Well, what is a fair wage? Can it be quantified, or is it just “average”? Do unions cause wages to be more fair or more unfair?
Better define “fair” Robbo. Contribution to output as currently valued? Or as it ought to be valued according to someone? Physical effort?
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- A “fair wage” is what you think someone else deserves. Especially if it’s less than what they want. - MC
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Would a “fair” wage ensure that all the labor feels like working at peak productivity and gets remunerated for ita rate that keeps both labor and management in a situation where they have enough money.
I doubt that such a wage is possible and one side will always want more. If someone didn’t want more, there would be little desire for someone to make a profit.
I’ve always hated economics and I can never say anything intelligent about it.
This post is evidence of that.
A fair wage is always a compromise.
A businees must try to keep costs down but an employees will usually want more.
In a completely unregulated market there is the potential for employers to ensure that all wages are kept low so there is no alternative for the employee but to accept whatever is on offer.
The more demand for your skills there is the less likely this can happen.
In the UK the system we have means that there is a minimum effective income from employers but this is not necessarily as adverse for the market as you might think.
If a persons income falls below a certain level, which is detrmined by their circumstances such as dependants, they may be entitled to certain benefit payments.
This level of income is so low that they are defined by study groups such as the Rowntree foundation to be living in poverty.
Employers especially at the lower end of the market have,in the past, set wages so low that welfare payments have been made, thereby effectively using the government as a paymaster and so subsidising their businesses, which is unfair competition for the more enlightened employer.
This money comes from general taxation and so,the reasoning goes, if wages were that little bit higher welfare payments would not have to be made and taxation could be lower as a result.
The current employment philosophy over here says that work must provide a better standard of living than the pitiful levels of welfare or there is no incentive to work at all.
Once in employment it is recognised that it is generally easier to find a job paying more, but you need to get people on the employment ladder first.
There was a huge amount of fuss not too long ago about the earnings ratios between the highest paid employees in a company against the lowest and it is generally felt that if someone adds value to a company in whatever role they undertake then they should reap some of the benefits.
Many people have tried to define a fair wadge as one that permits one to live in relative comfort because the ability to not have to scroung and be “happy.” France created stringent worker’s rights laws and drove up unemployment to above 20%. Unfortuntely, people are very unhappy when unemployed, less happy than when people are simply poor. My source on this is The Economist, and a government’s attempt to regulate happiness was somewhat flawed.
‘Fair’ must be defined, and some context given. In a capitalist system (I’m talking about the lassiez-faire ideal, where the government neither helps nor hinders business. It resembles Communism in that it is its polar opposite and it has never been tried in the Real World [We economists tend to avoid the Real World. It messes up our predictions and pretty graphs.]), ‘fair’ is given the value of being what the market can bear. If the workers organize and demand more money, you either fire 'em all and get scabs, give in and face lack of profit, or go under. Before Socialist reforms were instituted in this country, the first option prevailed. People like John D. Rockefeller could rule the world with Standard Oil Company and Trust, wages and prices were kept low, and worker’s conditions were awful at the lowest classes. Since the reforms, conditions have improved, but inflation has happened, worsening conditions in its own way. So there must be a balance between companies and workers, and that balance cannot be reached if the government interferes.
“Fair” is usually defined differently depending on who’s defining it. In an attempt to define it as neutrally as possible, I’d define a fair wage as one which enables the average worker to provide himself/herself and his/her family with the necessities of life. Of course, this definition has its own set of problems, in that the definitions of “average”, “family”, “necessities”, and “life” are all subject to argument. Some (including myself) would also argue that a worker is entitled, above and beyond the minimum needed to buy the necessities of life, to a partial share of the profit that is produced by his/her labor.
Just recently the UK signed up ofr the European convention on human rights following an election pledge.
One part of this relates to workers rights of representation .
It says that everyone has a right to representation but it goes further and puts the level of this in the boardroom.
You would, at first, think this was a bad thing but in practice (the German experience) is that employees have often moderated their pay claims because they now have greater access to information and understanding of the pressures faced by a company in a competitive world.
The emphasis is slowly drifting from the adversarial systme of industrial relations to a more co-operative one.
Yes, thank god it’s never been tried in real world! If businesses can’t be ethical and work for the good of society, thank god that democracies can keep them to some extent from not destroying society in their shortsighted profit chase.
I thunk that a fair wage was what was paid to carnival and circus workers, and some of the folks working at RenFaires.
That’s different from the fare wage paid to railroad workers…
…and then there’s the fayre wage paid to historical recreationists.
The average wage in the USA is just under $14 an hour. A fair wage? Maybe you mean a Living Wage. That would be enough to live on in the area you are in. In Monterey, California, home prices are so high that 70% of the people have to rent.
I read in my paper last week that house prices and rents are so high in the silicon valley area that people on what would be called very good wages elsewhere are finding life a struggle and there is a shortage of service labour as a result too.
In London we have a similar phenomenon and it can be very difficult to recruit government workers as their pay rates are set nationally.There is a local London weighting allowance but it does not cover the differance in living costs.
example 3 bed house where I live start at £45000 and Leeds is fairly prosperous but in London you would get no change from £120000, 2.75 times as much.
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- Workers shouldn’t have government-legislated representation, for the same reason your dog shouldn’t get to help you drive.
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- Britain and Germany might do many things well but fostering commerce is not one of them, and hasn’t been for quite some time now. Try southeast Asia: minimal taxes & regulations, Adam Smith’s Two Fingers. If it was your factory to build and you could put it anywhere, where would you put it? - MC
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Robbespiere,
" Well, what is a fair wage?"
I am wondering why you are asking the question? Was it on the news or something?
MC–“Germany might do many things well but fostering commerce is not one of them”
I can’t believe you said this. German is a leading economic power and has been for a good while now.
MY stab at an answer—
A fair wage would be one freely agreed upon by both parties, and it must be adequate to provide a decent standered of living, and there must be an adequate social structure (food stamps) to enable workers to choose not to work. For example, in many countries you are free to work for a dollar a day or starve to death. You are completely free to chose witch ever you wish. I’m thinking of countries like Indonisisa or the Dominican REpublic.
Casdave, I live in the Silicon Valley, and aside from soaring house prices, and inflation, and a lack of service-industry workers(try getting a decent meal around here), all’s peachy 
Actually, there are several advantages and disadvantages to our area’s present system. I have a feeling, unfortunately, that is is quite racially biased–whether by clique-ish ehtnicity, or design(that’s another topic entirely).
Advantages:
1- I get paid approximately 50K for a job that most likely would have brought 25-30K 5-7 years ago. That’s a plus in my book
2- I work in an office.
3- I get to live in style, not above my means, but closing in on extravagance.
4- We get treated pretty fairly by our employers.
5- Great bennies at a pre-IPO company.
Disadvantages:
1- My job is the first to go at the low end of the totem-pole at this point.
2- I could be flipping burgers next week if the market squeezes the industry.
3- I could end up selling my new home theater, and other technological toys I’ve recently purchased.
4- I pay 1200 rent a month(which is GREAT for San Jose...typical is like 1600-2000 a month).
5- My house is in the ghetto…
6- I could never purchase a home(new models 60 miles from work are around $500K, and 130 miles away, in the central valley a house twice the size only $200K).
7- houses in my area, on my block in the ghetto, sell for roughly $300-325K(that’s based on my neighbor who just sold his shack, complete with old carpet, no paved driveway and no yard, for—$325!!).
So, it’s a double edged-sword. I think that although a living wage would be beneficial to service personnel, it would be disastrous to some companies.
There has been a HUGE move toward the living wage recently. My only issue with that is that you would be paying an employee who is not pivotal, skilled or otherwise outstanding approximately 20-30% more than currently.
Is it Fair? it depends on your POV. In my book, no. I’m a trained individual who gets paid a decent wage. Do I want, say a burger-flipper making almost what I make? Certainly not. Will it hurt the economy? Locally, yes…overall? probably not.
Almost looks like a GD-bound discussion…
For raw labour power, Sth E Asia is cheap. For skilled labour that doesn’t try and cheat you when you can’t monitor them, Western countries are pretty good.
Rather than think of the few businesses relocating, think of the vast majority that are not despite the enormous apparent wage differential.
I’ll close with a different Adam Smith quote: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
picmr
Let’s see. If a home is $400,000, your basic USA mortgage payment would be about $4,000 per month. You’d need to make at least $24 an hour to pay just that, add more for taxes, etc, so you’d need to make around $50 an hour I suppose. Whoa.
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- Germany is a leading economic powerhouse of long-established companies. To the extent that “new” companies are created there, it’s mostly due to shuffling legal papers. Cheap labor is the foundation of industry, and due to generous social programs, Germany (and many other Euro nations) don’t have much of that to offer. Cell phones is about the only sucess story lately. - MC
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- “It doesn’t mean much now, it’s built for the future” - The Fixx