Wednesday, May 31, 2006

Maximum wage

There is an interesting juxtaposition of articles in the New York Times: this one, about how "Chicago may become the first city in the nation to require big box retailers like Wal-Mart or Home Depot to pay employees a living wage of at least $10 an hour plus $3 an hour in benefits"; and this one, about concern over Home Depot's CEO's compensation package, which was $245 million over the last 5 years.

I think that it's unjust both that our minimum wages are so low, and that people like Robert Nardelli make $50 million a year. I just don't know what to do about either. A living wage should be paid by all companies, but it should be paid by those companies voluntarily; no one should make $50 million a year, but no one should be forced not to make $50 million a year. What I'd like to point out is that situations like Home Depot's, in which the compensation committee is stocked with cronies, contribute to the fact that cities like Chicago feel they have to take steps to effectively double the federal minimum wage. If you argue that Chicago is driving away business by doing so, I'd respond that Robert Nardelli is driving away business as well, in his own way.

jackscolon will hopefully tell me how to fix both these problems.

26 Comments:

At 2:10 PM, Blogger Jackscolon said...

Having them pay a living wage is fine, until they start raising prices on goods to cover it, which leads to an increase in the CPI, and then we're back to where we started...

 
At 3:33 PM, Blogger CharlesPeirce said...

Wait...you think having them pay a living wage is fine?

 
At 4:59 PM, Blogger Jackscolon said...

No, I was being ironical. I thought it was funny that the agents responsible for keeping living quasi-affordable for low incomers are the first to be legislated to pay them more. I think it's typical, politically motivated, short-term fix legislation.

and I disagree, I don't think that every job should have to pay a wage high enough to "live on". For instance, I'm probably starting a company this fall installing air filters and lightbulbs in rental houses- ideally, I'd love to hire someone to do it for me, but there is no way I can pay a "living wage." The margin isn't high enough. So my choices would be 1) start a business, work like crazy to get contracts, hire someone, and maybe make a few hundred bucks a year or 2) not start a business, use that time playing low limit hold-em on the internet, make a couple hundred bucks a year. I'd choose #2.

There is way too much gray area and arbitrary definitions inherent in this problem. How profitable does a company have to be to pay a living wage? How big? etc...?

I think the bigger problem is that people are trying to make careers out of being Wal-Mart greeters, not that "corporations are exploiting desperate workers." Just because you're a 23-year old single mother with three kids doesn't mean minimum wage has to support you.

 
At 9:22 AM, Blogger J. Morgan Caler said...

Why not tie the living wage to the CPI, so that what constitutes a living wage changes – in real time - proportionate to the CPI?

 
At 10:11 AM, Blogger CharlesPeirce said...

jacks, do you even read my posts anymore?

You wrote:

I don't think that every job should have to pay a wage high enough to "live on".

Did I say they should have to? Here's what I wrote:

A living wage should be paid by all companies, but it should be paid by those companies voluntarily.

IE, I wish that all companies WOULD pay a higher wage to their lower income workers; I don't know how to justly get them to do so.

 
At 4:10 PM, Anonymous Anonymous said...

I think everyone should just be nice. Seriously. Mr. Nardelli, share intead of thinking you're worth all that.

 
At 5:15 PM, Blogger Jackscolon said...

Ok, I already replied to this once, but blogger freaked out and deleted it.

You said, "A living wage should be paid by all companies (voluntarily)."

I disagree. Companies hire people to make money, they don't make money so they can hire people. As a result, the better use of corporate profits is to either A) use it to make more money or B) return it to the owners of the business.

Perhaps the more relevant question is: would a living wage solve anything? I don't think it would. The problem isn't that poor people don't make enough money to live (America is the only country with obese poor people), it's that other people make more- and I don't think there is any way to solve that.

 
At 9:46 PM, Blogger CharlesPeirce said...

Let me break it down for everyone: either you think the income inequality in the US is acceptable, or you don't. If you think it's acceptable, you're set; if you think it's unacceptable, you must want to do something about it. I'm in the latter camp, and I know raising the minimum wage in Chicago or taxing Mr. Nardelli won't fix anything. jacks, you're acting like companies exercise no choice whatsoever in what they pay their employees, and that's just not true. Do companies hire people in order to make money? Absolutely. Are there more just ways than doing that than others? I think so--do you?

 
At 9:07 AM, Anonymous Anonymous said...

Ah, Charles has used the j-word, "justice."

jacks, why isn't there a (c) about what companies can do with their profits--increase employee salaries?

Owners of capital don't do (much of) the work that makes the capital make more money--justice would suggest those who do that work get a share.

Should justice be ignored just because large amounts of money are moving around?

And better-paid employees might work harder and better, raising the profits, it's good for everyone.

 
At 9:52 AM, Blogger J. Morgan Caler said...

Jackscolon: I want you to please address my specific suggestion about a living wage that I made earlier on this post:

“Why not tie the living wage to the CPI, so that what constitutes a living wage changes – in real time - proportionate to the CPI?”

 
At 9:53 AM, Blogger J. Morgan Caler said...

Jackscolon:

“Companies hire people to make money, they don't make money so they can hire people. As a result, the better use of corporate profits is to either A) use it to make more money or B) return it to the owners of the business.”

Nobody is disagreeing with your basic analysis of what corporations are about. That said, we all accept certain parameters in which it is acceptable (either legally or otherwise) for businesses to operate.

So, here is the question: Why is a living wage not one of those parameters? Why do corporate leaders, company stockholders, wage earners, and citizens not insist that one of the conditions that has to be met by any corporation that wishes to make money and apply that money in either of the manners you suggested above is paying a living wage to employees?

For instance, no corporation in America can forcibly enslave mentally retarded children and perform medical experiments on them to create marketable products. It cannot happen for both legal and social reasons. Everybody accepts that as a basic parameter for doing business and, as a result, having the opportunity to make money. Why doesn’t paying a living wage fall into the same camp?

“Perhaps the more relevant question is: would a living wage solve anything? I don't think it would. The problem isn't that poor people don't make enough money to live (America is the only country with obese poor people), it's that other people make more- and I don't think there is any way to solve that.”

Again, I don’t think anyone would disagree that a stratified America is an acceptable – even good - thing; I think it is only when gross inequality exists that you are going to find objections. As I have brought up before, gross inequality is fundamentally at odds with a free, transparent democratic republic. They are mutually exclusive social conditions.

That said, there is another issue: justice. Charles brought that up and you have yet to answer. If we accept a Randian notion of human dignity and worth, where human value is tied to ability and production, then you are all set and inequality and justice aren’t necessarily competing values. If, however, human dignity and worth and rooted in something beyond or other than ability and production, then we have a problem that needs an answer.

We have for a very long time lived under conditions in which the arena of profiting has been artificially expanded by ignoring just these sorts of concerns. If we started including them in the way we think about profits and earning, then we would, I think, notice that the arena is actually much smaller than we have been lead to believe. In this arena, your problem – “other people make more” – loses a lot of teeth.

 
At 2:52 PM, Blogger Jackscolon said...

I'll work through these in turn.

Charles: I think income inequality is unfortunate, but I don't think it is possible to change. Wealth distribution operates on power laws- it scales exponentially.

http://www.citebase.org/cgi-bin/fulltext?format=application/pdf&identifier=oai:arXiv.org:cond-mat/0103544

That's the nature of wealth, it's always been like that (for all the data we have anyway), and I don't see that changing in the future. It sucks, but rather than waste my time trying to change it, I'd rather just learn the rules and prosper under the current system. I'm not out to change the world, just my world.

Anon: The reason that (C) doesn't exist is that it doesn't make any economic sense. What drives business is dollars and cents, not morals and justice.

As for the worth of owners, try starting a business and you're perspective will change on that. I'm in the process, and I disagree strongly with your assessment that owners "don't do (much of) the work", I'm doing all the work, and I probably will be for a while, and if I get to the point where I can hire people I'm more than entitled to some exceptional profits to compensate me for the initial work.

Lastly, better-paid employees don't work harder and better. In terms of inspiring company loyalty, money ranks far down the list on all the surveys I've seen. As for low-income workers, you're telling me a $10 an hour Wal-Mart janitor with $3 an hour in benefits has considerably less incentive to steal than a $8 an hour janitor? I don't buy it, nor do I think that they possess the power to impact the bottom line very much. An extra enthusiastic greeter isn't going to make me freak out and buy 12 pairs of socks when I came in for 3.

J. Morgan- I addressed this in the first reply I wrote, but didn't rewrite it.

“Why not tie the living wage to the CPI, so that what constitutes a living wage changes – in real time - proportionate to the CPI?”

I'm not an economics major, but here is my rudimentary analysis. One of the major things limiting inflation (specifically the CPI) is big-box retailers (namely Wal-Mart), by keeping the costs down on everyday crap. These companies predominantly employ low-income workers. Effectively doubling their wages increase the cost of doing business, leading to an increase of the price of goods, leading to a negligible effect in the overall well-being of low-income workers. That money has to come from somewhere, and adding the Chicago living wage adds somewhere between a quarter to half of a trillion (TRILLION!) dollars by my estimates to the demands on American business. Contrary to what Charles would tell you, I don't believe that would all be recouped by the increased sales to those low-income workers (although it would most likely be diluted somewhat).

Basically, I think tying the living wage to some inflation measure (the CPI is a totally bogus number by the way) is most likely circular, i.e. they'll drive each other in some inflationary spiral- I don't think it would work as simply as we'd like.

Now the crux of the matter- "Why do corporate leaders, company stockholders, wage earners, and citizens not insist that one of the conditions that has to be met by any corporation that wishes to make money and apply that money in either of the manners you suggested above is paying a living wage to employees?"

A couple of reasons-
A) I would say many to most small businesses can't afford it. For those that could, it would most likely make the margin so small that it wouldn't make sense to keep the business running. For me specifically, I would make no attempt to start my business if I had to pay a living wage. I'm not going to work my ass off for a few years so that when I can finally hire someone to do it for me I make an extra $2k a year.

B) A living wage isn't as black and white an issue as you think. How much exactly does one need to live? What exactly constitutes a minimum level of existence? America's poor are fantastically wealthy by World standards. $8 an hour is not as clearly evil as medical experiments on retarded kids, you're analogizing to make a point, but you went too far here...

Look, I don't think every position should pay enough to make a living on. If you want a house, a car, and two kids, maybe you shouldn't try to build a career at Wal-Mart. It isn't the company's fault you're unrealistic, and they shouldn't have to pay for it. People need to understand that if they want to scoop ice cream for a living, they aren't going to have health insurance.

My word verification is wiauukeu- which is Hawaiian for "I don't care about poor people."

 
At 5:22 PM, Blogger CharlesPeirce said...

There is now disagreement on a number of issues, some of which are a little more empirical than others. Let's see if we can make them explicit.

(1)

jacks, you wrote: "I think income inequality is unfortunate, but I don't think it is possible to change."

The second part of that statement is only true depending on the context. If all you're claiming is that SOME income inequality is inevitable in any given society, then so be it. That's absolutely true, and is explained by differences in ability and the fact that we're fallen. There will always be people who have more goods/equity/wealth/control than others. But the burden of proof on you to demonstrate that any given society's wealth gap was unchangeable at its current level would be enormous. If the current level in the US is inevitable, please explain why. If it should be changed, please say in which direction.

(2)

"What drives business is dollars and cents, not morals and justice."

I don't agree with that, but I would definitely not argue the opposite--business is a shorthand that we use to describe certain processes, and everyone commenting on this blog knows what we mean by it. But to strictly demarcate the boundaries between business and politics and justice and morals and motivations would be impossible. Are non-profits businesses? Is Whole Foods a business? Why do some businesses seem more just than others? Aren't economic conditions better now than they were in the 1890s? If so, how did they get this way? Are we done working for justice?

(3)

You make j. morgan's and my point yourself in this statement:

"A living wage isn't as black and white an issue as you think. How much exactly does one need to live? What exactly constitutes a minimum level of existence? America's poor are fantastically wealthy by World standards."

Everything there is true. I'm trying to have a discussion in which we establish (A) whether economic conditions in general in this country could be improved and (B) if so, how. I've already ruled out mandatory living wages being paid and massive tax increases--do you have any suggestions? Or do you think we're good to go?

You're attacking a straw man--namely, you're proceeding as if j. morgan or I had said "Wal-Mart greeters should be paid $15 an hour, have health insurance, and Wal-Mart should simply have to bear those added costs." Show me where either of us said that?

Let me tell you one way in which I would proceed: had I been on the Home Depot committee determining Mr. Nardelli's salary, I would not have voted for what he received. Is that a moral or a business consideration, or is it both? Is higher executive pay always good for business?

 
At 7:42 PM, Anonymous Anonymous said...

jackscolon, this is the same anon as previously. You write:

"What drives business is dollars and cents, not morals and justice."

But any action taken by a real company is a decision made by a person. No "business" as an abstraction makes any decision or takes any action at all. So you seem to be saying that CEOs will only take dollars and cents into account, not morals and justice.

Then you write:

"Lastly, better-paid employees don't work harder and better. In terms of inspiring company loyalty, money ranks far down the list on all the surveys I've seen"

I happen to agree with that, but in terms of your own argument, you seem to be saying that the highly paid CEOs are only motivated by money, while the Wal-Mart greeters are motivated by various other things. What sense does that make? The more money people make, the less open to any other motivation they become?

Since it is the case that money per se is not the only key motivation of workers, why can't CEOs be motivated by justice and fairness?

You also write "try starting a business and you're [sic] perspective will change". For the record, I've been co-owner of my own business since 1999.

 
At 9:07 PM, Blogger GMack said...

I just want to be able to get money for free. I'll tie the CPI to the NAACP and then keep in on the DL...LOL. JK, but seriously, NASA said to SCUBA that the AARP was the GNP of GNC.

 
At 1:40 PM, Blogger Jackscolon said...

Charles:

(1) Divorce what I'm saying here from value claims because I'm not saying income equality is inevitable, desirable, or right- I'm saying it seems to be inherent within free market economics. As more wealth is accumulated within the system, the gap appears to grow larger, but the percentage difference remains constant. i.e. if the range changes from $10-$100 to $10,000-$100,000, the gap appears bigger, but the relationship is maintained.

I don't know how to change it, I haven't heard any feasible solutions as to how to change it, so I'm going to go ahead and accept it as fundamental- for now.

(2) "What drives business is dollars and cents, not morals and justice."

I'm standing by this- when I say business I mean the financial definition, "An organization operated with the objective of making a profit from the sale of goods or services." That's what business is, an attempt to make money. Not-for-Profits are excluded by definition, and operations like Whole Foods are not exempted from "dollars and cents" considerations. The reason you see Whole Foods and not Bob's Solar Power Car Shop is because one is financially sustainable and one isn't. "Moral" businesses use their "virtue" as a competitive advantage, they are still after that cash.

To tie this back in to the living wage dispute- these business are responding to the market, and not vice versa. To have businesses voluntarily implement a living wage is unrealistic, first you need to have some kind of market where people are willing to pay more or withhold business from companies that don't pay it (as they would from a company doing experiments on the retarded). There isn't the kind of external pressure to force this change yet...

(3) As for improving things, I'm not an idea man. I feel I can flourish in the system, and I'd rather expend my energy flourishing than fixing, so count me out of forcing social change that doesn't effect me. After I'm rich I'll have time for philanthropy.

I'm not saying you and J. Morg are on the side of the living wage, I'm just trying to thrash it on the terms defined in that article (which I believe was $10 an hour and $3 in benefits- which is probably at least $15 an hour in expenses to the company)

I don't think high CEO pay is always deserved, or good for business, and I think cronyism is bad (outside of the Bush Administration, Hey-O!). It's just that CEO's make on average $12 million a year in total compensation in the Fortune 500, and that number is understandably skewed by the gigantic outliers. The real number is probably under $10 million, and I can't seem to get too worked about that.

Anon: I'm not saying that there aren't responsible execs and businesspersons- but I am saying that business (especially big business) serves a collective of board members, stakeholders, and shareholders who often have little to no idea of how the business runs and only care about the bottom line, and that is who business execs are responsible to- not society in general. Ignoring financial concerns to promote social welfare may seem admirable, but it is NOT what managers are hired to do.

Also, I don't believe I have said anything regarding the pay of CEO's and company loyalty- I actually believe that current pay packages are structured poorly (the giving of stock options promotes accounting hijinks to keep stock prices high, and CEO's personal net worth high...). I was only arguing that low income employees won't produce much more revenue for the company by paying them a few dollars an hour more. That was it.

And if you own a business that employs low-income laborers and you feel that they deserve more than what you pay them, I'll admit that you are a better person than I.

 
At 1:41 PM, Blogger Jackscolon said...

I meant income inequality in the first paragraph...

 
At 3:03 PM, Blogger CharlesPeirce said...

jacks, we're just talking past each other at this point. I don't know what to say to you, or to this:

"Business serves a collective of board members, stakeholders, and shareholders who often have little to no idea of how the business runs and only care about the bottom line, and that is who business execs are responsible to- not society in general. Ignoring financial concerns to promote social welfare may seem admirable, but it is NOT what managers are hired to do."

j. morgan already dealt with this objection. You can't enslave children, right? Is that a moral concern or a business concern? And if you grant that you can't enslave children, then you're granting that moral concerns ARE relevant to business, and you're granting that there must be some basic threshold of justice, even if it's "Get away with whatever you can under the current laws of that country."

If you don't want to look for this threshold, then fine, but once you've granted its existence you're stuck.

Also, businesses don't make decisions. Individuals do. Jorge at the 7/11 shouldn't determine Robert Nardelli's pay package--the salary committee should. And they should have voted it down. That's what I would have done. The chief officers of Independence Air cut their salaries by hundreds of thousands of dollars just before the airline went under to free up cash. Was that a business action or a moral action? Is that more or less just than an executive getting all he can as his company goes under? Is it admirable? You've answered none of my objections to your "we can't judge businesses by moral concerns" stance.

 
At 3:58 PM, Blogger Jackscolon said...

Aaargh... we are talking past each other- I'll try to reconciliate.

"You can't enslave children." For society, it's a moral concern. For a business, it's a business concern. The reason businesses don't enslave children is because it's A) illegal, breaking it causes harsh financial consequences and B) child labor would reduce business- people will boycott when they see some Honduran child chained to a Kathy Lee Gifford sewing machine- not because it's wrong. Because the market (individuals) react to it on a moral level, it has business consequences. Now, if there was no law against child labor and the market was indifferent, would it occur? The answer is yes, some opportunist would take advantage and make gobs of money. Eventually, competitors would either have to follow suit or suffer losses. That's how it happened during the Industrial Revolution, and that's why we have to regulate business. Otherwise, businesses stoop to the lowest level in order to compete.

My entire point is that if you want business to do something that isn't profitable, you have to either A) fire people up enough to legislate it (like tobacco) or B) fire people up enough to financially affect the company (like Sony and the rootkit). Why do companies spend millions of dollars publicizing the good deeds? Because the good deeds have a positive effect on the financial position of the company, not because the company is morally motivated.. It is a dollars and cents consideration.

As for the part of my comment that you just quoted, I'm referring to "grey" social issues, not black and white ones.

Let's take Wal-Mart and the living wage. Wal-Mart employs well over a million people, if management decides to increase labor costs by ten billion dollars to pay a living wage, is that a correct course of action for them?

Financially, it vastly increases costs, decreases dividends, hurts stock growth, damages Wal-Marts position as a low-cost leader etc... for what? It has no real short or long term benefit since most people really don't care that much. If you are a manager, how do you explain that to the board members and shareholders who pay you to lower costs, increased dividends, raise the stock price, protect market position? It's a serious breach of allegiance for a morally grey issue. I think that's a problem.

As for your examples and my "can't judge business by moral concerns" stance- I'm merely saying that much more often than not business decisions are made (by individuals) on the basis of cost/benefit analysis (analysi?) over moral considerations and that it is unrealistic to expect business to be the catalyst of social change, when all it takes is one unscrupulous businessman (take that gender neutrality) to force business into a cycle of dubious moral choices...

 
At 4:24 PM, Anonymous just passing through said...

From jackscolon:

Living wage--"I would say many to most small businesses can't afford it."

"If you want a house, a car, and two kids, maybe you shouldn't try to build a career at Wal-Mart."

Why can't the other folks in the thread say, "If you can't afford to pay a living wage, maybe you shouldn't start a business"?

Your arguments aren't bad, jacks, but you are building a lot of contradictions into them. IMHO.

 
At 4:54 PM, Blogger CharlesPeirce said...

jacks, let's NOT take Walmart and the living wage. I can't say it enough times--I'm not arguing for a living wage. Forcing businesses to pay their entry-level employees more many is not the answer to any problem.

"Why do companies spend millions of dollars publicizing the good deeds? Because the good deeds have a positive effect on the financial position of the company, not because the company is morally motivated."

I don't agree. There is no way to bracket apart "business concerns" from "moral concerns." Human motivations are usually hopelessly inseparable.

 
At 5:17 PM, Blogger Jackscolon said...

I'm not saying you are arguing for a living wage. I understand that you want things to be better than they are, yet realize that the current solutions are myopic and flawed. I respect that.

I'm saying that there is a disconnect built into the system between the "right" course of action, and the most financially beneficial. To further complicate the issue, CEO's and managers are hired to pursue the most financially beneficial course of action, not to be social change mavericks.

I appreciate the "fuzziness" that accompanies human choices, and delusions that accompany them. I just think that decisions made where money is the deciding issue become "business concerns" and where right and wrong come into play are "moral concerns". Where they overlap or are clear cut, there is no argumentation- however, when businesses encounter morally "grey" issues, the decision is decided on financial terms.

 
At 7:00 PM, Blogger CharlesPeirce said...

Well, I think we're getting somewhere, but I still disagree with you. There are few situations in this life where justice is not a concern. Here's what you wrote:

Decisions made where money is the deciding issue become "business concerns" and where right and wrong come into play are "moral concerns."

I can't give you that business/moral dichotomy. Take my example of Nardelli's salary--you really want to tell me that that's a "money issue" or a "business concern" where justice is not a factor?

Here's what I think, and note how narrow the scope of my assertion is compared to you telling me and everyone how decisions are made:

Determining a salary is a moral issue as well as an economic and financial one, having components involving justice as well as cold, hard every day concerns. Sure, salary is a "cost" to a company like everything else. But assigning someone a salary is assigning someone or something an importance, and assigning an importance means saying someone "should" receiving something or someone deserves something. As soon as you do that, it's a moral issue, and as I said before, there are very few amoral decisions in this life.

We all have multiple allegiances--to our wives, our families, our siblings, our country, our companies, our gods, our ideologies, our feelings. Business decisions are not simply a matter of "business" concerns.

To state it another way, I can grant you that allegiance to shareholders is real and a factor--I just don't see how that rules out justice.

 
At 7:04 PM, Blogger CharlesPeirce said...

Let me put it another way. You don't seem to grant that we can judge something differently from the outside. You wrote this a few comments back:

The reason businesses don't enslave children is because it's A) illegal, breaking it causes harsh financial consequences and B) child labor would reduce business, not because it's wrong.

Even IF that's why businesses don't use child labor, it would still be wrong if they did, no matter what their intentions were! Right?! And IF that's the case, then we as moral agents can judge business decisions independently of their effect on business. QED.

 
At 1:16 PM, Blogger RedHurt said...

Coming in late, I know, but I think I have something worth saying about this.

On the issue of CEO salary, I maintain the position I've taken in the past that no wage is too high. The difference between a high wage and experiments on retarded children is obvious: a high wage for the CEO does not necessarily do any material harm. If the CEO is exploiting his employees, it becomes unethical. If the employees are not being paid a wage equal to the services they render, it becomes unethical. But the value of those services is tied to the value of the products being sold, and as Jacks pointed out, raising the wage would eventually simply result in higher prices, and inflation would occur.

I don't think we have a problem because I don't see people being exploited. Exploitation and abuse are the key issues here - I don't see that there can be any necessary maximum or minimum wage independent of these factors.

In our current system, while there are definitely exceptions that need addressed, I think there are enough checks and balances and voice for the little guy that exploitation does not, for the most part, happen. Companies like Starbucks and Google and Whole Foods have learned that treating your employees well is simply good marketing, and is profitable in and of itself. This reflects the commercialist ethic that J. Morgan referred to on this blog previously. Companies that do not, such as wal-mart, will eventually reap their just desserts.

While I do believe it's our duty as citizens to make our society livable and prosperous, I also think it's our duty to encourage innovation and education. I don't think we should shaft the people who can't do more than greet at wal-mart, but I think it's our duty to discourage people from spending their lives as retail checkout clerks and pursue greater educations. I think the current wage structure does this, so it doesn't upset me.

So, in conclusion, I think Wal-Mart has been unethical at times. I think they've paid people too little and expected too much. But I don't think it's unfair to pay a CEO whatever he wants, provided that his employees are making a wage respective to the services they provide. How we decide that is a sticky issue, and I know that it's important to this discussion, but it's not the same thing as a "living wage." Can we all agree that, provided we don't change the health care system, we shouldn't provide a comprehensive benefits package to people who shovel fries?

I feel like the wages we pay Americans are pretty decent, in general. I'm more upset about the way that the immigration issues effect our employment practices, and that so many almost-citizens are getting paid $1 an hour to do services we value higher than that.

 
At 2:28 PM, Blogger Jackscolon said...

Time to start picking nits-

First, ease up on the CEO pay example. Cronyism acts outside of both financial and ethical concerns. Take Nardelli- his $50 million package comes out of $84 billion in revenue- it's the size of a sparrow fart in a tornado financially, it has a negligible effect on the financial position of the company. Second, cronyism blurs judgement, people tend to think their peers are smart, funny, capable, whatever- the people on the board most likely believe this is a totally fair compensation package, and that Nardelli DESERVES it. They operate on a totally different level than you or I. They aren't trying to exploit the company or justice, they probably see that the company can afford it easily, and don't have the same ethical qualms about it as you or I. Presto! 50 million clams for Mr. Nardelli.

When it comes to assigning value, I think you've got it backwards. Companies don't assign value to people (outside of the upper upper realms and professional sports), they assign value to positions- a cook is worth $12 an hour, an assistant golf pro $30k a year, a financial analyst $100k... and there isn't much variance within those ranges. Merit pay exists, but you aren't going to find a kick-ass line cook making $300k, or an super sweet insurance salesman with an eight figure retirement package. A huge majority of people are pay takers, not pay fixers.

When I'm talking business, I'm talking statistical probability. I'm saying that GENERALLY things operate according to the dollars and cents rule. You'll have a Mr. Anonymous who overpays his laborers out of generosity, just like you'll have a compensation board who hooks their buddy up. You'll have some ethical businessmen, and you'll have some non-ethical ones.

It doesn't rule out justice, it just assigns a weight to it. With few exceptions, everyone has a price. If Joe CEO can hire child laborers and make an extra $500 a year, justice will win out. Bump that number up enough enough, and he will sell out even though he knows it's wrong. That's why you can't expect business to lead the way in moral issues- business is only as strong as its weakest link, and if doing something morally grey is financially advantageous enough then one person folds ethically and the others are then forced to do the same to compete or suffer losses.

So- would it be nice if low-income workers made more? Yes. Would it be nice if Mr. Nardelli was paid a fairer wage (from our perspective)? Yes. Can we count on business to voluntarily lead us down the ethical yellow brick road? Absolutely not. Change has to be forced from the outside.

 

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