Trio and Friends

Ondrej wrote:I recently stumbled across a video clip from Now This. Unfortunately I cannot find it again but it is worth at least describing and providing a comment on. A woman (presumably a government representative of some sort) is questioning a man (presumably a CEO or similar high ranking representative of a bank (they mentioned in the video but I don’t remember exactly)) in a congressional-type setting. It is revealed that his company employs a single mother and that they pay her something like $16/hr. The woman then begins to break down what typical frugal living costs might be like in that location with rent, food, car payment, cell phone bill etc illustrating that $16/hr is clearly not enough for her and her children to live on. She strongly implies that it is the responsibility of the business to ensure that the woman (and by extension everyone working for them) receives enough payment that they can cover their living expenses and that it is a severe injustice otherwise. The man basically didn’t answer the questions saying things like “I don’t know, I’d have to think about it”. It’s possible the video was edited and those were the only responses left in. In any case, his response is not important for our discussion.

I find this line of thinking wrong or at the very least incomplete. It centers on the woman’s situation and attempts to place the responsibility for her care on the business. It is not asked, what is the value of her labor? If she left, would the position be immediately filled by another worker happy to receive $16/hr? Are other businesses paying more for similar work? If they are, why does she not work for them instead? It assumes that worker compensation is not tied to what the worker produces. It is also assumed that the woman will not find another higher paying job but, I guess, will just starve to death with her kids. Likely the reason the video was created is because it features a number of factors unrelated to the job, the large power and wealth disparity between the CEO and the worker, that she is a woman, that she has children, and that she is single. (It naturally ignores that the CEO is responsible for balancing the needs of many other workers and the health of the company on which her job depends) If, instead, the worker were a male teenager living with his parents, one would likely have a bit of a different feeling about the situation. We might say, “well, he is just starting out. Great to see him holding down a stable job and getting the experience. He will surely move up to better positions as he gains experience.” And this is why such a job only pays $16/hr. People are willing to do the work for that price. Not everyone, but enough that the position stays filled. So the woman’s value to the company is being set by other people who are not in her situation and do not have the same expenses. Taking the focus off the woman and onto the job and what it entails provides a much different picture. What is the job? Is it just running a register and smiling at customers? Does it require a degree or specialization of some kind? Can anyone off the street be trained to do it within a few days? If it is no more complicated than working at McDonald's then $16/hr sounds comparatively generous.

Wages are bounded on the low end by what people are willing to work for and on the high end by what the value of the labor is. If the company pays more than it receives in value from the work it will go out of business. Another factor that often gets glossed over are the other financial requirements on the business related to the worker. There is insurance, benefits, paid time off etc. that the worker’s value added also has to cover. In other words the company cannot pay this directly to the worker because it is required by law to be provided, so this acts to decrease the upper bound of what the business can pay.

As I am turning this idea over in my head I am realizing that the competition among workers puts pressure on lifestyle. The more frugally one is willing to live, the more frugally everyone must live. Because the young man can happily live on less than the single mother, the payment for the work can be set lower. In reality the value of the work is actually decreased. I guess this is why immigrant labor depresses low-skilled wages, they are not just willing to work for less, they are able to work for less because of their lifestyle. This is at least true on the lower end where workers are abundant and jobs are few.

It centers on the woman’s situation and attempts to place the responsibility for her care on the business. It is not asked, what is the value of her labor?

• The CEO has a lot of prestige and occupies a high social rank. He is admired by the public. Many people spend much of their lives trying to become CEOs, and most of them fail. The CEO has a lot of power over other people, and at his whim, someone can be promoted or fired. Because of his power, people want to ingratiate themselves to him, meaning that he is treated very well by a large number of people. To be sure, the job is stressful and demanding, and that counts for something. But he chose the job, and he could quit any time he wanted. If he wants a simpler life, he can take a job selling apples in the market. So why should I pity someone who, every day, is choosing to stay in a situation which, any day, they could choose to leave?

• There are a few women who choose to be single mothers, but this is normally because they are wealthy enough to make such a choice without incurring lots of financial worry and insecurity. The vast majority of single mothers would love to be married to a husband who treats them with love and dignity. They would love to have greater financial stability for themselves and for their children. They may or may not have made a mistake in the past that led to their current situation, but either way, they have no choice about it any more. - To be precise, of course they have a choice. They could kill themselves, or kill their children, or abandon their children, or marry a jerk who beats them regularly, or marry another woman. So in a sense, they are choosing their situation on a daily basis, just like the CEO. If they have any moral fiber in them, they will neither commit suicide nor kill or abandon their children. Their morality forces them to stay in their situation.

Ondrej wrote:I might say, the CEO will be fine even if he has to pay this woman more. But then, the woman will most likely also be fine even if he doesn't.

Does pity bring with it some kind of action?

Jesus also had compassion on prostitutes and tax collectors.

The CEO is Jared Diamond of Chase Bank, and the context is a congressional hearing on why (according to a Congressional oversight committee) Chase used a substantial portion of the bailout money they received from you and I and a few others back in '08, on campaign lobbying and paying out salary bonuses to their executive committee instead of using it to restructure their business models to avoid needing another bailout. So the questions about the single mother were in the context of how funds given to them by the government were being allocated.

Ondrej wrote:You imagine the CEO is free to do as he pleases because he makes lots of money and is "in charge". I imagine, I think much more accurately, that he is even more constrained than the woman.

Ondrej wrote:Let's say he decides to give her a raise, let's make it $100/hr for illustration purposes. Can he do this? Yes. He is the boss. But what of the next cashier? They will want the same, of course. Ok, $100/hr for them too. He is the boss. But then the middle management is beginning to get jealous because they only make $50/hr. Hmm. Ok, they now need to get $150/hr to keep them happy. He is the boss. He can do that, right? Can't he? Maybe, for a time. But he is constrained by reality. If they are not profitable because they are paying out too much they will run out of money. And it will be his fault. Then what? Raise their rates on the customers? Doesn't sound like a good move. Then no more customers because there is a competitor they go to. The boss is constrained by reality that he cannot change.

Ondrej wrote:But by the same token we have all had advantages that we did not earn. You do not see God because you do not look low enough. Instead of being envious of the success of other people, look humbly at your own blessings dust them off, polish them up, and hold them to the light.

Ondrej wrote:Our culture is very quick to make excuses for people if they fall into certain "unfavorable" categories. It is not at all obvious to me that this is helpful for these people. It tickles our sense of compassion, for sure, they also ask for it. But is it helpful? In your financial charity, would it be helpful to just pay off someones debt? In a certain sense maybe but it might actually make things worse if they do not recognize and practice better behavior.