Fair Pay

Q. I'm a highly qualified professional, but my employer takes advantage of my strained situation to pay me way below my true worth. Is this ethical?

A. We find that the Torah does legislate charging a fair price: "And when you sell something to your fellow, or buy from the hand of your fellow, don't oppress each other" (Leviticus 25:14).This verse forbids selling an object far above the usual price, or buying one far below this price.

However, the essence of this law is not the problem of the fair price per se. "Just price" doctrine, which was a major topic of ancient jurisprudence, is given scant attention in Jewish law. Rather, the problem is one of misleading the customer. The baseline price is not determined by any intrinsic evaluation, but rather by the normal selling price. The idea is that a customer has a right to expect that a particular merchant is selling for a price similar to that of other comparable establishments. He had no intention of making a transaction at an unfair price, so the sale is void.

There is a hint of this theme in the word "to oppress"; the problem is a human one of deceit and exploitation, rather than a specifically economic one of obtaining an unfair price. For this reason this prohibition does not apply if the seller (or buyer) openly acknowledges that his price differs from what is usual in the market.

Furthermore, this law's main application is in sales of merchandise. It is still improper to actively deceive a worker (or employer), but an unusually high or low price for work does not annul the deal as it does with goods.(1) One common explanation of this limitation is that it is impossible to talk of a "standard" rate for labor, because each human being is unique. So even this limitation to the law bears a profound human message.

Even though we can not find any specific ethical lapse in paying someone a low salary if he agrees to it, the Talmud does hint at a potential problem with such behavior. The Talmud, in tractate Bava Metzia, discusses a case where there is a sudden change in the general wage rate. If the wage rate suddenly goes down, the employer may be tempted to discharge his workers and hire new ones at the current bargain price. If the current workers persuade the employer to keep them on, they should get the same high wage they were getting before, unless the employer stipulates otherwise.

Why do they deserve this wage? The Talmud tells us that they justify their demands by stating, "We intended to work harder."

Conversely, if wages suddenly rise, the workers may be tempted to look for a new job. If the employer persuades them to stay, they get the same low wage they got before. Why do they deserve this? The employer can say, "I intend to make it up to you in better working conditions." (2) In other words, barring an explicit agreement the assumption is that a change in wages should be accompanied by a change in motivation or working conditions.

The sages of the Talmud recognized a familiar lesson of management: motivation is proportional to compensation. When people are paid more than the going rate, they are naturally motivated to work harder; when they are paid less, their motivation naturally suffers unless they are provided better working conditions. So while an underpaid worker also is obligated to be diligent and honest, the employer should be wise and not push his luck. While Jewish tradition doesn't interfere with wage negotiations between employer and employee, it does recognize that it's just not reasonable to pay a qualified worker a sub-standard salary and expect him to work at the level of his fairly-compensated peers.

SOURCES: (1) Shulchan Arukh Choshen Mishpat 227:33 and commentaries. (2) Bava Metzia 77a.