Category Archives: Economics

Why Certain Jobs Are Not Designed to Pay a “Living Wage”

Executive Secretary

When I was an executive secretary, I thought I could stay in that job, if only people were willing to pay more.  I was an excellent secretary.  Only now, many years later, and with far more experience under my belt, do I realize why that job will never pay a living wage.

Fast food workers find themselves in a similar situation.  They think they could stay permanently in their jobs and make a living, if only the owners would pay them a living wage.

Unfortunately, many workers, if not most, are mistaken about why different jobs pay what they do.  All of these jobs are minimal service jobs, which do not give ADDED VALUE to the business.  In fact, most employees at most levels of business have it backward.  Jobs are NOT designed around employees’ needs, or what they need to live on.

Salaries and wages are designed for what value they provide to the business, and are driven upward and downward from that level by the shortage of workers, or oversupply of workers. It’s not about “the business owner sharing his profits.” it’s about what value the employees are providing to the business.  Yet, there is a maximal level of value that each worker provides.  Pushed above that level, either by a labor shortage, or by labor demands that don’t provide added value, technological innovation will replace those jobs.

The average employee, at every level, is thinking in the wrong way, if he wants to get ahead in life.  He is only trading his labor for a wage.  For that wage, he is expected to perform certain tasks competently and to achieve certain goals, or meet certain minimal targets. Doing one’s job competently is not enough to earn any more than a cost-of-living increase in wagenow.  It doesn’t get anyone ahead.  Like many others, I did not realize this when I was young.

To get promoted, or to be raised into a higher salary classification, one must become indispensable to one’s employer.  One must render service over and above what is required of them to earn their normal salary.  Those with this sort of mental attitude are able to raise their incomes.  For anyone who watches Suits, think of Donna; think of Mike; think of Harvey Specter.

Donna  Mike Ross on Suits  Harvey Specter on Suits

Most employees are not willing to assume the extra risk and responsibilities a higher salary entails.  Instead, they want to get a higher salary for performing ordinary tasks, without regard to the result in terms of profitability.  Employers pay ordinary salaries for competence; they pay extraordinary salaries for new visions combined with implementation.  And if they don’t, or can’t, this is when the entrepreneur with vision and drive strikes out on his own, where all the profits and all the risk accrue to him.  This is why those who are highly successful are rewarded with reaping the profits and becoming rich.

For those without great vision, the next best avenue is sales.  Sales pays well for those who add actual value to the company; it quickly separates the wheat from the chaff.  Those who perform the right tasks with the right people are able to give themselves an immediate raise through commissions earned.  Those who go through the motions of tasks without the right vision don’t get very far.  Often, they do have the ability, but are not willing to invest the same time, take the same risks, or invest the same effort, because succeeding in sales is not truly their dream.

–Lynne Diligent



The Problem with Raising Fast-Food Workers’ Wages

Robots at McDonald's

Fast food workers are requesting that minimum wage rates should roughly double to $15/hr.  Yet, what is likely to happen is that many of today’s workers will simply be replaced by machines and automated processes.

automated McDonald's ordering

Some McDonald’s restaurants are employing robots in the kitchen, while others are creating automated order-taking.  Automated order-taking, alone, can replace one worker.

There is an inherent conflict between the way workers look at wages, and the way employers  look at wages.

From the worker’s point of view, the amount of his paycheck determines his entire standard of living. Even if a worker doesn’t produce enough output to justify his salary, his family still requires the same amount of food to stay healthy.

Conversely, from an employer’s point of view, he is forced to pay wages and salaries based ONLY on the economic value of each employee’s ACTUAL work, and labor is only ONE cost of running his business. His total production costs (including labor) MUST be kept well below the amount the public is willing to pay for his product, or he will quickly go OUT of business.

Increased labor costs have always been the driver of technological change.  “No trade union, however powerfully organized, can FORCE employers to go on paying higher wages than their workers are worth to them.” (Gertrude Williams: The Economics of Everyday Life. London, 1976).

When either workers or unions demand wages that exceed the worker’s value, the employer has two choices.   He can CUT BACK the workforce (by employing fewer people, OR by going out of business); or he can FIND NEW METHODS THAT REQUIRE FEWER WORKERS (new technology, automation, new processes). This is the current situation taking place in the fast food industry in the United States.

The important thing here is that fast-food jobs are not, and have never been intended to pay a “living wage” for a family wage-earner.  The reason teachers and parents place so much emphasis on learning to read and write well is that, for those who never become proficient enough to make it through college, these are the only sorts of jobs now available.    These jobs need to be looked at as temporary jobs or unskilled jobs which will never pay high wages.

Many of those adults who are in these jobs full-time and for many years are probably the same students who didn’t do well in school (or who didn’t care to put in the effort), and those are now the only jobs they can get.  Should their wages be raised to the equivalent of a skilled carpenter, who has to be a math whiz and have years of experience?  I don’t think so.

There are many reasons why people are stuck in these low-wage jobs, but society needs to stop blaming the employers, and start holding students and workers accountable for developing their reading and writing skills, and for making responsible life decisions.  Sometimes people have bad luck, but we all need to remember that, “Good luck equals preparation (good skills) + opportunity.” –Seneca (Ancient Roman Stoic Philosopher)

–Lynne Diligent