There is no fair wage

We have to make sure labor is valued.” We hear statements like this from the leaders of the business unions all the time. For instance, “A fair day’s wage for a fair day’s work” has now been the motto of the mainstream labor movement since at least the beginning of the 20th century. On the face of it, this general demand for workers sounds like a good thing. We have to work for a living, and so long as that’s the case, we should be paid a fair wage for our efforts. We don’t want to be exploited. We want our fair share of the pie.

However, what is a fair day’s wages, and what is a fair day’s work? To answer this we have to think about the specifics of how our economy—a capitalist economy— operates. We can’t simply ask what feels morally fair or what the law says is fair, whether that be the federal minimum wage or the often discussed and calculated “living wage.” What is morally fair, and what is even fair by law, may be far from being socially fair. Social fairness or unfairness is determined by the material facts of production and exchange.

First, we can ask, from the perspective of a boss—a capitalist—what are a fair day’s wages? The answer from this perspective is pretty simple. The labor market defines the capitalist’s role as a buyer of workers’ ability to work, and the employee’s role as the seller. The employee sells her time to the employer who in turn pays the employee in wages. The capitalist pays his version of a “fair wage”—the amount required for a worker with average needs to survive and keep coming back to work each day. Some bosses might pay a little more, some a little less, but on average this is the base rate of “fair” pay.

From this same perspective of a capitalist, then, what is a fair day’s work? A fair day’s work to the boss is the maximum amount of work an average worker can do without exhausting herself so much that she can’t do that same amount of work the next day. You, the worker, gives as much, and the capitalist gives as little, as the nature of the bargain will allow. As is probably obvious, this is a very strange sort of “fairness,” and probably not how any rational person would define the word. Let’s look a little deeper into this issue.

People who praise the great “free market” would say that wages and working conditions are fixed by competition between the buyers, the capitalists. Supposedly, capitalists are all competing for workers, so that competition inevitably leads to fair wages and working conditions. After all, the seller—the worker—theoretically has several options of employers to choose from. If a buyer doesn’t offer a price that a worker thinks is fair for her labor, then she can look for another job that pays better. By agreeing to the prevailing wage, so goes this line of argument, workers have essentially made the statement: “We think this is fair.”

One problem with this “logic” is that workers and bosses do not start on equal terms when they are buying and selling. It’s not like you’re selling an iPod on Craigslist, in which you can wait until someone pays the price you want. For most of us, if we don’t have a job, we can’t pay our bills, feed ourselves and our families, or heat our homes. Having employment is a life or death issue. It may not be life or death in the short term, but eventually if you can’t find a job or someone with a job who will help you out financially, you will not be able to buy the things you need to live, let alone the things you need in order to be happy and fulfilled.

It’s a very different story for the owners of the companies we work for. They have money in the bank, and if they don’t get employees tomorrow or even this month, they might be severely inconvenienced. Although their companies might take a hit in profits, they won’t risk anything like the consequences workers do. Their worst case scenario is far better than ours, so the free market lover’s idea of an “even playing field” is, in reality, a sick joke.

This isn’t the worst part of it. Bosses lay off workers when they develop new technology to replace employees and they lay people off when their profits plunge, as is the case in the current recession. As a result, workers lose their jobs way faster than they can be absorbed into other jobs. Today, there is a massive pool of unemployed workers and the capitalists, as a class, use unemployed working-class people against the rest of the class. If business is bad and there are few jobs for those of us who find ourselves out of work, some of us can collect a meager amount of unemployment money, while some turn to stealing and some lose their homes and are forced to beg for money on the street. If business is good and jobs appear, then unemployed people are immediately ready to take those jobs. Until every single one of those unemployed workers has found a job, capitalists will use desperate job seekers to keep wages down. The mere existence of this pool of unemployed workers strengthens the power of the bosses in their struggle with workers. Anyone who has ever heard a boss say, “If you don’t like it here, there are 10 other people I could hire to do your job,” will know how this plays out in terms of respect on the job. In the foot race against the capitalist class, the working class has to drag an anvil chained to its ankle—but that is “fair” according to a free market economist.

Now let’s take a look at how bosses pay their workers. Where does a capitalist get the money to pay our very “fair” wages? He pays them from his capital, his stored up funds from all the business he’s done, from all the goods or services his company has sold. Where did those goods and services come from in the first place? They came from the workers. The employees are the ones who worked to create those products or services that were then sold to consumers. The boss doesn’t do any work—he might oversee some of the workings of the company, but for the most part, he sits on his ass watching as the work takes place. So we can say clearly the workers created the value that built the fund that they get paid from—a worker’s wage is paid from the product of her own work. Now, according to common fairness, you should get out what you put in, your wage should be equal to the value that you have created for the company through your work—but that would not be fair according to the values of a capitalist economy. On the contrary, the wealth you have created goes to the boss, and you get out of it no more than the bare necessities of life—a wage as low as the boss can get away with paying. So the end result of this supposedly “fair” race is that the product of the working class’s labor gets accumulated in the hands of those that do not work, and in their hands, it becomes the most powerful means to enslave the very people who produced it.

A fair day’s wages for a fair day’s work! There’s a lot to be said about the fair day’s work too, the fairness of which is about as fair as these “fair” wages. It is also worth examining the role that unions play in affecting the rate of wages, but rarely the fairness of the wage process. We’ll be talking about these issues in future articles. From what has been stated so far though, it’s pretty clear that the old slogan has outlived any usefulness, and no one should take it seriously. The “fairness” of the market is all on one side—the side of the capitalist class. So let‘s bury that old motto forever and replace it with a better one: “Abolish the wage system!”

Originally appeared in the June 2012 issue of the Industrial Worker via Libcom