The “Paid-What-You’re-Worth” Myth

[abelenkpe]

The “Paid-What-You’re-Worth” Myth

http://robertreich.org/post/79512527145

(snip)

It’s often assumed that people are paid what they’re worth. According to this logic, minimum wage workers aren’t worth more than the $7.25 an hour they now receive. If they were worth more, they’d earn more. Any attempt to force employers to pay them more will only kill jobs.

According to this same logic, CEOs of big companies are worth their giant compensation packages, now averaging 300 times pay of the typical American worker. They must be worth it or they wouldn’t be paid this much. Any attempt to limit their pay is fruitless because their pay will only take some other form.

(snip)

By the way, the lion’s share of that subsidy ($64 billion a year) goes to the top five banks — JPMorgan, Bank of America, Citigroup, Wells Fargo. and Goldman Sachs. This amount just about equals these banks’ typical annual profits. In other words, take away the subsidy and not only does the bonus pool disappear, but so do all the profits.

The reason Wall Street bankers got fat paychecks plus a total of $26.7 billion in bonuses last year wasn’t because they worked so much harder or were so much more clever or insightful than most other Americans. They cleaned up because they happen to work in institutions — big Wall Street banks — that hold a privileged place in the American political economy.

And why, exactly, do these institutions continue to have such privileges? Why hasn’t Congress used the antitrust laws to cut them down to size so they’re not too big to fail, or at least taxed away their hidden subsidy (which, after all, results from their taxpayer-financed bailout)?

(more at link)

[PDJane]

1. There is no such thing as an unskilled worker.

I watched my mother labour in textiles for decades; she worked for 60 years, stripping, mending, weighing, moving around heavy bundles, ensuring that parts and pieces were in order and ready to be sewn, and inspecting the finished garment for size and flaws. She worked in a cloud of fibers and knew more about the properties of those fibres and the dyes and finishing of those fibers than anyone I've ever met.

She earned minimum wage for all of that time. No, she wasn't paid what she was worth, but her skills and sheer hard labour weren't valued. Her hands are so crippled from the work that she did that she now can't engage in the decorative work that pleased her so much...and it's heartbreaking.

[Populist_Prole]

2. "professional" paper pushers have stole the soapbox on the subject just who is or isn't skilled

As a result, for the past 20 years, they've had the business media ( as well as all too many of the hoi-polloi ) believe that "unskilled" = anybody that doesn't have an MBA. To them, a sales manager is more skilled than a tool & die maker or electrician. They're full of shit or course, but their narrative is what's driving public economic policy. Even if those people the smug pricks look down their noses at are in demand, they still try to circumvent the normal supply/demand law and keep their wages down through lobbying and labor arbitrage.

[Lurker Deluxe]

3. Of coarse there is ...

I started as an unskilled laborer. I had no skills, I had youth and strength and I used those things to make money. I developed skills which allowed me to move into better jobs as my skill set progressed.

Now, if you want to argue that those opportunities are gone, I will agree to a certain extent that is true. But there are still ways to gain the skill set that will allow you to move forward in a career path.

Unskilled workers certainly do exist, choosing to stay that way is a choice .. granted one that can be difficult to make, but it is a choice.

I have changed career paths three times in my life, and hopefully will remain in this one for the rest of my working days ... but if I must adapt I will.

[South_Street]

4. Well said...

[PDJane]

5. If you are totally unskilled to begin with,

You can't stay that way. You have to learn to stay even at a job that seems to have no skills.....like waitressing or retail or just plain old cash. And there is no reason to look down on those who do those jobs either; we need them to be done, and they should be paid a living wage.

[Lurker Deluxe]

9. growth is what it is

You can learn just enough to keep your job as a waitress ... and you will be a waitress. Same as a cashier, dishwasher, or basic laborer.

Just because you know where the shovel is now, where you did not yesterday, does not mean you learned anything that is valuable to an employer. When you begin to understand why you are digging that hole you start to understand more of the trade, and you are able to advance.

[Half-Century Man]

13. Horsecrap. If you remain unskilled for longer than your trail period, You're fired.

The term "unskilled" actually means undervalued.
It is a cost controlling measure.
Usually assigned to a position, not a person.
By arbitrarily calling any task "unskilled" you can set the pay as low as possible. No matter how skillfully performed.
One of the problems unionization fixes is better job classification. The positions requiring greater effort or mastering difficult tasks are equally compensated (or that's the theory).

Yes, entry level positions exist, but not unskilled ones.

[geardaddy]

15. +1

[Lurker Deluxe]

17. Rubbish

Unskilled labor in the trades is what it is ... a person with no skills in that trade.

If you go to work for a plumbing company as an entry level employee you can expect to spend alot of time with a shovel in your hand, fail to learn how to glue pipe together and that shovel will remain in your hand.

Go to work for a masonry company or roofing company and expect to carry, wheel barrow, and lift large quantities of heavy shit all day. You have no skills, you are selling your physical strength, fail to learn the ways of the trade and you will remain the unskilled person carrying the load until you no longer physically can.

Again, if you choose to argue that there is not enough of this type of opportunity to learn a trade anymore I will agree.

[Half-Century Man]

18. I'm talking contractual language.

Unskilled labor refers to positions outside of the trades (as the Skilled Trades are commonly called).
A plumber is a tradesman (or person), a plumber's helper is an apprentice, also a tradesman.
Masons and Carpenters are also tradesman.
Experience in Skilled Trades is what makes you skilled. Not advancing in an apprenticeship program gets you fired.
The first stage of an apprenticeship is entry level, be it OJT or the first day of formal classes.

Granted, I am speaking anecdotally from 6 years in the UFCW, UAW member for 14 years, Journeyman electrician 20+ years, In the workforce since 1983, worked plant maintenance for Hormel, Alcoa, Reynolds, Noble (a subsidiary).....
In contracts the term "unskilled" refers to positions outside of skilled trades. It does not refer to the experience of any worker.

[haele]

14. I've also trod the "vertical/lateral" ladder. Sometimes, remaining unskilled is not a choice.

When at least 50% of jobs in America are low-skill requirement/low pay, the necessity to work more than one job just to be able to pay the bills can take precidence to taking the time to get training, do the "extra" mile to get noticed, or even to network for a better job.
There are is a family of unskilled workers across the street from us - when they have to pay $1200 a month to house their family, and work two/three jobs plus put in extra weekend under-the-table grunt work to be able to feed that family and keep their oldest boy full time in community college so he has a chance to succeed, they're not going back to college or even going to trade school in the evenings.

My neighbors don't "choose" to work unskilled jobs - if cleaning/retail and jack carpentry/yard work/auto repair should really be considered "unskilled". Nor would they choose to remain unskilled workers. There is just not enough time or opportunity for them to work to improve themselves.

There are just no full-time factory jobs, construction jobs, landscaping jobs at the non-managerial/ownership levels; no full-time retail that promotes from within. There are few businesses that value the majority of their lower skilled workforce (heck, most of them don't value their skilled or "professional" workers that much) enough to invest in them by providing them with full time work or give them a living wage that encourages workers to stay and develop their skills beyond what is needed for the job they are hired for.

Like you, I started out "unskilled". I now have skills, training, and OTJ certification and a good reputation. But since I have always "worked for a living", and did not have the luxury of going to trade school or college, it wasn't until the age of 52, before I was able to get enough stability and time in my life to be able to get the bachelor's degree that opens up a lot more doors for me than what 20 years in the military and another 20 years experiance on the shipyards was able to do. Because I could not invest that time without a signficant impact on my ability to pay bills and take care of my family.
Now, was my choice to not to improve my skills through the training that "mattered" to many of my employees because it was an easy way for HR to assess employability, or was my choice to work to be able to live and maintain a family on what I could get with the skills I already had?

Yes, a lot of "employability" at a living wage has to do with motivation. However, more has to do with availability of work that pays a living wage, or has sufficient hours per year so that the employee is not constantly stressed and working to look for the next job they need to apply for at the same time s/he is attempting to work at the job(s) they currently have.
But when looking at employability, it really is much easier to blame an overwhelmed person who is unlucky in circumstance and opportunity for making a bad choice or having insufficient motivation, than it is to look at the jobs available.
Low wage jobs are more like sharecropping now-a-days. There just isn't a lot of high wage, full time, career work for the millions of excess people who are looking for work.

Haele

[Lurker Deluxe]

16. As I said

If one choses to argue that the opportunities that I had to advance through the trades are no longer there I would agree, there are not nearly as many opportunities as there were.

But, there are still some. And sometimes those choices can be extremely difficult, if not impossible, to make .. relocating, pay cuts, loss of benefits, et all.

One can debate the reasons for this forever ... trade agreement/immigration policy/productivity gains.

[sharp_stick]

6. I despise a lot of CEO's

the only reason they're paid as much as they are is because of the really convenient incest on a Board of Directors (BOD).

Just take a look at the BOD for a major company who's CEO gets a really flashy package (nothing less than 5 or 6 million a year here) and then note the CEO. After that, find out what other companies have that CEO on their BOD, continue this little exercise a few times and you'll figure out it's the same group of fucking assholes getting the big packages plus a few willing douchenozzles that run big hedge funds and so own a shitload of company stock.

These thieving assholes vote their buddies up with fantastic compensation and then tell the willing business press that they have to spend that because they all get paid that much so it must be OK. The hedge fund toadies get this through each annual meeting because they own so many shares that there isn't a chance in hell of even passing a resolution to actually look at the CEO compensation.

[laundry_queen]

21. That's exactly the 'system'

When I hear those fake financial asshats on TV talking about CEO compensation being what the market will bear, I want to throw a brick at my tv. It's all just a buddy-buddy system, I'll scratch your back you scratch mine, guanxi etc. Market my ASS. It's all corrupt as hell, shuts everyone out except those that belong to the 'club'. Fat chance at getting in that club unless you make your own billion dollar business from scratch. It's all rigged. Unless you are born to it, you are more likely to win the next giant lottery jackpot than get into the 'club', even if you are a business genius.

[Demo_Chris]

7. "Worth" is usually subjective. People are always paid less than this or they are soon unemployed...

I believe that if you want to get ahead the first step is to stop thinking of yourself as an employee of some employer, and view yourself instead as a sole proprietor. It is then your responsibility to discover what you are selling, hone those skills as necessary, decide what you believe those skills are worth, and them market yourself accordingly. People who view themselves as employees don't think of themselves in this way. Unlike the Mitt Romney's of the world, they were never taught to do so.

[Lurker Deluxe]

12. Of coarse this is true

I think of my employer as my customer. It was actually one of our training modules this year, to learn to treat "internal customers" the same as external ones.

We do pretty much the same thing, we repair broken things ... and those things are pretty consistent. One example is a pocket I have to machine to oversize for a newer model bushing. There is a set price for this work, $450USD, that we charge the customer. As our shop rate works out to $100/hr the time alloted to perform this task is 4.5 hours. Over the time I have been here, through building fixtures to align the part quicker to using newer tooling methods I have been able to reduce the time it takes me to perform this task to just over an hour. It took the company over a year to notice the difference is profit that came with these improvements, but they did notice ... and compensation came with that.

I constantly strive to find better ways to perform my tasks, to make what we do more efficient, leading to higher profits. This leads to me getting more projects to work on, more responsibility, and more compensation.

Of coarse I do not have to do these things, I could do just enough to keep my job ... and I would be what I am now for the rest of my life.

[rock]

8. Who decides what CEOs and other managers are paid?

I rest my case. (For contrast imagine what if workers made that decision; what do you think managers would be paid?)

[phantom power]

10. People are paid what they can negotiate, not what they're "worth."

Without collective bargaining, most people have very very little negotiating power.

[abelenkpe]

11. Agreed

high unemployment makes it difficult to negotiate, too. Difficult times for workers right now.

[Morning Dew]

22. And many people never get to negotiate at all.

"The job pays 7.60. I need you to start Tuesday."

"You've been here a year so you get a dime raise."

You make a great point, pp.

[LumosMaxima]

19. You're paid what the 1% THINK you're worth . . .

and the 1% think the rest of us are worthless. That is what is actually happening here. It's not even about how much wealth you can generate for your employer anymore -- it's about your intrinsic worth as a human being. The privileged few at the top have actually come to believe that they are the only people who really matter, and somehow they've managed to convince workers of that, too. I think that's why workers haven't fought harder to preserve unions over the last thirty years or so. They've been persuaded that they just really don't matter and shouldn't expect anything better. It's emotional abuse on a massive scale.

[jmowreader]

20. Robert Reich misses a very important point

One of the big reasons GM paid so well, is it would have been more expensive to replace a worker. It costs real money to train someone to make cars - especially the workers in very-high-skill departments like paint and upholstery, and in certain plants like the ones that make engines and drivetrain components. Imagine too the havoc a worker at GM's engine factory could have caused in...oh, 1968 or '69 if he would have walked out the door knowing what a piece of crap the Vega engine was going to be and went to Ford or Chrysler. It is therefore to GM's benefit to pay workers enough to keep them from leaving.

OTOH, a Walmart worker is easily replaced and the great majority of their floor employees - the people who stock shelves - have no access to confidential Walmart information. If someone walks out of a Walmart his knowledge will probably not benefit his new employer...and there's always a line of people who want to work there to choose a new interchangeable employee from. Walmart therefore has no incentive to pay well.

How companies set wages: In the absence of any artificial floor, such as a minimum wage or market conditions that demand higher pay, employers reduce the wages they offer until people stop applying for jobs.