Ethical Duty: Balancing Profitability and Fair Wages in Corporate Practices

Abstract

This essay explores the ethical obligation of companies to strike a balance between profitability and providing all workers with a decent living wage. Drawing on principles of fairness and human dignity, it argues that fair compensation is essential for the well-being of employees and the sustainability of businesses. The discussion delves into the determination of fair wages, involving multiple stakeholders and considerations beyond legal requirements. Additionally, the essay presents a rationale for paying entry-level workers above the legally mandated minimum wage, emphasizing long-term benefits such as enhanced reputation, employee satisfaction, and economic stability. Through a synthesis of ethical principles and practical considerations, the essay underscores the importance of prioritizing fair compensation in corporate decision-making processes. 

Does a company have an ethical duty to find a balance between remaining profitable and paying all workers a decent living wage? Why or why not?

Yes, a company does have an ethical duty to find a balance between remaining profitable and paying all workers a decent living wage. This duty arises from several ethical principles, including the principle of fairness and the principle of human dignity. Fairness dictates that individuals who contribute to the success and profitability of a company should receive fair compensation for their work. This includes not only executives and shareholders but also entry-level workers who often perform essential tasks within the organization. Furthermore, the principle of human dignity recognizes that every individual has inherent worth and deserves to live a life of dignity, which includes being able to afford basic necessities such as food, shelter, and healthcare. Failing to pay workers a decent living wage can lead to financial instability, poverty, and a decline in overall well-being, which is unethical for any company that benefits from the labor of its employees.

Who decides what constitutes a fair wage?

Determining what constitutes a fair wage is a complex issue that involves various stakeholders, including employers, employees, government regulators, and society as a whole. Employers often have the discretion to set wage levels based on factors such as market conditions, the cost of living, and the skills and experience required for a particular job. However, fair wages should not be solely determined by market forces, as these forces may not always reflect the true value of labor or adequately account for factors such as economic inequality and social justice. Government regulators play a role in establishing minimum wage laws to ensure that workers receive a baseline level of compensation that allows them to meet their basic needs. Additionally, societal norms and values influence perceptions of what constitutes a fair wage, with many advocating for living wages that enable workers to support themselves and their families without relying on public assistance.

How would you explain to a board of directors your decision to pay entry-level workers a higher wage than required by law?

I would explain to the board of directors that paying entry-level workers a higher wage than required by law aligns with the company's values and long-term interests. Firstly, it demonstrates a commitment to fairness and social responsibility, which can enhance the company's reputation and brand image among consumers, employees, and investors. By investing in its workforce and ensuring that all employees are compensated fairly, the company can foster a positive work environment, improve employee morale and productivity, and reduce turnover and recruitment costs. Moreover, paying higher wages can contribute to economic stability and prosperity by lifting workers out of poverty and stimulating consumer spending, which benefits businesses and the broader economy. While there may be short-term financial costs associated with paying higher wages, the potential long-term benefits, including increased competitiveness, sustainability, and stakeholder trust, justify the investment in fair compensation for all workers.

Reference

Alnehabi, M., & Al-Mekhlafi, A.-B. A. (2023, September 26). The association between Corporate Social Responsibility, employee performance, and turnover intention moderated by organizational identification and commitment. MDPI. https://www.mdpi.com/2071-1050/15/19/14202 

Netizenme, W. T.-. (2023, July 4). Balance between remaining profitable and paying a decent salary: Netizen me. Knowledge Netizen. https://netizenme.com/ethics-social-responsibility/finding-a-balance-between-remaining-profitable-and-paying-a-decent-salary/ 

Piercy, D. (2019, August 17). What constitutes a fair wage?. Society and Business Anthology. https://pressbooks.pub/sbu200mcc/chapter/what-constitutes-a-fair-wage/