I believe that most jobs need to start paying people better regardless of skills, experience, or educational background. Even if we were to fill up the remaining vacancies for high-paying occupations (such as engineering or nursing), you would still have tens of millions of people employed in low-wage jobs like fast food, retail, and domestic assistance — indeed, the majority of new openings have been in these areas, meaning most people have been given no choice but to take dead-end jobs that often have little opportunity for upward mobility.
The fact is, there simply aren’t enough professional, technical, or administrative positions out there for everyone — nor should there be. We don’t need tens of millions of doctors, lawyers, managers, and the like, because by definition they’re highly specialized. In fact, we’re already over-saturated in some of these fields (namely law), partly because people have desperately been trying to find alternatives to the bulk of low-paying work.
With outsourcing, technology, and administrative innovation eliminating the need for even some well-paying work, what will we be left with by service-oriented jobs that mostly pay little. An economy in which only a minority of people have secure and sustainable work is likely to become unstable in the long-term.
To be clear, by paying people better, I mean between the hourly wage of $13 to $20, which is more or less middle-wage in most parts of the country. There also need to be real raises and benefits given to people who work somewhere a long time. I’ve heard too many anecdotes about folks working in a position for years and receiving literally a few more cents annually.
Since the majority of the largest low-wage employers have been making record profits, I think they can spare giving their workers some of the share — after all, they reward executives and shareholders with bonuses and dividends for a job well done, so why not the people they employ who help make that happen? The capital and resources are there, but they aren’t being invested into the laborers who in turn drive our economic growth through their disposable income.
Indeed, as my friend Will noted in his response to my status update on the subject, many of the common objections that are raised against across-the-board pay increases are either logically consistent or unsubstantiated:
Executive pay isn’t the one and only reason for the plight of workers, but it’s good to bring up because it illustrates the true problem: it’s not about economics, it’s about internal politics– whose interests are taken account of, and whose are minimized with ad hoc rationalizations dressed up as economics?
For example, pay: if we are talking about ordinary workers in firms, we are told that “economic efficiency” is the reason for the decline of their wages as a share of profits; companies squeeze workers because then they can provide products at the lowest price. Amateurs even sometimes argue that this is actually GOOD for workers because they then don’t have to pay as much for underwear and carbonated sugarwater, and raising their wages would just go to inflation and actually do them no good. (As though it’s literally IMPOSSIBLE to pay workers more in real terms.)
But when the conversation is turned to high-level executives, somehow paying them less isn’t relevant to efficiency and lower prices. Instead, we get tortured arguments from conservative/libertarian economists that executive pay ought to be HIGHER to increase efficiency, because huge payouts and stock options give executives “incentives” to do a good job– “skin in the game” is a popular phrase among conservatives/libertarians for why we are actually better off if executives get paid more and own larger parts of their companies’ equity.
So here’s the thing: if you are going to argue for or against raising the compensation of ANY group in the production process, low-wage of high-wage or capital or whatever, you can ALWAYS make these same arguments for both sides. Lowering compensation is efficient, because then there’s more to reinvest and the average cost per unit is lower. Higher compensation is more efficient because it induces the compensated party to work harder and more honestly. Apparently, you can get whichever result you want– argue for whichever set of interests you prefer, essentially– at whim. (To actually settle the issue, we’d need empirical evidence of a kind I’m not sure we actually have.)
In a similar vein, the notion that higher pay in itself leads to economic stagnation — namely in the form of unemployment and low job growth — is also unsubstantiated. To quote my friend once more:
So far as I know, there is no historic empirical correlation between high wages and unemployment, which would need to be the case to establish this claim. Indeed, right now we are in a prolonged period of falling/stagnant wages combined with higher unemployment; of course additional factors may be involved, but it’s at least not obvious that lower wages mean more jobs and higher production. Indeed, I’m pretty sure there’s nothing in economic theory to tell us that lower wages should lead to more jobs and higher production. Don’t confuse what ONE COMPANY does– hire more people and increase units produced– when it can get the same labor for lower cost, versus what the WHOLE ECONOMY or aggregate of companies does in the same situation. Just because one firm would, IF OTHER COMPANIES’ LABOR COSTS ARE UNCHANGED, increase jobs and production in response to a fall in its own labor costs, does not mean that such a fall FOR ALL FIRMS SIMULTANEOUSLY would lead to more jobs and more production; indeed, it might well lead to less, which has at least been the correlation (I won’t assume causation, of course) we’ve gotten for the last 30 years or so.
For anyone who doesn’t already understand it, look at the Mantel-Sonnenschein-Debreu theorem. It’s a dirty little secret of mainstream economics, which explains why you can’t just reason from the parts to the whole in economics.
In short, there’s little practical reason not to pay most people better, or at least ensure that they’ll actually receive growing wages over time. The money is there and so is the incentive: a larger and wealthier pool of potential consumers who can drive the demand these firms crave so much. As I’ve noted before, if companies want to avoid state coercion and/or disruptive labor action, then they should take it upon themselves to prove their social, economic, and environmental responsibility.