you can either increase income or decrease spending. It seems simple enough, but is that what this is all about?

At the core of every financial plan is the value system of its manager. Our motivations for work and spending are driven by what is important to us. Consider all the women who choose to leave work for a time so that they can care for their children. These women have chosen to act on their values and it has a financial impact. These families are willing to sacrifice wealth in favor of building character and security of relationships for their children. They made the choice to forfeit income and spending in order to accommodate their goals.

On the flip side, (old record slang; means the music on the opposite side of the record) how many of our decisions about earning and spending are not driven by our value systems? How many times do we allow advertisers to coerce us into making split second choices to take advantage of an offer that won't be available tomorrow? Advertising prompts us to make emotionally driven decisions regarding the spending of our money. I will write more on that another time, but suffice it to say that when we are being driven emotionally, we frequently are not adhering to our over-arching goals.

Financial planning (or any planning for that matter) is based on establishing goals that guide the project or process. In the case of Financial Planning the goals are life goals and they guide the decisions around earning, spending, saving, investing and gifting. I believe there are so many people floundering financially is because they have not established their purpose in life. They make only short term decisions because they have not developed a vision for their future.

As Christians we should be leading the world and modeling a purpose driven life. Our purposes should be fixed on so ordering our lives to honor the Lord and growing in the likeness of his character that it affects how we order our time and our money. I have said it before...I would do such and such, but I don't have enough time. I have heard over and over again that the cause of financial stress is a lack of income and available savings.

It really isn't the LACK of time or money that causes the issues that we face generally. It is the ORDERING of our decisions surrounding these commodities that gets us into trouble. Let me ask you, is Jesus Christ your Lord? Do you have a personal relationship with Jesus Christ; one that you can depend on to save your soul? Does this relationship change how you order your time? your money? How much time do we give to prayer? How much time do we give to Bible Study? How much time do we give to applying the lessons learned from our Bible Study? Are we seeing Jesus' character being developed in our lives? To order our decisions according to God's principles requires that we are walking in the Spirit and that we actively discipline our choices.

The same is true with our financial decisions. If Jesus is our Lord, then every penny of our increase should be dedicated for the purpose of serving him well in whatever circumstance we are. By in large we don't see that to be true in our lives, generally because we have not set our purposes down before the Lord and established a plan to achieve them. When we have established goals, our life takes on new direction and purpose. Every decision that we make becomes ordered to ensure the success of our mission.

There is more to serving the Lord than just living day to day and spending the increase for our comfort. We live in economically pressed times primarily because we were not focused on eternal things but on temporal. We have been very short term in our focus and have not prepared for our future.

Today is the day we can change all of that. I have established a planning firm with that end in mind: to help families and churches establish an eternal focus and order their time and wealth around the eternally minded goals we have set. You can visit me at or write me at You can begin yourself as well by praying about the following - you need God's focus to answer these questions:

1. What do you want to be remembered for after the Lord takes you home to heaven? What impact do you want to make in the lives of others? What character qualities do you want to develop? Why are you here? What is the Lord's plan for your life?

2. If I were to be successful in my life's mission, what are my benchmarks along the way. What should I have accomplished in 20 years, 10 years, 5 years, 1 year?

3. What should I be doing today to further these goals? Do my choices with time and wealth help me toward my desired end?

I understand that we are often caught up in the busyness of our day to day lives. There is so much to do and precious little time. It is very easy to lose the grander picture in the pixels of our daily routines. That is why we must take the time to establish our goals to give our life direction. Once you have set these goals down in writing, you can just check back regularly to see if you are moving toward their success or away from it.

Some things may need to be stripped from our lives that don't do anything to perpetuate our mission. I have to personally consider whether my time is well spent watching television or surfing the Internet. I have to personally consider whether my work attitudes honor God. If He were to stand next to me, would he be pleased with my spending choices? Our Lord cares about the details of our lives because it is in the details that our character is developed. Luke 16:11 says it well for me, "If therefore, you have not been faithful in handling worldly wealth, who will entrust the true riches to you".

Let us run this race with purpose and perseverance. This is not a race for the fainthearted but for those who will keep their eyes on the prize of our high calling. Remember our charge given to us in Hebrews 12:1-3: "let us throw off everything that hinders and the sin that so easily entangles, and let us run with perseverance the race marked out for us. Let us fix our eyes on Jesus, the author and perfecter of our faith, who for the joy set before him endured the cross, scorning its shame, and sat down at the right hand of the throne of God. Consider him who endured such opposition from sinful men, so that you will not grow weary and lose heart."

My gentle reader, be strong in the Lord and in the power of his might that you may be able to stand against the influences of this world and live a bold life in witness to the work of Jesus accomplished in you and for the world.

Thursday, July 2, 2009

Income Issues

Whenever I meet with people wanting counsel for their budget, I often hear them say that they just don't have enough income to be able to sustain them. Let's face it; housing is expensive, you need to be able to have transportation to work, and by the time you pay your essential bills, the money is more than gone. No wonder people look to credit cards to sustain them and find it impossible to save.

Every budget can balance if there is spending that is less than income. In order to balance a budget, you can do two things: 1. Increase income or 2. Decrease spending. In this blog, I hope to give you some food for thought on the spending side of your budget.

If we truly believe that God is the owner of everything, then he also must be the provider for the income we have been given to manage. It doesn't mean that there won't be challenges for a steward, but as we rise to the challenges and face them with godly attitudes and responses, God develops our character and we increase our trust in him.

Consider the following questions as you analyze the level of income you have:

1. Is this the income and work that God has given you?
2. Are you completing your work to the best of your ability?
3. Are there other income opportunities you could pursue?
4. Are you working to increase your income opportunities in the future?
5. Is God calling you to be content with the income you have been given?

Many people believe that more income is the answer to their financial problems. Think of all the people running out to buy lottery tickets in hopes of gaining prosperity. I think that the Bible would say that the greater issue is spiritual. As we look to the Lord to provide for our needs and really trust him rather than trusting ourselves, we find that God begins to move in special ways. He may provide for a need through the church or from an unexpected windfall, but if you are sincerely looking to him to sustain you, he will be faithful.

Giving: Our giving back to God a portion of his increase to us is evidence of our trust in him. We don't give to get back, but because he has already given to us. Giving is an act of worship and is our response to God's goodness in our lives. It is a sacrifice of thanksgiving. We will talk more about giving in another blog, but for now, we can say that we return thanks for God's financial, physical and spiritual provision in our lives.

Contentment: Paul said in Philippians 4:12-13 For I have learned to be content in whatever circumstances I am in. I know how to get along with humble means and I also know how to live in prosperity. I can do all things through Christ who strengthens me. I believe that contentment is not something that comes naturally to us. We are naturally selfish and rebellious. Even Paul said he had learned it. Boy, if Paul had to learn it, how much more do I need to learn it. As we practice contentment in what we have been given and look to God to supply all our needs, He does a marvelous work in our hearts and in our financial affairs.

Work: Some people don't have enough income because they have not worked heartily as unto the Lord. When we are slack in our work, it is right that we should not progress along the income scale. God ordained work and gave it to us. Work gives us a sense of mission and purpose. We can know that we have done our part when we do our best and feel confident in going to God to ask him for our provision.

Selfishness: Some people have less because God has seen their mismanagement of what he has given them. God does bless us with increase and when we exhibit faithlessness, he uses our circumstances to correct us and redirect our dependence to him again. When we spend our money selfishly and when we do not give God the credit for our provision, we are acting wickedly and if we belong to him, we can expect that he will respond in loving correction.

Calling: Finally, some people are selected by God to have less. Think about it. We need to have believers at every income strata if we are to be effective witnesses to the world. The large majority of the population have less rather than more, so it would make sense that God would choose his people to live with fewer means so that we can shine as lights in a dark world around us. Jesus lived out his days on earth without significant means. In fact he said that the son of man has no place to lay his head. He didn't even have a home to go to. If he willingly lived this way being God himself, how much more should we also be willing to live for him in whatever level of provision he allows.

Creativity: If income needs to be increased, there may be some creative ways that you can transform your skills and assets into an income stream even if it is for a short period of time to get debts paid down so that you can live within the income you have. Can you transform some of your time into income? A second job may be a short term fix until you can get your spending adjusted. Perhaps there are ways to transform a hobby into income production. With the internet, you don't even have to leave home in some cases to begin a business. As a family work together and talk to your children about ways that you can solve this issue together. Children learn about money management from you, so don't exclude them.

Two Incomes: Our society has come to view two incomes as a necessity, but it does create a significant cost to the family unit. When both parents are working, there is just less at home. There is insufficient time to care for all the children's needs, manage the home, take care of yourself and still have time to devote to growing in the grace and knowledge of your Lord and Savior Jesus Christ. Something has to give. Newlyweds should practice living on one income even if both are working. The second income can be used to build a savings so that when the wife has children, she can be free to care for them in the way that honors God the most. Many couples have expenses and debt so great that they are trapped into having to work two jobs in order to sustain their lifestyle often to the detriment of the children. The home is where our children develop their value system and they learn the value of work, sharing, integrity, honor, and a love for God from the training you give them.

God loves you and wants you to look to him to supply your every need. He is also transforming us into the likeness of his son, so he must chisel off the selfish attitudes and greed in order to grow contented servants. Is Jesus really all you need or do you look to your income to provide a little more?

May God richly bless you as you seek him and as you serve him.