What's Wrong With A Living Wage?

[untermensche]

It's a system that changes one thing. The way workers pay is determined.

It changes nothing else.

You have to provide a reasonable argument why simply changing the way workers are paid will make the whole thing collapse.

And what is your new system for how workers are paid?

I explained it over the last few pages.

It changes the whole focus from paying people based on market forces to paying them according to the value of their labor.

To begin making a determination of the value of labor you have to consider the amount of money an enterprise makes. And of course even from this there are costs unrelated to labor. But when all those costs are subtracted that is the total value of the total work done.

Now dividing this up is not always straightforward. What is the value of a clean work environment and clean bathrooms?

But once the focus has shifted from a market based approach then creating better and better systems to determine value will be devised. This is not putting a man on the moon.

 

[coloradoatheist]

And what is your new system for how workers are paid?

I explained it over the last few pages.

It changes the whole focus from paying people based on market forces to paying them according to the value of their labor.

To begin making a determination of the value of labor you have to consider the amount of money an enterprise makes. And of course even from this there are costs unrelated to labor. But when all those costs are subtracted that is the total value of the total work done.

Now dividing this up is not always straightforward. What is the value of a clean work environment and clean bathrooms?

But once the focus has shifted from a market based approach then creating better and better systems to determine value will be devised. This is not putting a man on the moon.

So something really vague and just say it will happen....Even though companies don't always know which area was the one that created value themselves but are able to pay it out correctly. And when figuring this out, which accounting method should they use?

 

[SimpleDon]

If people were just paid the true value of their work we would have a much smaller problem.

But most people don't get paid in any relation to their work. They get paid a market wage. Which is just another way of saying lowest possible wage.

So most are paid the lowest possible wage. That is the worst way to create a vibrant economy. The way you create the most vibrant economy is to pay workers as much as possible.

But who really gives a shit about the economy. Things are working out so well for those at the top even without much of one.

It's impossible to measure the true value of work because there's no way to resolve what share goes to each input when you are dealing with a synergy situation (and you almost always are.)

Your notion that the worker gets 100% is obviously flawed--it doesn't pay for the equipment, thus there will be no new equipment.

The idea that there is some "True Value" of anything, a product, a service, labor or of capital investment, that they have a value independent of their market value in money is pretty much a product of Austrian/Libertarian/extreme free market economics. They usually explain it as the barter value of whatever they are talking about. The value that the factor would have in a pure barter exchange, one good for another without the use of money.

But this idea is derived from and is almost wholly dependent on their obsessive dedication to the gold standard as the pure form of money. They don't accept our current money, which they incorrectly identify as fiat money, as an acceptable or an even better form of money than their beloved gold standard. They only accept that modern, bank credit money is a medium of exchange. They reject the idea that money is a storage of value and that it is a measure of value. This means that they have to have another measure of value, therefore the formulation of the idea of true value or the barter value of an economic factor.

On the other side of the coin we the classical economics idea of the intrinsic, objective value. This is the use value of the factor, the value that it has when used by the buyer. This is closely tied to the labor theory of value of the classical economists like Adam Smith, David Ricardo and Karl Marx. Obviously, factors can be put to different uses by different buyers so that the value of a factor is different for different buyers.

To all of this we add the modern neoclassical idea of utility. This is a subjective form of value, the idea that the value of something is related to the satisfaction that a buyer gets from consuming it. Once again, the utility of something can vary from individual to individual.

But when modern economists talk about value they are usually talking about the economic or exchange value of something. This is the value in monetary units, dollars for example, in short the price of the factor. It is the value of something when it is exchanged for money in the market. It is affected by both its objective and subjective value to the users, the demand for it, as well as its relative abundance or scarcity, its supply relative to the demand. All tempered by the availability of suitable substitutes for the factor, automation for labor, natural gas for coal, etc.

And while there is an objective component to the economic value it is largely the subjective utility of factors that determines its value to the users and its price. And this value exists in the heads of human beings, even those values that are considered objective or intrinsic.

Therefore modern economists say that we have a utility theory of value. A subjective value.

We have a purely monetary economy now. There isn't any value beyond the prices of factors. There is no "True Value" or labor value that is independent of the price that is paid for it. The value of something is its price.

(Even this idea runs into trouble when neoclassical economists try to prove that capital investment is not just a component cost of production but is something like a loan that can never be paid off, that it is a value to production like no other that deserves a perpetual income in the form of profits. Unless of course, the enterprise is computing their taxes, then capital investment is a pure expense to be written off against their tax bill. But this is an explanation for a different time. )

 

[SimpleDon]

Because it's a logical fallacy. A person putting in 40 hours a week has absolutely nothing to do with whether he should be be able to make a living doing so. These outliers you mentioned exist, and presumably they should be able to have decent living standards as well, but even if we were to just look at normal, able-bodied people, hours are not a measure of productivity or usefulness.

The statement that 40 hours of working should for vast majority always be worth a living wage seems to be more an article of faith than a fact-based claim. I tend to believe that this might be the case for a majority of people, but as simple manual labor gets more automated and the remainign jobs require non-trivial skills and experience, at some point, the productive members of society will be in the minority. We as a society need to figure out how to deal with that.

As a society, we're expecting people to get by in 2014 'Merica on 1994 wages. How is that sustainable? Or perhaps a better question is...if not a living wage, then what?

A wage set by market forces. And that includes strong enough unions and worker protections to balance out the collective bargaining power of employers. If after that, some jobs still aren't worth a living wage, then some form of welfare is pretty much the only option.

Yes, you are correct. What we need is institutions like unions to provide workers with the negotiating muscle to bargain with the large companies. This is why we suppressed the unions when we suppressed wages to increase profits and the money available for capital investment starting in the 1980's. But we are still suppressing wages and suppressing unions even though we need wages to come up. Thirty plus years of suppressing wages and increasing profits has inevitably resulted in too low wages and too much capital available for investment. Surprise.

This why we need changes in our economic fiscal policies to start pushing wages up and profits and the accumulation of capital and wealth down.

The fact that we are providing welfare to people who are working full time shows us that we need to change these policies to boost rather than to suppress wages. To have the government supplement wages with government welfare is both economically inefficient and it produces friction between the people who pay taxes and the people who receive the welfare. Friction that any number of politicians are willing to exploit, including those that want to continue to suppress wages and to keep increasing profits. A regime that favors only the already rich. But you know as well as I do that this describes one of the two political parties completely and about half of the other one.

Capitalism is more than able to adapt to these kinds of changes in the distribution of income in the economy. If anything the US is late to the idea that we don't have to have poverty to have a growing, robust economy. The social democracies of Europe have successfully eliminated most poverty in their societies, especially the Scandinavian ones. It is only the Anglo American countries that seem to feel that they need poverty to provide the proper amount of incentive to the people that it is readily admitted are trapped in poverty.

This is not to mention that these countries including the US are awash in the idea that the economy should be set up to provide ever increasing amounts of riches to the already rich. An idea that is enthusiastically supported by the already rich.

 

[untermensche]

I explained it over the last few pages.

It changes the whole focus from paying people based on market forces to paying them according to the value of their labor.

To begin making a determination of the value of labor you have to consider the amount of money an enterprise makes. And of course even from this there are costs unrelated to labor. But when all those costs are subtracted that is the total value of the total work done.

Now dividing this up is not always straightforward. What is the value of a clean work environment and clean bathrooms?

But once the focus has shifted from a market based approach then creating better and better systems to determine value will be devised. This is not putting a man on the moon.

So something really vague and just say it will happen....Even though companies don't always know which area was the one that created value themselves but are able to pay it out correctly. And when figuring this out, which accounting method should they use?

You're nitpicking and not commenting on the general principles.

A market wage is much more vague and ambiguous.

 

[coloradoatheist]

So something really vague and just say it will happen....Even though companies don't always know which area was the one that created value themselves but are able to pay it out correctly. And when figuring this out, which accounting method should they use?

You're nitpicking and not commenting on the general principles.

A market wage is much more vague and ambiguous.

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

 

[Axulus]

You're nitpicking and not commenting on the general principles.

A market wage is much more vague and ambiguous.

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

Plus it makes no sense that one person doing the exact same job would get wildly different pay depending on the particular company he or she happens to work at, since he bases it in large part on how much money the company brings in.

Equal pay for equal work goes completely out the window.

 

[ksen]

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

Plus it makes no sense that one person doing the exact same job would get wildly different pay depending on the particular company he or she happens to work at, since he bases it in large part on how much money the company brings in.

Equal pay for equal work goes completely out the window.

lol, like there's equal pay for equal work now.

 

[coloradoatheist]

Plus it makes no sense that one person doing the exact same job would get wildly different pay depending on the particular company he or she happens to work at, since he bases it in large part on how much money the company brings in.

Equal pay for equal work goes completely out the window.

lol, like there's equal pay for equal work now.

I agree, don't think that's an issue. Though there will be definitely heated arguments when the boss starts just every different penny between all the workers.

 

[ksen]

And that wouldn't be a problem today as well if there was payroll transparency?

 

[Nice Squirrel]

And that wouldn't be a problem today as well if there was payroll transparency?

Even with transparency I make $10-15k more than my female coworkers in the same position.

 

[ksen]

I think it's weird that they keep bringing up problems with the current system as if they are some insurmountable problem of a different system. And because those problems aren't solved by the new system it is obviously unworkable and needs to be immediately scrapped.

 

[coloradoatheist]

I think it's weird that they keep bringing up problems with the current system as if they are some insurmountable problem of a different system. And because those problems aren't solved by the new system it is obviously unworkable and needs to be immediately scrapped.

Actually we've told unter that if he wants to start his new system there is nothing stopping him. Create a new company with the model he wants and if it's the greatest thing since sliced break then it will become the new model.

 

[untermensche]

I think it's weird that they keep bringing up problems with the current system as if they are some insurmountable problem of a different system. And because those problems aren't solved by the new system it is obviously unworkable and needs to be immediately scrapped.

Actually we've told unter that if he wants to start his new system there is nothing stopping him. Create a new company with the model he wants and if it's the greatest thing since sliced break then it will become the new model.

What I do or don't do has nothing to do with the idea of worker justice.

We either consider it an idea worthy of implantation or we don't.

 

[untermensche]

You're nitpicking and not commenting on the general principles.

A market wage is much more vague and ambiguous.

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

That's completely vague. The very essence of vague.

It in effect says labor has no intrinsic value. Some boss must agree it has value before it does.

 

[Loren Pechtel]

Sure, you could devise a scheme. That doesn't make it the right answer.

And in the real world there is a range of skill, not just skilled vs unskilled.

Worthless criticism. I never said this represented a perfect model. Only that it shows some of the considerations needed to make a real world system.

It is perfectly possible to devise a system that correlated pay to the value of labor. Reducing labor to a market is a choice. And we could easily choose differently.

Again, while you can make a system that relates them you can't make it fair.

And I note you neglected the management and capital costs.

 

[Loren Pechtel]

Plus it makes no sense that one person doing the exact same job would get wildly different pay depending on the particular company he or she happens to work at, since he bases it in large part on how much money the company brings in.

Equal pay for equal work goes completely out the window.

lol, like there's equal pay for equal work now.

It's a lot closer now--underpay a worker and you'll find him working for your competitor instead.

 

[Loren Pechtel]

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

That's completely vague. The very essence of vague.

It in effect says labor has no intrinsic value. Some boss must agree it has value before it does.

Correct, labor has no intrinsic value.

Consider an old joke:

A guy is going down the street digging holes.

A bit farther down the street is another guy filling in the holes.

Someone noticing this asks what's up.

"The guy who plants the tree is out sick today."


Labor only has value in what it produces.

 

[coloradoatheist]

It's not vague, and very easy. It's an agreement between two parties on what needs to be done and at what rate which I can then lan for. Yours asks for a lot more calculations that aren't easily done and could backfire on a lot of employees. Yours is not simple.

That's completely vague. The very essence of vague.

It in effect says labor has no intrinsic value. Some boss must agree it has value before it does.

Labor has no intrinsic value. It's laborious to write these posts, but doesn't mean somebody will pay for it. Moving works is laborious, but moving it 3 feet there and back doesn't mean anything.

 

[untermensche]

Worthless criticism. I never said this represented a perfect model. Only that it shows some of the considerations needed to make a real world system.

It is perfectly possible to devise a system that correlated pay to the value of labor. Reducing labor to a market is a choice. And we could easily choose differently.

Again, while you can make a system that relates them you can't make it fair.

And I note you neglected the management and capital costs.

Management is just an ordinary labor cost. This whole current division between labor and management is a residue of feudalism. We don't need a lot of it. A lot of management is nothing but a power structure to make sure dictates from the top are carried out.

This is not to say that some management isn't necessary. But it can be lateral management, not top down management.

And I said explicitly that only some money would be available for labor.

What you mean is "perfect fairness" will never be achieved.

We have a system now that is basically a system of institutional and widespread theft from workers.

And you complain that I don't replace it with perfect fairness? Get real.

- - - Updated - - -

That's completely vague. The very essence of vague.

It in effect says labor has no intrinsic value. Some boss must agree it has value before it does.

Labor has no intrinsic value. It's laborious to write these posts, but doesn't mean somebody will pay for it. Moving works is laborious, but moving it 3 feet there and back doesn't mean anything.

I assume if you are sitting there writing and not getting paid as I am you are getting something out of it.

I assume your labor has some value to you.