I tried to do this subject a couple of years ago and was never satisfied with what I wrote, so I didn't post it. But with the economy falling into a hole, the Big Three automakers tottering on the edge, and the union contract with the UAW intimately involved in all of it, I think it's worth, once again, trying to ask the question:
How do you judge the proper value of a day's work?? What is a fair day's pay, anyhow?
A couple of years ago, a lot of jobs in my former field (computer support) were being outsourced to India, with the (not always unspoken) subtext that it costs too much to hire Americans . I actually once heard a senior executive from another part of the country tell a room full of California techies, "You people just get paid way too much."
So I began to ask myself, what is a fair day's pay? My father, a blue-collar worker with a high school education, used to work for around $20 a day; he was a Federal civil servant. I have the draft of a letter he wrote in 1963, applying for a job that paid $2.65 an hour, instead of the $2.57 he was making. On that salary he supported a homemaker wife and two children; he owned his home outright (paid $7,000 in 1950, financed $2,000, paid off in 1952) and paid cash for his (used) cars. Minimum wage in 1960 was $1 an hour, the equivalent of $5.26 per hour in 2003 dollars (source: Working Life, published by the Labor Research Association).
Forty-five years later, minimum wage is $8 an hour ($64 a day) in California ($6.55 Federal), and a laborer making that salary can't even afford to pay rent in the inner Bay Area, much less support a wife and two children. In fact, a family with both adults making minimum wage has trouble with rent here. What's the point of calling it "minimum wage" if it isn't enough to live on??
We're told all the manufacturing jobs have gone overseas because it's cheaper there. It's cheaper there because somebody making $20 a day in Vietnam is pretty well paid (I'm making these numbers up to make a point, so don't yell at me), and therefore the widget that he makes can be sold back to Americans for much less money than if we paid Americans $64 a day. Nobody ever seems to ask about the quality of the widgets. Does the Vietnamese factory make widgets of the same quality as an American factory would? We don't ask; all we ask about is the price. And who are the people asking for the cheapest prices, the best deals? Americans. We're not willing to buy goods that have our own salary costs built into them; how dumb is that?
I'm deliberately not getting into the UAW and its union contracts, for a couple of reasons: one, I don't know much about them, two, I have equivocal feelings about the big unions. (That's another post.) But surely, what applies to the minimum wage worker at $8 an hour applies in spades to the UAW assembly worker making over $70 an hour, $33 of which represents health care, pension and related benefits. (Source: Yahoo Answers, from the Indianapolis Star in 2007) I don't know if my hypothetical Vietnamese factory worker has health care or pension benefits, but I doubt it.
Obviously some of the problem is inflation. According to the Bureau of Labor Statistics Inflation Calculator, $1 in 1960 is worth $7.32 (in buying power) in 2008. But that doesn't explain everything. In 1950, Dad bought his house for $7,000. The dollar in 1994 was worth $6.15 in 1950 buying power; but we sold the house after he died, in 1994, for $144,000, over 20 times what he paid for it. If it had only gone up with general inflation, it would have been worth $43,000. How long has it been since you could buy a house in California for $43,000? This is why I'm thinking that the economy has a long way to fall yet, as we shake out 50 years worth of real estate hyperinflation.
I'm not being very organized here, and that's because I have more questions than answers. It seems unfair to me that some people should work hard for less than a living wage, while others lose jobs entirely for being paid too generously; but who said it was going to be fair? Is there some way we can get back to a condition where a fair day's work pays a wage you can live on? Or is that too much to hope? We'll surely never reach a balanced solution as long as the men at the top (and it always is men, at the top) are paid hundreds of times the salaries paid to the men and women on the bottom.