Work
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The other day I fell into a discussion with a friend of mine regarding the problems in our society and what to do about them. I happened to mention that I thought that the federal minimum wage was way too high, and that I wasn't convinced that a federal minimum wage was a good idea in the first place. My friend, who is normally a taciturn individual, became so upset that she wouldn't even talk about the subject any more. "Oh," she said, "you just want to screw the workers!"
Now, I'm sure my friend didn't mean to be insulting, but I couldn't help wondering why anybody would even entertain the idea that I would want to "screw the workers." Even if I were the kind of person who would do stuff like that, why would I want to? I mean, what possible advantage could I gain by "screwing workers?"
Normally I would have chalked up the whole incident to my well-known difficulty in discussing things with women, but I happened to turn on the TV when I got home and there on the ten o'clock news was a mob of people outside the Northrop-Grumman Ingalls shipbuilding plant in Pascagoula, Mississippi, all talking about going on strike. The theory seemed to be that Northrop-Grumman was "screwing the workers" and the workers weren't going to put up with it.
I heard the same thing a few weeks previously regarding an announcement that the Oreck plant in my home town of Long Beach was planning to move to Tennessee because they couldn't remain profitable here. Our mayor, one of my favorite people, said that he didn't buy it. If I understood him correctly, he didn't think the Oreck executives were telling the truth.
Now, I'm no economist, but I was always taught that the business of business is business. In a capitalist economy, the purpose of businesses is to make money for their stockholders. Surely, there are still some businesses in the United States that are owned by rich old guys who always wear silk top hats, pocket watches, tail coats and spats, and smoke cigars and get their kicks exploiting sweat shop workers, but there can't be all that many of them any more. As I understand it, the "robber barons" were a transient reaction to the redistribution of wealth and power caused by the industrial revolution. The really wealthy people in the US, Bill Gates, Steve Forbes, Donald Trump, Oprah Winfrey, etc., got that way by owning stock in successful corporations that cannot afford to be too exploitive because (1) they'd have trouble with their employees, and (2) they'd run afoul of the law.
Today's large corporations are in fact owned by tens of thousands of relatively honest, hard working investors who are looking to secure their golden years by investing in economically and socially profitable enterprises. In my neighborhood, oil and insurance companies are constantly portrayed as dishonest, disreputable and greedy, who should be "made to pay" for "gouging" the public. The Democratic candidate for Governor refers to them as "moneychangers," in an apparent attempt to denigrate them in the minds of his religious reactionary supporters. Our public officials are under severe political pressure to make corporate profit a thing of the past. We are already seeing the adverse economic impact of their artificial controls on the oil and insurance marketplace, and it's only going to get worse. If we don't smarten up and recognize that the "oil barons" and the "insurance giants" and the "money changers" are actually our friends and neighbors and the folks in the local nursing home, we are going to be faced with the problem of what happens when they all lose their life savings. It's a scary thought!
In the case of Oreck, many, perhaps most, of their employees were displaced by Hurricane Katrina. A large proportion of them haven't come back at all, and of those who have returned, their performance has suffered from preoccupation with their personal, hurricane-related, problems. One can surely sympathize with the employees, but it seems to me that there is something to be said for the fact that Oreck is not a charitable organization, it is a manufacturer and distributor of Oreck XL vacuum cleaners. If it can manufacture them more easily or reliably or less expensively or more profitably in Tennessee, why would any sane person suggest that they should stay in Long Beach? When asked that question, my neighbors are quick to point out that the State of Mississippi and the City of Long Beach gave them all sorts of financial incentives to come here. That shows the fallacy of creating false beliefs and expectations by subsidizing a business instead of requiring it to stand on its own. Oreck was able to remain profitable only as long as it had the artificial financial incentives. Now the employees are giving them financial incentives to leave. DUH!
The assertion that it's not the employees' fault, while possibly true, is beside the point. The employees simply didn't help their employer sufficiently to overcome the hardships imposed by the hurricane. Fault is irrelevant. Did anyone really expect Oreck to operate at a loss until the company went bankrupt? What would have happened to the Long Beach workers then? Don't people in Tennessee need jobs, too? And what about people who want to buy Oreck XL vacuum cleaners? Don't they have rights? (And don't even get me started about whoever owns Oreck stock!)
Does anybody really think that the Oreck executives got together one morning and decided, "Hey, let's screw all the Long Beach workers by moving to Tennessee and making even less money than we do now!"?
When I was growing up, only about twenty percent of the people in my neighborhood had jobs. Many of the residents were children who were prevented by law from being employed because they were too young. They were allowed to baby sit or sell lemonade or baked goods as long as they were self employed, but those weren't considered jobs. The job holders thus had to support themselves and an average of four other people while they were working, and at least two people in retirement. Every worker I knew fully expected to have to live off what he (or her husband) earned during his working years. "Saving for retirement" was a national pastime. Many workers bought stock in successful corporations as a way of doing that.
My first money-making venture was selling doughnuts door to door at ten cents more a dozen than I bought them for in the local bake shop. We children were provided food, clothing, shelter, education and the other necessities of life by our fathers or, in some cases, our grandfathers. In large families, (more than four children) the children went to work when they were old enough to supplement the family income. Young women could get work as checkout girls or lunch counter waitresses at age fifteen, but we boys had to wait until we were sixteen to get jobs as busboys, elevator operators, theater ushers or gas station attendants. Young men took these apprentice jobs after school or on Saturday or during the summer to make dating money and to learn the skills that we knew we would need when we graduated from school and got real jobs.
About half of the adults in my neighborhood were not formally employed because they were what were then called "homemakers." They got apprentice jobs before they were married to make money for cashmere sweaters, bobby socks, poodle skirts and saddle shoes, and to learn skills they might need if their future husbands got injured, laid off, or killed. As adults, their physical and economic needs were satisfied by their working husbands. The preoccupation of most unmarried women was to get a husband who could do that well. That's why they bought the attractive clothes when they were single, to attract desirable potential husbands and breadwinners. During the day, the husbands worked at whatever their jobs were and the homemakers maintained the house and furnishings, went to the stores to buy things with the money the husbands brought home (or to shop to find the best bargains), did the laundry, and cared for the children. At night, everyone in the family relaxed around the dinner table and then around the radio or (later on) TV. On Saturday, the husbands worked in the yard or on the car, played with their children, or did minor maintenance on the family home. Women who were employed cleaned other people's homes, took in laundry, or taught school.
The value of the homemakers to the acquisition of family wealth was at least that of the wage earners. In addition to obviating the need for day care, baby sitters, tutors and nurses for the children, homemakers increased the wage earners' effective income by preventive maintenance of family property, identifying bargains, sales and sources of hard to find items, gathering information about more lucrative prospects for the wage earners, and advertising for sale or trade items no longer needed by the family. An employer knew with certainty that if his workers (or perhaps their wives) were dissatisfied with their jobs, the wives would find them new and better ones in short order. This provided a powerful incentive not only to pay the workers well, but to look for creative ways to provide additional benefits to their families.
Of course, it was recognized that a job was something you did for someone who was willing to pay you for it. It was a contract between the employee and the employer. We spent a lot of time trying to find out what we liked doing and were good at so we could find someone who would pay us to do it. We all recognized that the more education you had, both formal and informal, the quicker you could start earning enough to get married and buy a home and have children, which was the goal of everybody I knew.
I earned fifty cents an hour as a deckhand on a river boat when I was sixteen, half the minimum wage that didn't apply to my job. During that summer I managed to save over a hundred dollars and still take my girl to dinners and dances on weekends and buy 31.9 cents a gallon gas to use in my dad's new Plymouth to do that. I didn't have a car because my father didn't believe that students living at home should have their own, but many of my friends did. I always had access to one, because we were one of the few families that had two cars. My father was a traveling salesman and my mother needed a car when he wasn't home. I drove my mom's old Studebaker to school on weekdays and my dad's new car on weekend dates while my car-owning friends had to be content with their jalopies. Saturday nights in my home town were like American Graffiti.
Minimum wage was $1.00 per hour then. It went up to $1.15 in 1964. Nobody I knew cared, because we didn't want to make minimum wage, we wanted to make maximum wage. We knew we couldn't do that unless we had something worthwhile to sell to an employer.
My first real job was as a second lieutenant in the US Army. I made $222.38 a month, a third more than the minimum wage. Out of that I paid for my uniforms, meals, BOQ rent, and a Plymouth Sport Fury with a five-speed Hurst shifter and power everything. Of course, I could afford a sporty car, because I wasn't married. Some of my officer friends weren't so fortunate, but their wives didn't work, either. I didn't like the BOQ's so I had a mobile home custom made from my design. It cost $6,500, furnished, which was about half the cost of a small home and yard. I recall being surprised that I had to pay over $100 to buy home supplies like dishes and a vacuum cleaner (and other things) when I moved in.
Nowadays, of course, everything is much better, thanks to government intervention. Almost all adults now have jobs. Husbands and wives both work to make ends meet. Mothers may have to do double duty as employees during the day and homemakers at night, which leaves precious little time for relaxing with their husbands, if they have any, and no time at all to increase family purchasing power as their mothers and grandmothers did. Add to the money they don't save by staying at home and taking care of the family and its property, that they have to spend on education, clothes, accessories, and transportation, and many wives actually lose money by working. As a result, many working men cannot afford to have working wives, so both man and women are under increasing pressure to forego the reliability and stability of marriage for less escape-proof relationships. Of those who do marry, more than fifty percent of them change spouses during their working years, so there must be some period of transition from one to the other when each has to provide for his own needs, but I confess I don't know how that works, or who takes care of the children, if any.
Two out of five contemporary workers, including those earning over nine times the minimum wage, aren't saving anything for retirement. They're depending totally on Social Security. Good luck with that, folks!
(I predict that we will soon see public support for laws "protecting" the elderly by allowing physicians, hospitals and insurance companies to "withhold or deny coverage for excessively costly diagnostic and treatment procedures of unproved effectiveness." Translation: the voters will want to start killing off indigent old people. Watch this space!)
The lunch counters and their waitresses are all gone now; the stores where they used to work can't afford them. So are the busboys, elevator operators, and theater ushers. The river boat that provided my high school job doesn't employ anybody because it's illegal to pay deck hands what they're worth. Instead of running out to service your car, the gas station attendants are mostly bored trinket and snack vendors who can't make change without a computer and sometimes can't even spell "gasoline." You now have to pump gas yourself, and it costs ten times as much as when the guys in the brown uniforms used to come running out to check your oil and vacuum soil and gauge the spare and fill with air and make your engine good to go and fill your tank with Texaco!
Gone too is the notion of paying a worker what he's worth. For many workers, that would be against the law. I don't mean any disrespect here, but the plain fact is that someone on his first job probably isn't worth paying anything. It's only been during my lifetime that employers were expected to pay an unskilled worker what has become known as a "living wage." The customer now subsidizes the employer to pay the new employee to learn how to do something useful, with the result that nowadays we pay ten times as much for everything as we did when I was growing up. Now that the minimum wage has become a satisfactory income for some employees, they are satisfied with doing the minimum, which in some cases is actually nothing. For some employees, it's sometimes less than nothing, because they create the need for more work than they accomplish. They are not work sources, they are work sinks. God help you if a certain work sink "mechanic" I know works on your car! It'll take two real mechanics twice as long to undo whatever he does to it!
A contributing factor in the United States is that it takes about 10,000 hours of doing something really to learn how. For basic skills like walking and talking, this is about three years of wakefulness, which is why four-year-olds do these things tolerably well, but younger kids are still learning how. For intellectual pursuits, such as reading, writing and arithmetic, 10,000 hours of schoolwork puts one in high school. Anything that one does for a living, however, takes about six years of 9-to-5 on-the-job practice after one learns what he's supposed to do in the first place before a worker reaches his full potential, whatever that is. As a result, fewer and fewer workers in the US are learning how to do anything well enough to contribute to society! "Old world craftsmanship" is being practiced today only in the old world!
Work is defined as a distance through which a force operates. In places where things are measured by standards established by King Henry VIII, the unit of work is the foot pound. (King Henry didn't have a clue about how to measure work, so he didn't establish a unit for it, but he had two big feet and a lot of pounds!) The civilized world measures work by the joule, which is a little less than three fourths of a foot pound. This became important when James Watt invented his steam engine, because he had to sell people on the idea that it could replace horses and mules. To find out just how many draft animals a steam engine of a given capacity could replace, he had to figure out how much work a horse could do. By observing horses doing things that the steam engine could do better, he figured that a strong horse, working at peak capacity, could do about 550 foot pounds, or 746 joules, of work in one second. This is the power of one horse, or one horsepower. A 128 pound woman climbing from street level to the 86th floor of the Empire State Building in eleven minutes and 57 seconds produces about 1/3 of a horsepower while doing that. One horsepower is 550 foot pounds in one second, 33,000 in one minute, or 1,980,000 foot pounds (2,685,600 joules) in one hour.
A real horse can't work that hard for very long, but one horsepower for one hour is a unit of work called the horsepower hour. A world class athlete (like Suzy Walsham, the Empire State Building climb woman's record holder) can work at about 1/3 of a horsepower for short periods of time, and perhaps 1/10 of a horsepower for extended periods. This is a power of 74.6 joules per second, or 74.6 watts, about enough to keep a small light bulb burning. So the maximum amount of work a human being could be expected to do in one 8-hour day is 8/10 of a horsepower hour, or 1,584,000 foot pounds (climbing 8800 feet or lifting a one-ton weight 792 feet!). This is also 2,148,480 joules. In units of work for which you are charged in your electric bill, it is 0.5968 (a little less than 3/5) of a kilowatt hour.
The next time you get your electric bill, check to find out how much you are paying for 3/5 of one kilowatt hour. This is the maximum of what one day's human work is worth. No wonder we use machines where we can!
Incidentally, if you run your 200 horsepower car flat out for an hour, you get 200 horsepower hours, 537,120,000 joules, or 149.2 kilowatt hours of work. How much would you pay for gas? How much would you pay if it ran on electricity? How much if it were pulled by 2000 employees at minimum wage?
The horse and mule replaced the donkey and slave for mechanical work during Biblical times, although there are still places in the world where humans are employed to do fractional horsepower work such as pumping water or transporting one or two passengers somewhere close by. When human power costs more than machine power, human workers are invariably supplanted by the machine, whatever the machine costs! The steam engine superseded the horse, but was itself displaced by more efficient and reliable electric motors and internal combustion engines. As machines have become more versatile, more costly human workers have been replaced by them. Today's workers have become so expensive that inventing machines to do the same work has become one of the main domestic industries of the United States and most of the developed countries.
If the minimum wage is high enough, an employer may well decide to replace the worker with a machine even if the machine doesn't do the work as well and accept the penalty in customer dissatisfaction as the cost of doing business. Automated telephone answering machines are a good example. Why learn all about a company and its products and services to become a competent customer service representative when you can make the same wage watching soap operas and selling trinkets in a convenience store? Why pay someone whose lack of dedication annoys the customer more than it costs to buy a machine that does that?
A temporary interruption of this process is provided by the illegal worker. The choice to replace an expensive human worker with a less expensive machine can be avoided for, a time, if an employer can find another human worker who is even less expensive than the machine. As the cost of legal labor goes up, the illegal laborer becomes more attractive. (Do we have an illegal labor problem in this country? I wonder why!) The process is self-limiting, though, because as more illegal workers supplant legal ones, social pressure increases against the lawbreaking employer, raising his incentive to buy a machine to do the work and stay out of jail. The machine displaces the illegal workers, thus providing them an incentive to find another employer, so displacing another legal worker. The end result is a social upheaval in which legal workers continue to be displaced by illegal ones at an increasing rate. Over time, the true number of illegal workers actually decreases, but each one of them displaces more and more legal workers. The perception among legal workers becomes that the "illegal worker problem" is becoming worse, while statistical analysis demonstrates that the opposite is true. This results in a situation where the political party that represents the displaced legal workers chronically disagrees with the political party that represents the statistical analysts, and nobody can arrive at a solution to the perceived problem. Could this happen in the United States? - Naaaawwwww!
My father's generation was concerned about substituting machines for unskilled laborers. That became common by the end of the Great Depression. By the time I entered the work force, unions were concerned about "automation" replacing skilled workers. Programmable machines are now supplanting costly white collar workers, and the few professions that still require human employees are finding it increasingly worthwhile to find them in other countries and to buy machines that make that possible. "Telepresence" makes the relationship between the location of the work and the location of the worker (such as a vascular surgeon and his patient) irrelevant. Modern communications technology, such as the Internet, makes it possible for a company based in the United States to coordinate the real-time activities of workers all over the world, regardless of where the work happens to be. Not all other countries are as enlightened as the United States about paying a minimum of $75.74 (or more!) per kilowatt hour of human work.
Of course, humans do much more than just moving forces through distances, so foot pounds or kilowatt hours or horsepower hours are obviously inappropriate measures of human work. That's one of the problems involved in assigning a value to it; if it can't be measured, it really isn't defined. But the fact is that human labor and machine production can be measured in quantitative terms, however inappropriate. In the case of a laborer who walks on a treadmill all day pumping water, his productivity can be reasonably measured against that of a steam engine or an electric motor doing the same job. In the case of a lathe operator for example, different considerations may apply, but the lathe can also be operated by a computer (actually a numeric controller) that also consumes energy and does the same work the human operator does, namely, operating the lathe. The numeric controller can do it faster, more precisely and more reliably, but the human is better at custom work and coping with unexpected problems. As human labor becomes more intellectual or skillful, a machine to replace him becomes more costly, regardless of the actual power consumptions or productions involved.
An interesting historical perspective of the first replacement of workers by machines at the beginning of the industrial revolution is provided by the story of "John Henry, the steel-drivin' man." Steel drivers worked in railroad cuts and tunnels. They used sledgehammers to drive star-nosed rock drills by hand to make holes for gunpowder (and later dynamite) charges used to blast out the tunnels. They were paid according to the total depth of holes ("length of steel") they could drive in a day. Faced with competition from the steam drills that could do the job immeasurably faster, the story goes that John Henry challenged the steam drill to a race that he won when the steam drill broke down, but was mortally injured in the process. In the songs and stories, John Henry is reputed to have pointed out that, "I can hoist a jack; I can lay a track. I can pick and shovel too (ain't no machine can). I can do anything you want me to." Of course, minimum wage back then was zero. The famous statue of John Henry now stands damaged and neglected at the entrance of the abandoned Chesapeake and Ohio Railway tunnel outside of Talcott, West Virginia, where the contest allegedly took place around 1840. It seems to me that the sole monument to a bygone Negro work ethic that liberated them from slavery deserves better!
There is probably a leveling-off point at which a machine always costs more than a human worker doing the same job, but it's not anywhere near what a minimum wage earner does. There are at least three factors at work here. The first is that minimum wages are paid for the minimum skills (including none) that are most easily replaced by technology. Automatic elevators and gas pumps, and the little aisle lights in movie theaters are good examples. So are vending machines and telephone answering machines. The second is that minimum wage jobs tend to be more common, that is, there are a lot of them. This provides a powerful financial incentive for somebody to make and sell machines to do all this minimum wage work. The third is that, as minimum wage rises, machines become comparatively less expensive. If it costs $6.00 per hour to purchase and operate a machine to do a job, it makes sense to hire someone to do it at $5.00 per hour. If the government demands that he be paid $7.00 an hour, you save a dollar an hour by buying the machine and firing the worker. And as wages go up, so does the cost of living, so a worker today has to work the same number of hours that I did to buy his lunch, or his car, or his home, even though he's earning ten times as much now. The cost of the machine is likely to fall dramatically in comparison. So even if minimum wage stays the same forever, the minimum wage earners are all going to lose their jobs to automation sooner or later. They're going to do it sooner if the minimum wage goes up, or later if the minimum wage goes down. Guess which option the government favors!
This process is reversible only with great difficulty, and there's no real incentive for the wage payers to do that. Employees must be hired, managed and supervised. Many of them must be trained. They get sick, pregnant, arrested, drunk or killed totally outside the control of the employer. Sometimes they just quit. They also gossip, loaf, steal and go on strike, sick leave, or vacation. They get the employer in hot water by doing illegal things in the workplace or on company time.
Machines do none of these things. Replacing personnel (or "human resources") departments with machine support departments, once accomplished, biases the employer in favor of the machine. So does investing capital in its purchase, which is almost always less expensive than renting, once businesses have committed to its use. It's easy to replace a employee with a machine. Just fire (lay off, refuse to hire) the employee and buy the machine. Even if the machine breaks down, it's usually less expensive to repair it or buy a new one rather than go back to human workers doing the same job. New machines are likely to be faster, more reliable, easier to maintain and more simple to operate than the old ones, exactly the opposite of employees. The cost of a machine can be reliably predicted over a very long time, but nobody today knows what employees are likely to cost next year.
By far the greatest contributor to replacing workers with machines, however, is government regulation. The reason an employer hires a worker (or buys a machine) is that the work he needs done is more than it is practical for him to do himself. The cost of the worker or machine represents value that the employer trades in exchange for the value of the work done. More expensive machines tend to do more and better work faster. It works the same way for more expensive human workers, too. However, when the government begins mandating worker benefits, workplace improvements and expensive recordkeeping, the employer in effect has to pay more for the same amount of work. The machine becomes correspondingly more attractive. Every time the state or federal government imposes another "workers' benefit" or "compliance requirement" on the employer, it increases the number of workers sometime, somewhere, whose jobs will be lost forever to machines.
The very notion of minimum wage is seductive, because it suggests that there is some level of income below which the government will not allow the worker to go. But the fact is that, whatever the minimum wage is, and whatever jobs qualify, there is a strong incentive in a capitalist economy to put those workers out of jobs. Eventually, they won't be earning minimum wage, they'll be earning nothing. Then they can go on welfare and take money from the wages of people who still have jobs, which make their work less attractive to the people actually doing it. If it becomes so unattractive that they stop, then they go on welfare, too. At present, our government promotes this very situation for millions of otherwise productive wage earners.
This is precisely the reason the poor are getting poorer. Whenever Congress raises the minimum wage, more people are put out of work faster. The minimum wage applies only to people who have jobs, not to people who have minimum skills, more and more of whom are making nothing. If you consider the average minimum wage (the total amount all the minimum wage earners, employed and unemployed, are making, divided by the number of them), it remains pretty much the same regardless of what Congress does! Whatever the minimum wage is, it doesn't count for you if you're unemployed.
It works the other way, too. The rich are getting richer! A company can lay off thousands of minimum wagers, but they'll always have rich executives. If one of them quits or retires or dies, the company doesn't eliminate the job or get a machine to do it, they hire a new guy, one who already has a good job, but takes the new one because it pays more. Some other rich guy takes his job to get ahead, and so on down the line. They all personally just got richer. It's happening all over, the government bailouts and public outcry about executive salaries have done exactly nothing to change it! Go ahead and demonstrate; nobody cares.
Minimum wage is seen as a safety net for historically disadvantaged ethnic minorities for whom "getting a job" thus guarantees a predictable level of income. It's appealing, but it's deceptive. Since the passage of the Civil Rights Act in 1964, the purchasing power of people identified by the census as "black" or "African American" has actually declined, by some measures as much as 50%, while it has increased for everybody else. What that means is that these people can buy only half as much now as they could when the minimum wage was $1.15. Their power to influence the political process by application of economic pressure has thus decreased by a like amount. Go ahead and boycott; nobody cares! You've come a long way, baby!
The existence of any level of minimum wage guarantees the existence of state-sponsored welfare. In a free market economy, the wage an employer pays the worker is determined by the employer's perception of the value of that person's work. If the employer's perception of the value of a certain person's ability is less than what that person expects (or is legally guaranteed) to get, he won't do it. Society then pays him not to work, either by a formal process involving unemployment offices and food stamps, or a less formal process involving taking care of him in jail (possibly until he is executed) for more lucrative criminal behavior or paying the social cost of tolerating that behavior. Generally, unemployable citizens will not choose to starve because nobody will pay them what their work is worth. They'll rob and steal instead.
Welfare is a cancer in any society because it increases the number of other people each worker must support, and decreases the number of workers. This results in a decrease in the total amount of productivity of all the actual workers. This means less work gets done overall. It also means that there's less competition, and competition is absolutely necessary in a viable economy.
Marxian communism was a revolutionary attempt to solve a social catastrophe in which the czar owned virtually everything, as a result of which the workers had very little political power. In oversimplified essence, communism provides government benefits (welfare) to the workers in return for their contribution in the form of work and taxes. "To each according to his need, from each according to his ability." It seems like a good idea in theory, but it isn't in practice. The communists tried to eliminate unemployment by putting everyone on welfare and requiring everyone to do something socially useful. In doing so, they eliminated competition, with predictable results.
In the United States, this practice still exists in the form of civil service. It persists because government has no competition. Of course, all of the functions provided by government require workers who actually provide them, so civil servants are absolutely necessary in any organized society. The United States is fortunate to have so many capable and dedicated ones. On the other hand, US civil servants are evaluated and hired on a basis that considers other factors (ethnicity and previous military service among them) in addition to (or sometimes instead of) a demonstrated or assessed ability actually to accomplish anything. For example, the current popular fear of terrorist attack has provided employment opportunities for tens of thousands of otherwise marginally employable, minimally educated representatives of culturally disadvantaged racial minorities whose only demonstrated professional skill is snooping through the belongings of people who would "rather be safe than sorry" and not finding explosives and weapons. The service they provide is supposedly to keep airline passengers safe from terrorists, but what they actually accomplish is to soothe the fears of people who otherwise would feel less safe, and perhaps more sorry, as a result. Their jobs were created in the widespread belief that tranquilizing travelers with false assurances is a worthwhile government function. Their ability actually to prevent or deter terrorist activity has never been conclusively demonstrated. All the 9/11 hijackers got past them, and their effectiveness in tests of their ability to spot fake terrorist bombs is, at best, abysmal! They are said to be part of a "multilayered security screening process," but they are the layer that makes the others necessary because it's the one that demonstrably doesn't work.
So the average skilled worker in the US is still supporting four other people; they're just not his wife and children. They're more like, "a welfare recipient, two people who can't do what their employer is paying them for, and a government bureaucrat!" God bless America!
The idea of minimum wage, possibly in a minimally productive government job, is attractive because it has become synonymous with "workers' rights." Suggest that the minimum wage is too high, and someone is likely to accuse you of trying to "screw the workers." For the record, I believe, as my church does, that every worker is entitled to a living wage, and every working head of a household is entitled to a living wage for himself (or herself) and his (her) family. My church and I also believe that it is a function of government to make that possible. We do not believe that it is the function of government to guarantee a living wage, or to select who should earn that, or, in fact, what a living wage is! Your living wage may be different than my living wage, and neither of us may be productive workers.
The nature of humanity makes this immediately obvious!
First of all, newborn babies need care, but they can't work. Same with one year olds, two year olds, etc. It is a function of government to promote the general welfare, and it doesn't promote the general welfare to (1) make it impossible for the parents to support the kid, (2) make the mother work, forcing the kid to get what care he or she can from someone else, or (3) make the kid get a job as soon as he's old enough. The general welfare is best served by strongly encouraging children to stay at home and learn skills and social responsibilities from their parents or parent surrogates (schools or apprentice programs) until they are physically, socially, and psychologically ready to become parents (not just adults) themselves. If you encourage a kid to quit school to get a job, he'll probably never go back. That's bad for society, because it produces ignorant, minimally productive employees.
Second, if the job he gets pays a living wage only for himself, he'll be disadvantaged when (or if) he has children of his own to support. This doesn't promote the general welfare, either. He'll be even less likely to go back to school, because of his increased parental responsibilities. He'll then have to choose between depriving his children of the benefits of living in a secure household with an intact, financially secure family, or of not having any in the first place. That's bad for society because it (1) reduces the number of new workers, (2) impairs the social abilities of the few children that there are, and (3) makes it more difficult for the head of the household to provide for his own retirement and that of his nonworking spouse.
Third, having the government decide what is a "living wage" for a person, even the hypothetical "average" person, takes away the person's liberty to determine that for himself and his family, and securing the blessings of liberty for its citizens and their posterity is another of the functions of government. If any kind of "living wage" standard is established by the overwhelming power of the state, it becomes unlawful for anyone to work for less. That's bad for society because it deprives the community of the valuable contribution of nonstandard employees such as the disadvantaged and elderly. These people are now subsidized by taxes paid by employed workers in the form of welfare and Social Security, respectively.
The belief that everyone should be paid a "living wage" is so powerful that many people won't even entertain the idea that it isn't so, but it just isn't. High school students living at home don't need a living wage. Girl Scout Cookie sellers don't. People receiving welfare don't. People with independent incomes don't. On the other hand, many of them do need jobs, if for no other reason that having a job makes it easier to get a better one.
This belief has a more subtle, and far more socially pernicious, consequence. If the legal minimum wage is supposed to be a living wage, and for some reason I believe I can't live on the wage I'm making, it only stands to reason that whoever is paying me is violating the law! He's not paying me enough! It's his fault I'm poor! If this is the case, I'm simply restoring the balance of justice by stealing from him or from the customer to support my drug habit or my three illegitimate kids or my new Cadillac! Employees steal in many ways, by not doing a good job, or by alienating the customers, or simply by taking things. "Tips," once rewards for exceptional service, have now become so expected in the US that they are based on a percentage of the bill and factored into the employee's reported income, regardless of the quality of the service. Employees expect bonuses and raises and perks simply because they feel they need them! And if a potential employee simply can't do enough work to make it profitable for an employer to pay him a living wage, he's screwed!
I once worked for a company that had an impressive "hire the handicapped" program. They paid a person for what he did, not how long it took him to do it. Physically and mentally handicapped people came to work there from all over the United States. Their work provided them with income, self-sufficiency, socialization, companionship, the opportunity to maximize their potential, and a sense of self-respect and personal accomplishment that came from knowing that they were an asset to society instead of a burden. It's illegal for the company to do that anymore. The handicapped employees are all gone. The government pays them to sit in nursing homes and watch television and refers to them as "special needs" welfare recipients and "challenged" and treats them as less than human and keeps them locked up. There's a tax-supported government reservation for them not a mile from my home. It's called the "South Mississippi Regional Center" to disguise its true purpose and function.
Quantification of human labor by the monetary measurement of the minimum wage contains a built-in inflationary mechanism that makes it impossible actually to provide a long-term benefit to the employee who earns it. If the minimum wage is $6.00 per hour and you're earning twice that, your earning twice minimum wage. If the minimum wage goes up to $8.00 per hour, you're earning only half again minimum wage. If it goes up to $12.00 per hour, you're earning minimum wage. It's likely that you're going to want a raise for the same amount of work long before that happens. Eventually everybody will want more income, including everybody who produces, distributes and markets the things you buy. This is why everything costs ten times as much as it did when I could live comfortably on $222.38 per month. Raising the minimum wage doesn't improve the income of the wage earner, it simply reduces the value of his money!
The minimum wage after World War II was 40 cents an hour. In 1949 it rose to 75 cents an hour. In 1955 it became $1.00, then $1.15 in 1964, $1.25 in 1965, $1.30 in 1969, $1.45 in 1970, $1.60 in 1971, $2.00 in 1974, $2.10 in 1975, $2.30 in 1976, $2.65 in 1978, $2.90 in 1979, $3.10 in 1980, $3.35 in 1981, $3.80 in 1990, $4.25 in 1991, $4.75 in 1996, $5.15 in 1997, $5.85 per hour now, $6.55 in 2008; and $7.25 per hour in 2009. When I was a teenager, it was $1.00 per hour. You could buy a gallon of gas for 31.9 cents, a candy bar or a coke for a nickel, a nice house for $10,000, a McDonald's hamburger for 15 cents, and mail a letter for three cents. Today, the minimum wage has gone up by 585 percent. Can minimum wage earners buy 5.85 times as much as they could then? Can they buy as much? Do the math!
But wait! It gets worse! The value of all of all money and the value of all the wealth that is measured in monetary units (dollars) in the United States has been reduced to about 1/10 of what it was 50 years ago. At the present time, the average effective income of every worker in the United States, not just minimum wage earners, is falling at the rate of about 1/5 of one percent per year. This also reduces the value of savings accounts and pension plans based on bonds and cash. It has reduced the value of taxes, so the government has to charge more from every taxpayer. You can probably guess what happens to the balance of trade with other countries. Chinese and Mexican workers earn much less than Americans. The next time you buy something, note whose workers made it. Whose jobs did they take?
The simple fact is, minimum wage is a form of government welfare, and the more minimum wage jobs there are, the more this hurts everybody. Minimum wage earners get from the taxpayers more than they give. Somebody has to make up the difference. If you are a taxpayer making more than minimum wage, that somebody is you!
If the minimum wage keeps rising at current rates, today's four-year-olds will be earning a minimum of $16.00 hour when they enter the work force. On the other hand, gas will cost $7.50 a gallon and a Happy Meal will cost 16 bucks. Stupid people think this is a good idea. Their vote counts just as much as yours does.
Minimum wage is not now and never has been a living wage, and it is not likely to be possible to make it so, whatever the politicians say or do. If the minimum wage is somehow artificially set to whatever the living wage is, everybody earning minimum wage (including, for the sake of argument, a single unskilled teenaged high school dropout waitress with four children) just gets by. Skilled people, of course, make more. Manufacturers, distributors and vendors start marking up their prices a little bit so they can make more than minimum wage, too, and eventually they raise the price of something the minimum wage earner needs but can't then afford. Presto, minimum wage just fell below the living wage again!
It doesn't matter how hard the single mother waitress works, she's never going to get ahead -- ever! Even if she's the best waitress in the world, her lack of education is going to hold her back from getting a better job, and the kids are going to make it really difficult to get a better education. The politicians can pass all the laws they want, but they aren't going to make waitresses with no education able to make a living wage for five people. Their efforts are merely making waitress jobs go the way of the dodo. People go to McDonald's and Wendy's because, without waitresses, they're cheaper and faster, not because the food is better.
Actually, there's no such thing as a single mother. Somewhere there's a man who fathered all those children. Why isn't he providing for them? Mom can pretend that she's a hard working victim of circumstance, but the fact is that she's condemning all her progeny to a life of being disadvantaged. Eventually, they're likely to end up on welfare or in prison. The politicians can say they'll change that if you vote for them, but they won't! They can't!
Politicians will tell you anything to get your vote. One guy is going to lower the price of gasoline, another is going to get you free insurance; a third is going to bring back prayer in public schools. It's all lies, people! There are exactly two ways to live comfortably. One is to be lucky; be born rich or win the lottery. The other is to go to school, get a good education, learn skills, get a good job, and then start a family. Not even the Communist Party in the Soviet Union could change that, and, believe me, they tried!
Because the minimum wage, and most others, are based on the time a employee takes to do a job rather than the value of what he does, there is no incentive for him to be productive. In particular, he has no reason to do better work to make more money. In fact, there is a strong incentive for him to take as long as he can to do a job, working overtime if necessary, and maybe even having to take more time do it over (and over). This makes the monetary cost of the goods or services he produces even greater, further decreasing the value of the wages he is paid. Far from protecting employees' rights, government specification of a minimum wage does the opposite. Individual hourly workers can improve their purchasing power and standard of living by learning new skills or taking advantage of promotional opportunities, but they can't do it by working smarter or harder or better. That isn't just, and establishing justice is a function of government.
Of course, employees wouldn't have jobs if there were no employers. The relationships between employees and employers throughout the ages have been many and varied. Many of them have been historical accidents (slavery), some have been noble experiments that failed (communism), and some of them are still evolving. In the United States, this evolving relationship is based on capitalism. Basically, the employer hires employees to do or make things that he sells to his customers. In its purest form, the employer attempts to pay the employee the lowest wage possible and charge his customers the highest price possible. The whole process reaches equilibrium when the customers refuse to pay more and the employees refuse to work for less. The difference between what the employer pays for work, raw materials and other business expenses and what he charges the customer is profit. The employer can either keep the profit for himself, or he can invest it into the business to hire people to do more work and satisfy more customers. If the employer and employee is the same individual, profit allows the self-employed worker to pay himself more, or to invest in tools and other productivity enhancements to allow him to do more or better work. In control theory, this process is called positive feedback. Positive feedback causes a process to speed up, so the employer makes more profit, pays for more work, and makes even more profit until he either can't find any more ways to get more work done, or runs out of customers. This is how the robber barons got so rich in the nineteenth century, and how self-employed workers with an unlimited customer base, such as doctors and lawyers, are getting so rich in this one.
The employer's incentive is to pay the minimum for work, not necessarily for workers. If he is forced to pay a certain wage to a worker, regardless of how much the worker actually accomplishes, the employer will try to hire as few workers as he can. He will also attempt to make them maximally productive, to get more work out of each worker for the same wage. Happy workers do more and better work than angry ones, so it is to the employer's advantage to make the workers happy, possibly by paying them higher wages. Obviously, this is to the worker's advantage also. If the employee is chronically unhappy, the employer is likely to replace him with someone else, or possibly with a machine.
The appalling working conditions in the robber barons' sweat shops were due in part to the inherent economic pressures of capitalism and in part to the dire poverty of available workers, who were happy with any job, no matter how unpleasant. They are tolerated in areas of the world today where those same conditions prevail. Some time ago, a famous television personality who sponsored a brand of clothing manufactured in such places overseas attempted to use her influence to better conditions for "her" workers. They responded by telling her to go home and mind her own business! The workers recognized that the employer's profit margin permitted better working conditions only at the expense of fewer workers. In countries less enlightened about the benefits of chronic welfare subsistence than the US, having an unpleasant job makes the worker much happier than having no job at all!
The cost of making employees more productive in the long term comes at a reduction in immediate profit. The employer must balance the costs of higher productivity against its anticipated financial benefits. The problem is that cost is immediate, whereas benefits have to be forecast. The employer will be more successful to the degree that he minimizes his cost/benefit ratio. If it is greater than one, he will eventually become bankrupt, and the employees will all be laid off, which is not good for the employees. If it is exactly one, he can operate as a non-profit organization. Non-profit organizations operate successfully only if (1) they have no competition, (2) the employer receives income from some other source to pay his costs, or (3) the customers or employees are the employers. In the latter case, the cost/benefit ratio can be maintained at unity by receiving more money from the customers or by the employees agreeing to less benefits for a given amount of productivity, or both.
Government mandate of a minimum wage without an associated guarantee of employer benefits puts the employees at the mercy of the employer's management ability. If he isn't able to manage his cost/benefit ratio, his employees may lose their jobs. This is what happened at Oreck. Calling the Oreck management names and questioning their honesty or ancestry may be emotionally satisfying, but it doesn't change economic reality. No business can operate at a cost/benefit ratio of more than one for very long, regardless of the reason.
Of course, sometimes employer incentives don't sufficiently motivate the workers, especially when they know they're going to get paid minimum wage no matter how much they goof off, and unemployment compensation if they get themselves fired. In such cases, "the boss" may have to persuade them with other inducements, such as yelling, or other methods they don't like. At the moment, no less than thirteen states are considering legislation that would make this kind of "harassment" of subordinates illegal. None of them is considering compensating legislation to protect the employers from dishonest or incompetent employees! I can't wait to see how minimum wage employees will react to transferring profit from their employers to their lawyers instead of to themselves, especially when they start getting laid off! The chief disadvantage of a republic is that the voters usually get what they deserve!
Talks between Northrop-Grumman and the unions involved broke down several times, but an agreement was finally reached and most of the employees went back to work. I heard employees' demands for improved benefits, but I didn't hear any of them suggest how all these benefits are going to be paid for. Nobody is apparently striking for more productivity. This is unfortunate, because Northrop-Grumman has fallen on hard times recently because of their personnel, equipment and time losses due to Hurricane Katrina. The workers seem to assume that the US Navy will provide extra income indefinitely to keep them building ships, because providing for the common defense is a government function that it takes seriously. However, Northrop-Grumman ships have been so poorly built recently that the first thing the Navy has done is to send them to the overhaul yard for repair. Neither Congress nor the Navy is likely to stand for this situation indefinitely. If the workers don't start doing a better job, they're all going to be permanently out of work!
The general feeling seemed to be that the strike and its severe consequences were all Northrop-Grumman's fault, even though it paid its journeymen workers about five times the current minimum wage. Even people who are not involved expressed anger over what they saw as Northrop-Grumman's exploitation of employees by not giving them everything they wanted. This is in spite of the fact that nobody seemed to be clear about what that was. The unions were saying "more," and Northrop-Grumman was asking "how much?" The employees didn't seem to know.
It is interesting that many Ingalls employees did odd jobs that had no benefits other than monetary income well below minimum wage. Given the choice between working for continued benefits in a new contract and the greatly reduced benefits of self-employment, they choose the latter. Maybe having a contract that expires every so often is not a good idea. I wonder what their reaction would have been if they had been forced to stop working the odd jobs because they weren't paying themselves enough.
"Profit" is not a dirty word. It is the incentive for people to create businesses that employ other people in the first place. Labor needs capital just as much as capital needs labor. Northrop-Grumman, like virtually all large employers in the US, is a corporation, a business owned by a very large number of private investors who have a voice in proportion to their investment in how the company is run and how employees are treated. Profit is used to increase the value of the company and each investor's portion of it. Any investor can convert his ownership of Northrop-Grumman, represented by his stock, into cash or in stock of other corporations. The worth of the transaction is determined by agreement between the buyer and the seller. Right now, Northrop-Grumman stock isn't worth as much as it once was. Reduction in the market value of corporate stock, even if the corporation is doing well otherwise, represents a loss for the stock owner. If the strike lasts too long, a company's stock may lose so much value that the corporation will go into receivership and a federal judge will decide what benefits the company can afford. Judges can force the employees to live with whatever they decide. I wonder if the all strikers know that?
The fact is that workers are "screwed" by a process that continually reduces the value of their wages, encourages them to be minimally productive, provides an incentive for their employers to replace them with machines, or makes their jobs hostage to the management ability of the employer. It's nice to have a guaranteed minimum wage only if you're a guaranteed minimally productive employee.
The most recent Presidential election came at a time of economic uncertainty. Mr. Obama won because of (among other things), he promised to "create jobs." Among white Republicans, the joke circulated that his supporters don't want jobs, they want income, and that appears to be the case so far. The Democrat-sponsored bill to "stimulate the economy" includes: $43,000,000,000 for unemployment benefits; $20,000,000,000 for food stamps; $4,000,000,000 for Supplemental Security Income; $2,500,000,000 in temporary welfare payments; $1,000,000,000 for home heating subsidies; $133,255,000,000 for government-sponsored health care; $12,000,000,000 for mass transit; $79,000,000,000 in state fiscal relief; $16,000,000,000 to boost the maximum Pell Grant; $2,000,000,000 for Head Start; $6,000,000,000 to weatherize modest-income homes; $6,000,000,000 to bring high-speed Internet access to rural and underserved areas; and $13,000,000,000 for public housing projects. That's $337,755,000,000 - $3,377.55 per United States taxpayer, of incentives for people not to get more or better jobs! No wonder no responsible Representative voted for it!
There are plenty of jobs in my hurricane-ravaged neighborhood, but the ones that aren't empty are being done by Mexicans or county prisoners or people in other countries. Nobody I know of is clamoring for a reduction in the minimum wage so that currently unemployable people can be paid what they're worth, or for less union benefits so employers can hire more workers. The American automobile industry, on the brink of bankruptcy, is still paying average workers $75/hour, and replacing them as fast as possible with machines that cost less than 1/9000 of that to run. Bailing out the auto industry is likely to provide jobs only temporarily for manufacturers of automobile-building robots, and it's not going to do a thing to get people to buy more American cars, which are going to cost more to be more fuel-efficient, thanks to, you guessed it, government regulation. Which cars make the most money for the people who make them? Check the specs!
We have probably saturated government offices, transportation terminals and sensitive manufacturing facilities with employees whose only demonstrated talent is rummaging through other people's belongings and not finding bombs (including any that are actually there!). Government projects like the Interstate Highway System and putting Americans on the moon or Mars create lots of skilled jobs, but they also consume readily apparent amounts of tax money, and most taxpayers, especially unskilled taxpayers, don't believe that they benefit from such things. Many of them don't believe in biological evolution, the age of the universe, or Apollo 11, either, and they're just as wrong! Soldiers don't make near minimum wage, but the only really certain way to employ vast numbers of otherwise unemployable people is to start a war. We'll see if Mr. Obama has another way.
In my opinion, all employees would be better served by an increase in opportunities and incentives for employees to take advantage of those things. People are satisfied with minimum wage only if it is satisfactory, as it is intended to be. I would be in favor of a federal law allowing reduction of five percent of current welfare benefits and five percent of the current minimum wage per year over the next twenty years. This would provide enough time to deal with unfavorable trends in the process. The goal would be to provide an incentive for current welfare recipients to go to work, and for minimum wage earners to take jobs that pay more than minimum wage.
I would like to see it again be possible for mothers to stay home and care for their children, for $222.38 per month to be a living wage for a college graduate and his wife, and for everyone to be able to retire.
I don't think it's going to happen any time soon, though. The workers would think they were being "screwed."
The United States of America has always been the land of freedom and opportunity. For generations, millions and millions of people have come here from all over the world, some at the risk of their lives, to make their fortunes here by working. Many of them have become rich, taking advantage of the freedom to enjoy the full benefits of their talents, ability and the fruit of their labors.
Of course, America offers this same freedom and opportunity to be poor, as well, by not working. The Government even pays people not to work. Currently, the politicians are promising that they're going to "create jobs," but they're getting rid of jobs even faster than they're creating them. President Obama gave about 500,000 highly paid aerospace jobs, worth about $100,000,000,000 a year, to Russia when he canceled the US manned space program. Besides, most of the jobs being "created" are going to "undocumented visitors."
In the United States, nobody has to starve because he doesn't want to work. Here are some helpful hints on how to avoid work: