# Can the market set fair wages? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 30, 2016, 10:32pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673 "2016-03-30T22:32:39Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 1, 2016, 7:14pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/61 "2016-04-01T19:14:02Z")
> [@puddleglum](#): > > It is a good thing because it brings the people in poor countries out of poverty. Jobs come as a package, wages, hours and working conditions are all packaged together. The lower the skills of the worker and the worse the alternatives then the worse the package they are offered. As they get better skills and better alternatives the packages get better. However if you mandate the package be good right away then it prices out the poor and unskilled and they never get that first step on the lowest rung of the income ladder. Look at China and how fast their wages have risen over the past thirty years. If you had mandated minimum wages or expensive work rules then it would never have happened. Wages are not the only issue. In many places low wages go with intolerable working conditions. There is economic justification, perhaps, in not paying these workers a lot, but none for forcing them to work in firetraps of forcing them to work 16 hour days or forcing children to work. ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [April 1, 2016, 8:42pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/62 "2016-04-01T20:42:23Z")
> [@D\_Anconia](#): > > The status quo. > > We don’t have a basic income, and we are not in revolt. > > Next question? But we _do_ have elements of both a planned economy and a welfare state. That is the status quo. A bizarre labyrinth of laws detailing what people can and can’t buy, when and where, for what price, government-granted monopolies, how much the government is going to pitch in to prop up businesses that can’t stand on their own, or maybe they can but they have sympathetic ears in Congress so they get government subsidies anyway. And on the other side, we have welfare, food stamps, social security, and a whole host of other social welfare programs. You’re really saying you prefer the status quo over a truly free market plus some minimal guaranteed income? (I’m assuming by your handle you’re a free-market kind of guy. So was [Milton Friedman](https://en.wikipedia.org/wiki/Milton_Friedman#Social_security.2C_welfare_programs.2C_and_negative_income_tax), and he advocated for a basic income of sorts, himself. For the same reasons I do, to maintain some safety net for the disadvantaged while eliminating a whole host of intrusive and counterproductive market distortions and kludges that currently attempt to do the same thing.) ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [April 1, 2016, 9:20pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/63 "2016-04-01T21:20:50Z")
> [@Voyager](#): > > Wages are not the only issue. In many places low wages go with intolerable working conditions. There is economic justification, perhaps, in not paying these workers a lot, but none for forcing them to work in firetraps of forcing them to work 16 hour days or forcing children to work. Well, that’s not something the protectionist Trump supporters care about. All they care about is keeping their shitty jobs here and out of China. But suppose you’re a left-wing protectionist like Bernie that is trying to protect foreign workers: Is there anything _besides_ free-trade we can do to prevent this sort of thing? We don’t have control over China’s labor laws and short of a hostile takeover, we never will. So the choice is between protectionist policies that _hurt_ third world workers, or free trade, which may not help them as much as we’d _like_, but which nevertheless improves their living and working conditions over time. And foreign countries we have open trade with will be a lot more receptive to American requests for better working conditions than countries that we hurt with protectionist policies. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 1, 2016, 10:10pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/64 "2016-04-01T22:10:32Z")
> [@DrCube](#): > > Well, that’s not something the protectionist Trump supporters care about. All they care about is keeping their shitty jobs here and out of China. But suppose you’re a left-wing protectionist like Bernie that is trying to protect foreign workers: Is there anything _besides_ free-trade we can do to prevent this sort of thing? > > We don’t have control over China’s labor laws and short of a hostile takeover, we never will. So the choice is between protectionist policies that _hurt_ third world workers, or free trade, which may not help them as much as we’d _like_, but which nevertheless improves their living and working conditions over time. And foreign countries we have open trade with will be a lot more receptive to American requests for better working conditions than countries that we hurt with protectionist policies. First, I’m not a left-wing protectionist. Working condition issues are really handled better by the market with a bit of pressure by US consumers. I agree that tariffs are not going to help, but US companies threatening or even actually changing suppliers if current suppliers violate safety standards will. The situation in Bangladesh is probably worse than in China, since it seems even more corrupt. Now charging tariffs to cover externalities like pollution which affects us as the smoke blows into California might be different. I know it would affect those mystical non-polluting plants also, but only forcing the government to enforce clean air standards will level the playing field to allow companies who do not wish to pollute to compete. Now I know some people will buy stuff if it is cheap, no matter how many puppies are killed, so maybe we should pass a law that would put “endorsed by Bill Cosby” on any product made by slave labor. ETA: What Trump supports think is so irrational that I don’t even want to get into it. Saying Apple is ever going to manufacture in the US (assuming a non-robotic factory) is stupid even for Trump. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 1, 2016, 11:57pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/65 "2016-04-01T23:57:58Z")
> [@D\_Anconia](#): > > I disagree that it leaves the free market intact. > > If the going rate to rent a 2 bedroom apartment in a particular market is $800, and a basic income of $200 is introduced, the going rate will soon approach $1,000. It doesn’t have to. A progressive tax scheme could keep people like me from seeing any additional income. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [April 3, 2016, 11:12am UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/66 "2016-04-03T11:12:08Z")
To be honest, I suspect the solution would be not to create a basic income, but to provide a certain level of services. What are the differences there? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 3, 2016, 11:51am UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/67 "2016-04-03T11:51:26Z")
> [@BigT](#): > > To be honest, I suspect the solution would be not to create a basic income, but to provide a certain level of services. What are the differences there? The difference is that you have markets providing services vs government planners providing them based on direct allocation. People have different wants and needs. Competition can drive down the price of services and provide new ones. Investment, production, distribution, and prices are set by supply and demand, vs government planners. I’m not convinced this basic income scheme is the best plan, but I’d prefer to let people make their own decisions about what they need. That said, we already know that a huge number of people are incapable of making sound financial decisions, which is why I’m stuck paying into social security. So maybe you’re right. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 3, 2016, 4:43pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/68 "2016-04-03T16:43:56Z")
> [@bump](#): > > Sure, but why should Americans support this, if it reduces our wages and standard of living? I mean, I don’t give half a crap about raising people in India up, if it means that people in MY country lose something in the bargain. Because it actually INCREASES everyone’s standard of living with lower prices. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [April 4, 2016, 6:10pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/69 "2016-04-04T18:10:29Z")
> [@msmith537](#): > > Because it actually INCREASES everyone’s standard of living with lower prices. Which, I suppose cushions the economic crash-landing of those unemployed by shifting jobs overseas. Where I’m not entirely convinced is that the lower prices seen as a result of the lower equilibrium labor price is low enough to keep the same standard of living. I.e. US workers may only make 60% of what they used to, but prices went down by 30%. Seems to me that things will still be tighter in the US in that situation than before the drop in wages. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 4, 2016, 6:35pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/70 "2016-04-04T18:35:52Z")
Haven’t read through the whole thread yet, so this is probably going to be redundant: > [@](#): > > Can the market set fair wages? Sure, for certain definitions of ‘fair wages’. I think that without minimum wage what you’d get is the wages for some jobs a few bucks an hour less in some specific places. You could probably get enough labor to fill checkout clerk positions or non-managerial fast food workers and the like in rural areas for $5 bucks an hour for teens looking for a summer job or something to give them pocket money. It’s going to vary, however, depending on the cost of living in the area and the access to non-skilled labor. In areas where such sources are scarce or there is a lot of competition for such labor you are going to have to pay more to get the workers you need. I’m pretty sure that there are areas in, say, California, where you are going to end up having to pay something like the current minimum wage anyway in order to get the workers you need. That’s the thing…it depends on what you mean by ‘fair wage’. If what you mean is that everyone should get a specific amount regardless of what their labor is actually worth in a market exchange, then the market is a poor way to do that…you will need regulation and law to force companies to pay a certain wage across the board regardless of local conditions or any other factors that a market would normally take into account in determining a wage level. Depending on where you set that bar it could not have any effect on companies, or it could cause them to increase automation and pay the capital costs on the front end to save money (and shed at least some jobs) on the back end. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 4, 2016, 7:29pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/71 "2016-04-04T19:29:13Z")
> [@bump](#): > > I.e. US workers may only make 60% of what they used to, but prices went down by 30%. Congressional Budget Office ([PDF](https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/reports/10-25-HouseholdIncome_0.pdf)): Real median after-tax household income increased by 35% 1979-2007 ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [April 4, 2016, 8:11pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/72 "2016-04-04T20:11:32Z")
Define “fair”? If it’s what a person is willing to pay to do a job and a person is willing to do it then in my opinion yes the market can and does. And I think those who support minimum wage while buying things made overseas or from the product of illegal labor are hypocritical. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [April 4, 2016, 8:51pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/73 "2016-04-04T20:51:35Z")
> [@Ruken](#): > > Congressional Budget Office ([PDF](https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/reports/10-25-HouseholdIncome_0.pdf)): Real median after-tax household income increased by 35% 1979-2007 I was using a hypothetical example, but I guess that does show that we do come out ahead. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 4, 2016, 9:51pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/74 "2016-04-04T21:51:58Z")
> [@bump](#): > > I was using a hypothetical example, but I guess that does show that we do come out ahead. Dunno, it’s nearly 10 years old. We’ve had some strange times since 2007. I haven’t seen anything newer. ---
**Author:** ![drewder](https://avatars.discourse-cdn.com/v4/letter/d/57b2e6/32.png) [@drewder](https://boards.straightdope.com/u/drewder)\ **Post date:** [April 5, 2016, 3:02pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/75 "2016-04-05T15:02:24Z")
I’m curious what system other than the market could possibly provide fair wages? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 5, 2016, 4:07pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/76 "2016-04-05T16:07:57Z")
> [@bump](#): > > Which, I suppose cushions the economic crash-landing of those unemployed by shifting jobs overseas. > > Where I’m not entirely convinced is that the lower prices seen as a result of the lower equilibrium labor price is low enough to keep the same standard of living. I.e. US workers may only make 60% of what they used to, but prices went down by 30%. Seems to me that things will still be tighter in the US in that situation than before the drop in wages. Actual data would suggest that “real income” has largely remained flat for all but the highest quartiles. I have not seen any data or theories that protectionism provides an actual economic benefit, so if you have any, I would be interested in looking at it. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [April 5, 2016, 5:50pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/77 "2016-04-05T17:50:07Z")
> [@msmith537](#): > > Same reason schoolteachers get paid a lot less than most management consultants. Are they? There’s a lot of wannabe management consultants who aren’t making enough to cover the payments on their Kia Optimas. Some make a ton of money; many do not. I liken this to the frequent comment that it’s a shame we pay teachers more than athletes. Well, that’s sort of true, but sort of false; some baseball players make $25,000,000 a year but most don’t make minimum wage and will try for years to make it and never will and will end up trying to find a job with no useful background at the age of 28. So teachers may make less on average, but they make more at the median, and there’s FAR more certainty and stability. If you go to school to become a teacher you can have a well paying job until you’re 65. If you become a ballplayer maybe you’ll be a millionaire but more likely you’re going to waste eight years of your life. The tradeoff is possible riches versus poverty. In teaching, you have stability. You’ll never drive a Bentley but you’ll do well. The thing is, though, that we pay schoolteachers WAY more than we do athletes. In 2016, more money will be paid to teachers than will be paid to all professional athletes in every sport combined. The spread of how the money is allocated is just really different. ---
**Author:** ![drewder](https://avatars.discourse-cdn.com/v4/letter/d/57b2e6/32.png) [@drewder](https://boards.straightdope.com/u/drewder)\ **Post date:** [April 5, 2016, 5:55pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/78 "2016-04-05T17:55:28Z")
> [@msmith537](#): > > Actual data would suggest that “real income” has largely remained flat for all but the highest quartiles. > > I have not seen any data or theories that protectionism provides an actual economic benefit, so if you have any, I would be interested in looking at it. The actual data is misleading. Household size and composition change radically over time particularly when the economy changes. In bad times people live together to decrease expenses and at good times they shrink as more people live on their own. This is but one reason that any time someone mentions household income statistics over time that they’re getting ready to lie to you. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 5, 2016, 6:08pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/79 "2016-04-05T18:08:44Z")
> [@drewder](#): > > The actual data is misleading. Household size and composition change radically over time particularly when the economy changes. In bad times people live together to decrease expenses and at good times they shrink as more people live on their own. This is but one reason that any time someone mentions household income statistics over time that they’re getting ready to lie to you. IIRC the CBO report I linked to adjusts for household size. I can check the PDF after work. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [April 5, 2016, 8:20pm UTC](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673/80 "2016-04-05T20:20:17Z")
In 1865, the US and state governments [changed things](https://en.wikipedia.org/wiki/Thirteenth_Amendment_to_the_United_States_Constitution) in one incredibly important way regarding the labor market. Stupid government, interfering with the free market again. If you truly support a completely unlimited free market, you _absolutely must_ be for revoking that law. [Previous page](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673.md?page=3) [Next page](https://boards.straightdope.com/t/can-the-market-set-fair-wages/750673.md?page=5)