The other day my brother was showing me this Facebook thread that he was commenting on. The subject was Wal-Mart paying their employees more. There was one comment that caught my eye in particular. You’ll find a comment just like it said or written in just about any discussion about wages or income inequality, and it goes something like this: “BUT IF WE ALL MAKE THE SAME AMOUNT OF MONEY WHAT INCENTIVE DO PEOPLE HAVE TO WORK HARD?!?!?!”
That panic-stricken caps lock emphasis is my own, because I always imagine these people shouting in confusion and ignorance at their computer monitors. But this is a pretty common attitude for people to have, surprisingly. I posted once before about raising the minimum wage, and the subject of that article, the owner of the longest lived McDonald’s franchise, said something to the effect of, “If I started people out above minimum wage, what incentive do they have to learn their job?” From here, conversations with people who believe this kind of drivel usually degrade into tirades about socialism and how welfare just keeps people dependent upon the government teat. All of these ideas share one common theme: Incentive.
What drives people, what motivates them, what makes them act (or not act)? I’d like to tackle this subject and expose some of this economic/political rhetoric for what it really is: total bullshit. Let’s begin, shall we?
1. Welfare just makes people lazy and not want to work.
I certainly hear this one a lot. This idea is alive and well, and the stories of “the welfare queen” can still be heard or read, even though that story is total crap. Modern iterations include people on welfare with new expensive cell phones and iPads, etc. But the idea is still the same: people on welfare live high on the hog and never lift a finger, etc. All on your dime! Except that, as the story about the welfare queen explains, only 2% of welfare cases are fraudulent. Furthermore, the people most likely to benefit from social safety nets in general are children and the elderly. But let’s take the crux of this idea–that welfare is a disincentive for people to work–and examine it for a moment.
I find several things about this ironic. First, I’d be willing to wager that most of the people making this argument about welfare themselves would prefer or choose not to work if they didn’t have to. How many people dream about winning the lottery or striking it big so they can quit working? Gambling and the lottery are big business for a reason.
Second, and more importantly, are the solutions for dealing with this “problem.” The problem to these people is the government. Fine, but there have always been homeless people or people who are out of work or unable to work, and there probably always will be in our society. So what do these people propose to do about that? “Well, that’s not the job of the government, that’s where private citizens and charity can play a role.”
Ah, yes, charity. Everything the government does is evil and wasteful, and everything private business and individuals do is brilliant and effective. Spoiler alert: it’s much easier to defraud or embezzle from a charity or private business because there is no oversight like there is with government programs.
So then, the follow up question: why wouldn’t people just come to rely upon charity the same way they rely upon welfare and other social safety programs sponsored by the government? The correct answer is that there’s nothing at all that says they wouldn’t. If someone is going to defraud the government of money, they’re probably willing to defraud total strangers of it too. So stop volunteering at the soup kitchen! All those free meals are just going to make the homeless want to stay homeless! Stop donating your old clothes to Goodwill or Salvation Army–you’re just teaching children that they can rely on freebies and handouts! See how ridiculous the logic behind the “welfare makes people lazy” is?
2. It’s socialism!
Apparently all of the people out there who make these claims about income inequality and wages never made it past 8th grade social studies, because they certainly have zero idea what the hell socialism really is. So let’s go ahead and straighten this matter out right here and right now.
Socialism is defined by the dictionary as, “social organization So where in that definition does it say everyone will make the same amount of money? That’s right, it doesn’t.
I have zero idea where the notion came from, but there is nothing in socialism that dictates equal income. You can go to any socialist country on the planet and you’ll find people of varying incomes and a representative elected government. There’s nothing to be terrified of.
More to the point, you already use things everyday that are “socialist” in nature. If you send your children to public school, congrats–you’re participating in socialism! If you support our troops, congrats–you’re supporting socialism! And more to the point, I don’t think any sane person, regardless of their political bent, would argue that public school and the military are bad things. But aside from the fact that people are generally wealthier, healthier, and happier in socialist countries, the people who like to espouse the evils of socialism are totally right on the money. Please read that last bit with sarcasm.
3. IF WE ALL MAKE THE SAME AMOUNT OF MONEY WHAT INCENTIVE WILL PEOPLE HAVE TO WORK?!
I saved the most ridiculous argument for last. There are a lot of things wrong with this line of thinking. Buried within this idea is a statement about hard work: some people don’t deserve to make as much money as other people because they don’t work as hard. I’ve tackled this issue before, but let’s tackle it again. What exactly constitutes “hard” work? You could probably ask 10 different people and get 10 different answers.
And that’s one of the problems with this argument. There’s no way to quantify “hard work” and so any comparison of jobs or careers will never be apples-to-apples. Is manual labor “harder” work than creative or intellectual work, or vice versa? There’s no correct answer to that question. Politicians are often fond of saying that teachers, policemen, and firemen are “the backbone of this country.” Yet their pay is hardly reflective of that sentiment. Does a doctor or lawyer work “harder” than a policeman or a teacher? Ask a policeman or a teacher if you’re struggling with this concept.
“Fine, but doctors and lawyers need more extensive training and spend more time in school,” one might say in rebuttal. Yes, that’s true, and I would agree that this obviously plays a role in their wages. However, other highly specialized work is paid less than non-specialized work. The average salary according to Standford University of an electrical engineer with a PhD is $108,000. Meanwhile, according to payscale.com the average CEO makes $152,000/year. And how many CEO’s do you know with a PhD in CEO-ing?
Obviously education and training plays a role in determining wages, but only to a small degree. So, some people might argue, the answer is how important a job is! On the surface that makes sense. That’s the common economic argument: that people are paid according to how valuable their job is to society. But again, let’s think about what makes a job “valuable” to society. Let’s think of our policemen and firemen, and then expand that idea to include people like garbage collectors and utility workers.
Every single one of those jobs earns somewhere around $50,000/year on average. Now, compare that again with the CEO’s pay. Or the pay of the average NBA player salary, which is $4,167,386/year (Chris Bosh makes $118,705,300 alone). Now let’s perform a little thought experiment. Let’s imagine that tomorrow, suddenly every single police officer, firefighter, garbage collector, and utility worker disappeared from the face of the earth all at once. How do you imagine your life would be affected? Things probably wouldn’t run so smoothly, huh? Might be a little difficult, to say the least, until they could be replaced. In short, if these people didn’t exist, your life would suck a lot harder.
Now let’s imagine what would happen if tomorrow every professional athlete, actor, and musician disappeared. What would happen? A big resounding nothing. Society would continue to function and your life wouldn’t be quantitatively affected at all. What if all the CEO’s disappeared? Again, probably nothing. I’m willing to bet that most people in larger companies and corporations have never met the CEO and never will. In other words, them knowing how to do accounting or marketing or cashiering has absolutely nothing to do with the existence of a CEO. Unless you think that CEO’s go around everyday and one-on-one show every single employee how to do their job, CEO’s are more or less superfluous.
So while value to society does play a role in determining wages, it’s really only up to a certain point. We pay the people who contribute nothing meaningful to society the most, while leaving teachers and plumbers and utility workers to languish in stagnant wages. Clearly something else is afoot here. The truth of the matter is that your wage is determined by how much someone with more money is willing to pay you. If they want to offer you less they will and if they want to offer you more they’ll offer you more. It’s as simple as that. There’s no hard science or mathematical formula that determines wages.
Chris Rock once had a bit about the minimum wage. “If an employer is paying you minimum wage, what they’re really saying is ‘I would be paying you less money if it weren’t illegal.'”
Okay, what about the idea that with equal income, there is no incentive to move up the ladder or work harder or whatever other bullshit this idea is peddling? Well, I would argue that is patently false. Most obvious is the fact that people aren’t motivated solely by money, as evidenced by the fact that we aren’t all lawyers and hedge fund managers. Let’s examine some of the non-financial things that motivate people to work.
a) people find their job challenging/interesting/intellectually or physically stimulating
b) people want to make a difference or change in the world
c) people like their coworkers/clients
d) pride/personal enrichment
I just find it utterly baffling that people think the invisible hand of Adam Smith only operates if there is inequality. I don’t know why people think that, considering there is no logical or practical reason to assume so. If you believe that people choose jobs based upon their natural personalities, inclinations, and abilities, then it shouldn’t matter how much money people make: they will always gravitate toward varying and different jobs.
People who make these arguments reduce people to automatons. They think people are no better than trained animals doing tricks for treats. The argument that people will only perform if paid is the same logic we use to train circus animals. Plus it’s demeaning to anyone who holds any sort of ideals higher than “I do work to make money to buy shiny crap.” This philosophy almost denigrates people who want to do things for altruistic reasons. It completely removes the ethical and intellectual arguments for work and productivity. It’s dishonest and it’s low brow. And quite frankly it needs to stop.