Wednesday, October 28, 2015

Hard Work Has No Intrinsic Value

It is one of our cultural truths that if you work hard, you get ahead. That mantra is as American as mamma and apple pie. While it is certainly true that working hard in your profession is usually rewarded, hard work has no value by itself apart from the labor market. Let me elaborate.

I can go outside and dig a huge hole in my yard and work really hard doing it but if no one wants me to dig that hole, they won't pay me for it. No one deserves a particular wage just because they think they should, it only matters if what they do has economic value to someone else. What I do for a living has a value to the people I provide services for. If it didn't, they wouldn't pay me and I in turn wouldn't do it and I would find something else to do. How hard one works is also typically irrelevant to the wage they receive, what instead determines the wage is the relative value of that job to the person paying you to do it because they are unable or unwilling to do it themselves. A major component of this is scarcity. The more scarce and specialized the skills required to do a job are, the more people in general are willing to pay for it. That is why doctors, CEOs, biochemists, etc. make more money than someone who works at McDonald's, even if that person flipping burgers is working really hard. Anyone can work at McDs flipping burgers but very few people have the skill set to run an organization like McDonald's in the CEO suite with nearly half a million employees, tens of thousands of locations and billions in revenue. There are a lot of factors in determining what work is worth to an employer but hard work is only one of them.

This shouldn't dissuade anyone from working hard at their job, it simply is a reminder that work in  the labor market is only worth what someone will pay you for it. Teachers work for 9 months of the year and by all accounts they work pretty hard during those months but the local school board decides what that work is worth. It has no intrinsic value. If the school district thinks it is only worth $20,000/year to be a school teacher then qualified prospective teachers have to decide if they will teach for that amount. If not enough of them sign up for $20,000 the school board has to decide if they will run the school short-handed or raise the salary to attract more teachers. That is how the labor market works, or at least it is how it is supposed to work when artificial means like collective bargaining and minimum wage laws don't interfere. 

Here is another example. My wife and I drove together into town today and passed a garbage truck. It used to be that garbage trucks had guys hanging off the back who picked up the cans and dumped them into the back of the truck. Kind of a stinky job but it probably paid decently. Now many garbage trucks have a mechanical arm that picks up the dumpster and angles it just right to pour the trash in the top of the truck. That arm was probably really expensive to install plus the need for dumpsters the right size and configuration for customers but the owners of trash hauling services have decided that a one time investment and on-going maintenance of the mechanical arm is more cost effective than paying a guy or two to hang on the back of the truck. That means that every garbage truck with one guy driving and a mechanical arm picking up is replacing a crew of 2 or 3 workers. Actions have consequences.

This is pretty basic stuff but in a Twitter and Facebook world many people seem unable to grasp that every economic action causes a ripple effect. ATM machines replace human tellers. Centralized order takers replace a kid in a window at McDonald's. Automated garbage can picker-uppers (that is an industry term) replace workers picking up cans. Manufacturers find ways to make stuff with automation instead of relying on expensive and often undependable workers. On and on. When we think about economics looking only at the immediate impact, we often make disastrous decisions. 

So remember, work hard at your job but remember also that your job is only worth what someone else will pay you for it.

1 comment:

Melanie Reed said...

What you accurately describe is a system giving wages based on both exclusivity and scarcity. I agree that is how the attitude behind our economy works...but it is not biblical. If we cast our minds back to when the Bible was written and, specifically, the scripture: "The elders who rule well are to be considered worthy of double honor, especially those who work hard at preaching and teaching. For the Scripture says, "YOU SHALL NOT MUZZLE THE OX WHILE HE IS THRESHING," and "The laborer is worthy of his wages." (1 Timothy 5:17-18) we will see that God does not think how we do about hard work or exclusivity. It is clear from the Mosaic law and for example, the Jubilee year, that God had some corrections for and unappreciative and greedy economy. His laws specifically barring usury (which got the nation of Israel into hot water a number of times) point to not supporting an economy such as ours, but condemning it. Indeed, as regards wages, they were not to be based on exclusivity but hard work and were to be paid (under the mosaic law) that day. In some cultures, such as Mexico, that is the way the pay, in general. We don't usually pay be the day here in the US. What it really says about us is that we don't appreciate the worth of hard work, we ungratefully expect it on our behalf as if that person were our slave rather than our brother. This is not the way. Because with God, hard work has always had an intrinsic value. We even teach our children that. But we don't do it as adults.