Equal Pay

Equal pay for equal work is an issue discussed almost exclusively related to the pay for women vs. men in the same job. That makes sense given the long history of discrimination against women in compensation, employment and educational opportunities. Despite improvements in recent years the problems continue, to the detriment of women and our society.  

However, there is another perhaps even more fundamental aspect of "equal pay." That is the relative compensation level of different jobs. Specifically, how they are valued and who establishes the relative pay levels.  
Consider a small thought experiment. Assume you were looking for a job and the following positions were available. Assume you are well qualified for each of these jobs and they were offered to you. Which would you chose?
Job                                                       Salary*
Refuse/Recyclable Collector            $38,920
Airline Pilot                                         $161,280
Farm worker                                        $27,840
Librarian                                              $28,170
Wall Street worker                            $422,500
Child Care Worker                              $23,760
Fine Artist                                            $57,520
* Salaries from US Dept. of Labor database
 
I am willing to wager that not many of you selected Refuse Collector or Farm Worker. I'll also bet that even those who thought that being a librarian would be a good job were put off by the low salary.
So do the experiment again but this time with a change in the salaries.
 Job                                                      Salary*
Refuse/Recyclable Collector            $59,055
Airline Pilot                                         $59,055
Farm worker                                       $59,055
Librarian                                              $59,055
Wall Street worker                            $59,055
Child Care worker                             $59,055
Fine Artist                                           $59,055
* Average US salary from US Dept. of Labor
 
Did your selection change when all the jobs pay the same? Did this new equality have a liberating effect? Did you decide to be an artist or to care for children once salary was not a factor?  

All this is a way of asking, why do different jobs pay what they do and who decided those relative compensation levels? Capitalists, especially economists, would tell us that the "invisible hand" of the market determines prices for goods and wage levels. If that were true one would expect that the least desirable jobs would be the hardest to fill and therefore would pay the most. Therefore, working in a farm field in the burning sun would pay much more that sitting in a comfortable office on Wall Street. Perhaps the invisible hand is not so invisible and has strings attached to it. 

Wages are not established by simple supply and demand but by power. It is not a coincidence that jobs that are most likely filled by the traditionally disenfranchised usually have low wages. Jobs historically seen as "women's" work or for minorities, such as child care or librarian or farm worker have the lowest wages. The fact is that low wage jobs correlate with disenfranchised groups, including women, Blacks, and immigrants. It’s about power. 

Why do we accept as "normal" that the hardest jobs pay the least? There is a long cultural and political history that has acclimated us to this situation. For many centuries there was some elite and powerful group that ran things while most of the people were peasants or serfs or slaves, and there often was little to distinguish those categories. Most people were tied to the land and were completely under the control of a lord of one kind or another - political, religious or military. People were not free to move to the next fiefdom to get a better deal. They labored, were flogged and lived at the whim of the lord and master.  

In Europe it was the rise of first the age of exploration and exploitation and later the industrial revolution that gave rise to a meaningful middle class of traders and merchants, creating a group with independence, increasing wealth and power. While many prospered, they continued the system within their new "capitalist" domain. They used the cheapest labor possible, including slavery whenever feasible, to maximize their profits. They normalized the exploitation of workers in the new commercial realm, continuing the tradition that the least desirable work received the least compensation.  

The entire history of labor has been that the powerful pay as low wages as possible. The only break from this was the rise of unions, which were instrumental in creating blue collar jobs that paid middle class wages. Workers fought and died in strikes and were killed by owner wars in mines, railroads, mills and fields to gain living wages and safer working conditions. It was unions that got child labor outlawed, an eight-hour work day, and most other workplace improvements.  

But union membership has plummeted in one of the most successful anti-worker campaigns imaginable. As a result, workers’ wages have been stagnant while incomes for the already wealthy have soared. As the Pew Research Center reported " today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers."  

Economists profess to be perplexed that despite low unemployment wage growth has continued to be negligible. They obviously have not been paying attention to the successful campaign to eliminate most worker bargaining power. Today only about 10% of private sector workers are unionized. This has been coupled with actions including right to work laws (also known as a right to poverty), no poaching agreements, elimination of class action lawsuits through forced arbitration and legislation, removal of the check off provision to fund unions, and the use of temps, contractors and undocumented workers to assure employees have no clout and work in fear of losing their jobs. In most industries workers have little say or leverage over their wages. Executives remind us that they have a fiduciary responsibility to maximize returns for stockholders. Having no moral or societal responsibility means that they can pay workers as little as possible. In face of this onslaught it is no surprise that wages are stagnant.  

Perhaps we should use the free market that economists and capitalists are so fond of lecturing us about to address this situation. Wages for jobs should be determined by a reverse auction, meaning that the low bid is the "winner." For many low paying jobs that is in effect what is happening already but let’s do it for all jobs, starting with CEO's and bankers.  

The CEO of Wal-Mart was paid more than $28 million in 2018. I would bid to do that job for $10 million as long as I get to keep the corporate jet. Would you do it for $6 million? Maybe someone else would do it for $250,000. Remember those Wall Street workers noted above making a half million a year? I bet someone would do that job for $100,000, maybe less.  

Now I know some will immediately say what about the qualifications needed for these elite positions? Research has consistently shown unmanaged index funds outperform virtually every stock market trader and fund over five or more years. And CEO's? Studies indicate that in ninety percent of the cases CEO's have virtually no impact on company profits or stock performance. The general economy drives most business success or failure. Truth is that pretty much anyone is "qualified" to do these jobs. Let the bidding begin.
 
What about those less desirable jobs like farm worker or garbage collector. With many more desirable jobs available for everyone to bid on these jobs will see fewer applications/bidders and they can bid higher pay rates.  
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Utilizing these market forces will foster much greater income equality. Those once elite positions reserved for Harvard and MIT grads will now be available to a much larger pool of candidates, driving pay down, while formally low wage jobs will have substantially higher pay resulting in much greater income equality. Income equality fosters political equality and political equality is the basis for viable democracies. What am I bid for real democracy?