How Much Is Work Worth?

Here’s a test that just might give an indication of what an ordinary job is worth. Answer the question: How much would you have to pay someone to do this work if the only ones available for work were people who already had a good job?

If there were no people who were forced by circumstances to work for low wages, common labor just might be paid what it is really worth to society. Employers would have to pay enough to attract someone worth having. That might be, say, $25 per hour, whereas the employer might get away with $15 if there were lots of people desperate for work.

But if it’s worth $25 to hire a good worker who has a job, why isn’t it worth $25 to hire anyone who is a good worker? It should be worth $25 to hire any worker who could do the job well, a person who would realize that the pay was good, and was therefore motivated to perform it better than if the job paid poorly. Knowing that a similar job paid $15 elsewhere, the worker would be in no hurry to quit, and would want to be sure to deliver full value.

Contrast that with a situation I am familiar with, in which a company paid its workers less than $9 an hour, knowing that they could always get more at that rate because unemployment was high and people were desperate. But a lot of these workers were marginal types, who showed up for work drunk or stoned, if they showed up at all. So paying these workers a pittance increased profit as long as there was a pool of these marginal workers, but there was clearly a moral price to be paid, because no one can actually afford to be paid so little if they are supporting someone else. The good workers knew they were being screwed, and left when they could.

If pay were raised high enough to be called Living Wage, would profit decrease so much that the company would be unviable? If even the marginal workers were well paid, wouldn’t at least some of them come to their senses and realize they had a good thing worth protecting by good work? I don’t have sure answers, but I believe many would realize the value of having their job, and the company might benefit from not having to hire new people all the time. Those who were underpaid did not value their job because they knew management didn’t value them.

The question arises: If everyone were paid what their job is actually worth, would the possibility of getting a similar job elsewhere become a disincentive? This is the setting for workers in Australia, which has had Living Wage laws for a century. Workers that tourists see are somewhat disdainful of tipping, because they recognize the value of their work, and their pay. Tipping is uncommon in Australia, and workers stick with their jobs, and tend to be pleased with them. Poorly paid Americans don’t feel the same way.

If everyone were paid what their job was actually worth, what would that mean for the Wall Street tycoons? The thought is amusing, because we all know they are grossly overpaid for no particular reason. They might well earn a couple million dollars a year under our new system, and they are probably worth that, but there would be no ten million dollar salaries, with twenty million dollar annual bonuses, because nobody is “worth” that.

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