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THIS is Why You Don’t Get Paid Enough | An Economist’s View
The question today is, should we all earn what we deserve?
This might seem like an easy question to answer at first. Of course we should get paid what we deserve. We would earn more, we’d be better off and we would have a better standard of living.
Well, think about it this way. That is only a fact if you’re currently in a bad financial situation. What about if you’re from a rich country? If we were to apply the concept of granting everybody what they deserve, it is likely that you would actually be paid LESS.
Wages in the developed world are protected from the pressures of the market. Therefore, wages remain high, even if the work isn’t really that valuable.
An example of this – let’s say you are applying to be a cleaner. You want to earn a certain amount of money so you can pay your bills and live a relatively comfortable lifestyle. You’re looking for minimum wages + a bit more ideally. The fact is, there are many people who want to do your job for less money. However, the government steps in to protect your job and your relatively higher wages. They do this by implementing strict immigration controls to prevent saturation of the market for cleaners – they do it to keep your wages artificially high. They also do this by enforcing the National Minimum Wage.
Can we say that it is your skills that determines how much you can earn? Or is it the society that you live in? If you come from a productive, well-situated society, your wage will be pulled up by everybody else. It doesn’t really matter if you are not a productive worker. You will earn more than a hard worker in a poor country.
Unfairness of wages is also present for those higher up the ranks in society. In the 1990s, top executives’ wages increased by 100 times the salary of the average worker. 20 years later, this gap has increased to 400 times.
Is the executive worth more than a worker each year? If markets are there to reward productivity, does that mean an executive is worth 400 times more than a typical worker? Of course not. This must mean that top executives are being paid wages far higher than they deserve. In economics terms, they are being paid huge economic rents, much higher than their transfer earnings.
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