The Absurdity of the ‘Living Wage’

barely earning a living wage

Today is Labor Day.

Most of the world pays homage to its sweating, busing, trucking classes, its poor huddled masses…yearning for a cushier seat and a better deal…on 1 May.

President Grover Cleveland chose the first Monday in September.

Of great interest to people in America, as indicated by the newspaper headlines, is how much other people earn.

No one — or almost no one — writing in the editorial pages works at McDonald’s or earns the minimum wage. But practically every one of them has an opinion about how much people on low wages should earn.

A ‘living wage’ is what they say they want. $30,000 a year is the amount we’ve seen discussed.

Of course, a national living wage is absurd. It costs far more to live in Manhattan than in the Ozarks. And it is far less expensive to live with Mom and Dad than to have a place of one’s own.

But we are not so much concerned with the practical details as with the theory.

We have been told that the people who work at McDonald’s need to earn more. But what about those who write for the editorial pages? Perhaps they should earn less?

If well-educated, well-liquored, and well-paid employees can decide the wages of McDonald’s workers, surely the burger flippers should have the right to fix the wages of the chattering, meddling, and improving classes.

Were that to happen, our guess is that the well-paid know-it-alls would take a pay cut. Which seems proper and just.

We walk into McDonald’s, and a minimum-wage worker serves up our order. We get what we pay for and are content with the transaction; we do not begrudge the worker his recompense.

We read the paper, on the other hand, and we get bilge and nonsense.

Self-satisfied price-fixers

Generally, we get decent service and good value for money from the blue-collar worker.

What do we get from the white-collared clown?

Grief.

Logically, there are only two possibilities. Either wages are determined by a free give-and-take between those who offer their labour and those who want to buy it. Or someone sets wages according to his own standards.

The do-gooders want to use other people’s money to raise the wages of the least well paid, but they make no mention of their own.

Nor do they even offer to pay more for their hamburgers so that McDonald’s can pay its workers more.

And what about the poor people who cannot find jobs at all?

If the minimum wage were raised, there would surely be more of them — either because McDonald’s could not afford to hire so many people at higher salaries or because it had replaced its minimum-wage employees with machines!

But the price-fixers are so self-satisfied taking what they think is the high road — driving along comfortably in their Subarus and Priuses — that they can’t be bothered to look out the window. If they did, they would see that setting prices always — always! — makes people poorer, not richer.

Nevertheless, we will give them the benefit of the doubt, if there were any, by trying to imagine how the world could be improved by setting wages for other people.

A jolly undertaking

So let us begin with a modest nod to fairness: If it makes sense to set the living wages of the least among us, why not the most?

If people not involved in a labour transaction can know better than the participants what the terms should be, why not set the salaries of editorialists? Publishers? CEOs? Sports celebrities? Movie stars?

There may be cheapness on the low end, but there is extravagant generosity on the other.

If one side should be fixed, why not both?

You can see what a jolly undertaking this would be for a bureaucrat with a sense of mischief. Instead of allowing the market to set prices, we will set them ourselves.

Yes, we will not stop at rigging the stock market. We’ll rig the labour market, too — by assigning salaries where we think they should be.

So, let’s have a go. We have taken the lead to propose annual salaries for the following trades according to the good we think they do society.

Entrepreneurs (including your editor), poets, inventors, and whacked-out metaphysicians — $100,000.

Priests, teachers, mathematicians, scientists, pilots, nurses, and filmmakers — $85,000.

Corporate CEOs, prostitutes, writers, bartenders, and hedge fund managers — $75,000.

Drivers, labourers, clerks, salesmen, farmers, firemen, and policemen — $50,000.

Psychologists, bone crackers, doctors (including witch doctors), and financial planners — $40,000.

Government employees (those not included in the groups above), politicians, drug dealers, world improvers, economists, counterfeiters, psychiatrists, sociologists, political scientists, pollsters, and flimflam artists — $30,000.

We do not mean this list to be comprehensive or final. It is just a suggestion — a point of departure toward a ‘fairer’ distribution of national income.

Regards,

Bill Bonner,
For Markets & Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and MoneyDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

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