Saturday, December 06, 2008

The Value of a Man

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.


  1. I've long felt that America's primary export should be trade unionism. If workers throughout the world became organized and demanded a decent living wage while working in safe and humane conditions, we'd be a lot closer to having a level playing field.

    But that's exactly the sort of level playing field the captains of industry do not want. Instead, their goal has been to beat the workers of the United States down to a third-world level with third-world wages. Thus we have seen the shrinking middle class, as more and more workers in the service, retail, agriculture, and manufacturing sectors tumble into the lower class.

    Products made in emerging economies are not necessarily of lower quality than first-world economies. Efiicencies and institutionalized quality - something that there has been a lot of resistance to in the U.S. - contribute to lower costs, too. But there is a limit to how far such things can reduce cost. Beyond that, corners must be cut and fixed costs - people, materials, machinery - must be whittled away.

    Honestly, I don't know how such an economy where the global playing field is level and everyone is paid a decent living wage would function. I have long heard that wherever food is cheap and plentiful there is great injustice and misery for the people making that food. The alternative is food that is expensive and difficult to obtain.

    Still, as each of us goes shopping and demands lower and lower prices, we are contributing to the downward spiral. It's a race to the bottom, really. And there are only losers at the finish line.

  2. My, hedera, what an enormous subject to shoot at with your small post!

    History of capitalism, unionism, trade, currency, and the disparity across the globe of styles and classes of life.

    I'm afraid you're going to have to break this question down into smaller pieces to deal with it. Minimum wage--what it means, how it originated, and why we care about it--might be a good starting point.

    5:54 PM

  3. Anonymous11:50 PM

    Curtis, try this paper from the US Department of Labor. It's illuminating. Essentially, like so much else, the minimum wage was formalized during the New Deal.

  4. Thanks for the link, Linkmeister, that paper is fascinating. It reinforces my basic convictions about government regulation and business: that ordinary workers need government regulation to protect them from business owners who would, if unrestrained, work the employees 10 hours a day and pay them a pittance. If you doubt this, look at the working conditions of illegal immigrants, many of whom are operating under conditions similar to pre-FLSA workers.

    At least we've advanced far enough that employing children in factories is no longer a debatable point. At least in the U.S., we don't do that any more.

  5. And Curtis, it's my blog, and if I want to take on too much, I can. Besides, it doesn't matter what I say about it, because as far as I can tell, nobody listens to me. Certainly nobody in the government listenst to me.

  6. Thanks Linmeister. I read the whole entry.

    Like many other provisions passed during the Depression, it came under pressure after the War. Republicans still routinely rail against raising the minimum wage, even in times of high inflation.

    The new trend of sending American jobs overseas is the latest salvo in the war between the classes.

    Unfortunately, capitalism doesn't respect borders, and industrialists and entrepreneurs could care less where their money comes from, or how it's made. Given the freedom to exploit by playing one population against another, they'll do it every time. That's why we need laws against allowing profiteers to leverage cheap labor, and tax laws that don't reward moving money overseas.

  7. Gosh, hedera, did I offend?

    I just meant that, given the opportunity, you could certainly do justice to any of the component parts of the issue(s) you raised. Linkmeister, for instance, offered a link which, as extensive and informative as it is, only touched on a small part of this.

    As a self-employed small business owner, I could no more afford to have an "employee" than I could afford to buy a new car every year. To do that legally, I'd have to gross at last five times what I do a year, and even then the potential liabilities would be enough to scare me away. Most of the people I know at the lower end of the wage scale, accept all kinds of compromises in wages paid, benefits, and so forth because the employers for whom they work can't afford them.

    Take on a full-time employee, even at minimum wage, and you're stuck with Social Security, Income Tax, State Tax, State Disability/Worker's Comp, Accident Insurance, as well as a host of workplace requirements all of which must be certified and maintained. It isn't hard to see why employers would want to hire anybody!

    Now the Republicans in Congress want the Auto Workers' Union to make a whole host of concessions across the board, effectively killing gains made over the last 60 years. We may be moving closer to "socialistic" system with government buy-outs, but the actual result is people--working-people--will probably end up with less. Is this a strange irony, or what?

    9:55 AM

  8. Typo: "It isn't hard to see why employers WOULDN'T want to hire anybody!"

  9. Well, Curtis, "your small post" came across as just a touch condescending on the receiving end! I accept that you had no intent to offend.

    You're quite right that it's a huge subject, and I don't have a hope of doing justice, whatever that is, to any part of it; but sometimes I like to tilt at the windmill.

    Speaking as a worker and the daughter of a worker, if it's so impossible for businesses to cope with employees, why are there so many employees out there?? Because some businesses find they can make more money if they DO hire employees, taxes, forms, and all.

    I actually did run a small business, years ago, and we even had a single (part-time) employee. The experience convinced me I'd rather be the employee and let someone else worry about the bottom line (especially after the business went broke).