Just gross ignorance from Zoe Williams

But a wage floor alone isn\’t enough. It wouldn\’t be enough even if there weren\’t employers who dodged it. A living wage might be a start, but that isn\’t enough either. We will not tackle inequality until we start talking about wages that are fair. We cannot make any dent on what is fundamentally a moral issue unless we\’re prepared to talk about morals.

So, indeed, let us talk about the morals of wages. We might even take the point that Zoe makes about such morals herself:

And yet you\’d have to go as far left as Marx before you\’d find anybody insisting \”this isn\’t going to work\”, saying, \”wages have to reflect our relative input into what we\’ve produced; they cannot be a lottery\”. And still, nearly 200 years later, the same squeamishness obtains.

Excellent. Wages should reflect the value that labour adds. Can\’t see a problem with that at all. For that\’s what market wages are.

It isn\’t quite true that everyone gets paid their productivity. But it is true that average wages across and economy will reflect average productivity. And the system that gets us closest to payment by that productivity is indeed the market system.

Which is what Zoe is complaining about of course. Because some people have low productivity, possibly even low to zero marginal productivity, they end up, in a pure market system, being paid very little to nothing (that\’s the unemployed of course).

And we also, as the moral beings that we are, all agree that leaving those with such low productivity to starve in the streets is a bad idea. To take an extreme and possibly distasteful example, someone with a serious case of Down\’s Syndrome. There\’s no job that he or she could do that would produce enough value for them to survive. Pace those who insist that such should be coathangered at an early age we all agree that we should all chip in so that they have enough to eat, be clothed and shod, gain access to fingerpainting supplies and so on. We might disagree about voluntary charity or forced taxation to pay for it but the moral duty to provide is still there.

But here is our moral conundrum. These people with this low productivity. Should we load the burden of provision onto the shareholders of companies that we insist employ them at higher than their productivity wages? Or, given that it is us as the wider society that insists on the morality of higher than productivity wages should it be us as the wider society that dips into our own pockets to top up those wages?

Clearly, it should be us. It is not moral to state that x must be paid but make sure that it\’s \’im over there that \’as to pay, don\’t you dare touch my cash. Being moral would be to say that x has to be paid and here is some of my cash to pay for it.

That is, the moral position on topping up market wages which we think are too low is to add to those wages through charity or tax: not through dumping the costs on others by rigging the market.

38 comments on “Just gross ignorance from Zoe Williams

  1. “Should we load the burden of provision onto the shareholders of companies …”: how do you know that it’s the shareholders that would bear the burden? Wouldn’t it be like tax incidence; you’d have to try to estimate who would bear the burden eventually?

  2. What people like Zoe object to is that some of that productivity gets creamed off by the capitalists. Unless and until you can get it through their thick skulls that a return on capital is actually essential (even proved to be the case in communist command economies) otherwise you have no capital with which the workers can increase their output, you will never persuade them that the workers should take home less than 100% of turnover. Minus the enormous chunk the state wants of course – but that comes from the greedy capitalists, doesn’t it, and has no influence on wages.

    Irony tags around the last half of the last sentence for any Germans or Americans reading this.

  3. Wages should reflect the value that labour adds. Can’t see a problem with that at all. For that’s what market wages are.

    I don’t think so. When many different sorts of labour are required to produce a particular good, how does the market determine the value added by each worker? It doesn’t: wages are determined by supply and demand for the labour, not by value added. The result is that the price of unskilled labour is pushed down to levels determined by the minimum wage or by benefits available to the unemployed.

  4. It is not moral to state that x must be paid but make sure that it’s ‘im over there that ‘as to pay, don’t you dare touch my cash.

    But that is the lefty position in a nutshell.

    “I pay my ‘fair share’, but more money is needed, therefore we must increase the ‘fair share’ of others, but not mine, because I am already paying my ‘fair share’”

    Always, always, it comes down to “the rich must pay more, but not me, because I pay enough already”.

  5. It’s more like “Here is this magic line which defines ‘rich’ which is, conveniently, just enough more than what I have”.

    We must tax the rich to pay for the poor.

  6. “The equivalent precept, just as simple, is that all people are born equal. Taken to any logical conclusion, this would make it impossible for one person’s wages to be 185 times another’s (this is the current, depressing ratio between a FTSE 100 chief executive and average earnings, according to the One Society’s half-term report on inequality under the coalition: a precis if you’re busy – it has increased).”

    But those people do different jobs, Zoe, you imbecile. The cleaner at the ‘Guardian’ offices is never going to be paid as much as you, never mind as much as Alan Rusbridger!

  7. I must admit that I still interpret equality as being of opportunity.

    Equal outcomes (which seems to be what the leftists are trying to sell me) are impossible to achieve and I see real moral hazard in trying to achieve them. The results are all around us in Europe.

    Our world (progress not progressivism) is built on personal effort and imagination and doing stuff.

    We all wax lyrical about young entrepreneurs, but it seems we only want them in the start up stage when they create half-a-dozen jobs. Once they are successful in their endeavour we are going to spend our time telling them:
    - Nobody needs more than £40.000/year
    - Tax the rich
    - Evil money-grabbers

    My definition of a safety net (which I want and am prepared to contribute to and try to supplement with time in certain areas as a moral responsibility) now differs widely from that of my friends on the left.

    I feel ripped off by the ‘you don’t care, I do’ meme which has been appropriated by my publicly-employed friends.

    When we have a discussion over dinner I try to work in the ‘If you care so much, don’t have dinner and take the 20 Euros and give it to the down-and-out we passed on the way here’.

    I believe they care, but not as much as they think and certainly no more than me.

  8. @PaulB is simply a claim there’s no market operating in employment. Higher skills attract higher wages because there’s more employers bidding for those with the skillset.
    The downside of the living wage, even the minimum wage, is it sets a floor below which there’s no incentive to acquire such a skillset. A broompusher is a broompusher. There’s no incentive to be a better broompusher

  9. wages are determined by supply and demand for the labour, not by value added.

    Up to a point, Lord Copper. There’s precious little social demand for Diversity Officers and Co-0rdinators, and yet the job attracts salaries comparable to most graduate jobs, skilled professions excepted. This is because the demand is artificially created by fiat.

    In fact quite a few jobs aren’t sustainable on their own merits. My wife comes from an old farming family, and I have a lot of sympathy for farmers, but an awful lot of them aren’t economically viable in this day and age.

  10. I think PaulB’s point is more realistic than that (and is one that Tim has made before). The simplistic economic theory says that wage = marginal productivity. However, wages are set in a more complex environment (otherwise ’5 a day co-ordinators’ would be paid nothing and ‘diversity managers’ very little – there being a benefit, but not much of one on the margin, to not limiting your workforce by bigoted selection processes).

    A wage is generally determined (in the absence of rent-seeking or agent / principal issues) in a complex economic environment (as Tim repeatedly points out, mostly on Forbes) by the wage for the next worst job you could do, plus a bit. Here, you get BiS’s point. If the wage for the next worse job and for the next better job are all the same – because of minimum wage or other market distortions – then there is little incentive to improve your skills.

  11. I’d despise GMG journalists’ output less if their employer made any attempt to follow the principles that they repeatedly espouse.

    And we all remember Laurie Penny’s attempt to recruit somebody to whom she “couldn’t afford” to pay a living wage.

  12. bilbaoboy – The drive for equal outcomes means that you have to invert the incentives

    i.e. the successful are punished while the feckless are rewarded for making poor choices. Anyone see why western societies are crashing and burning?

  13. PaulB seems to think that supply and demand only affects employees and not employers. Demand for labour is largely determined by value-added, supply by the relative attractions of pay and benefits versus effort and conditions compared to doing another job or nothing. For instance I, personally, should want more money to dig ditches than to do Zoe Williams’ job. The employer will bid up wages until adding another worker adds no more to his bottom line but if he/she has to go through fifty anti-discrimination hoops before hiring an unskilled labourer then the cost to him/her is far greater than the net pay to the labourer.

  14. “JuliaM // Nov 8, 2012 at 11:36 am

    But those people do different jobs, Zoe, you imbecile. The cleaner at the ‘Guardian’ offices is never going to be paid as much as you, never mind as much as Alan Rusbridger!

    IMHO the cleaner at the Guardian should be paid more than Zoe – certainly more useful.

  15. I suppose the value added by Zoe Williams could in principle be estimated by finding out what difference there is in Guardian sales between editions with and without her golden prose. But how do you determine the value added by the cleaner? You can’t: cleaners get paid the least the employer can get away with. John77, if you disagree with this, please explain what the value-added mechanism is.

  16. Improved productivity of direct workforce who don’t have to spend time emptying their own wastepaper bins etc
    Simples!

  17. ” But how do you determine the value added by the cleaner? ”
    Would have thought that was bloody obvious. By how much it costs to get the place cleaned.

    (To me, it’s amazing that someone can be so absolutely divorced from the real world as to ask a question like that.)

  18. 18PaulB // Nov 8, 2012 at 4:03 pm

    I suppose the value added by Zoe Williams could in principle be estimated by finding out what difference there is in Guardian sales between editions with and without her golden prose. But how do you determine the value added by the cleaner? You can’t: cleaners get paid the least the employer can get away with. John77, if you disagree with this, please explain what the value-added mechanism is.

    And if those who hire Zoe don’t get away with the least they can pay her then they aren’t paying attention and its verging on a dereliction of duty.

    Not every value add can be directly measured. In those cases its the judgement of those doing the hiring: what contribution will this person make to the whole?

    I’ve no idea what my value add is to the project I’m on, but the person who hired me thinks its greater than they are paying because they keep extending my contract and I’m on 7 days notice so if my value add dips below their perceived value of my contribution I’m out on my ear.

  19. To add to my #20
    There’s a useful analogy illustrates this:
    Here you have a pile of dirty pots & pans. In their current condition, they’re of no use for cooking, so what are they worth? It’s not zero because washing them will return them to a useable range of cooking utensils – say£200 worth. But you can’t say the act of washing adds £200 of value or you might as well buy a new set for every meal.. So the added value is simply the cost of a washer-up. And that value is removed next time they’re cooked with.. Each cycle, the added value is purely the cost of the process because you can’t accumulate or dissipate value by that function alone

  20. john77: I understand why it might be a good idea to employ cleaners. What I’m asking you is by what mechanism you think their pay is linked to the value they add.

  21. PaulB
    The value added is simply the amount paid. What’s the value of an uncleaned room? The value of an clean room less the cleaning cost.
    The cost is simply determined by how much a cleaner wants to clean the room. There’s no independent determinator, as you’d find if you pay to have rooms cleaned. They cost a lot more on Christmas day morning than they do the following mid-week because it takes a lot of dosh to pursued someone to clean rooms on Christmas Day morning.

  22. “To take an extreme and possibly distasteful example, someone with a serious case of Down’s Syndrome. There’s no job that he or she could do that would produce enough value for them to survive.”

    Not that it affects the point here, but I’ve once worked with someone with Downs’ Syndrome who was well capable of doing a good day’s work as a labourer. It doesn’t take a genius to do enough work to be useful.

  23. Bloke in spain, I used to work Christmas day as part of my salaried role. Not as a cleaner but got no extra pay for being there.
    The extra value I gave answering the phone – probably not a lot. But employer had to be open and therefore had to have some staff in.

  24. Bloke in Spain – I’m sure I’m missing something. If a market wage “reflects the value that labour adds” (as per TW), and “the value added is simply the amount paid”, and the amount paid in wages is determined by the market (which I take to be your point), then it would seem to follow that the market wage is a function of, well, the market wage, and we’re back to the beginning again.

  25. “wages are determined by supply and demand for the labour, not by value added. The result is that the price of unskilled labour is pushed down”
    -
    this is correct.

    “The value added is simply the amount paid.”
    -
    this is also correct.
    ( let us finesse that a bit “paid” = cost to the employer + profit (difficult to allocate in the case of a cleaner, say divide profit by headcount for simplicity)).

    Interesting, though hardly news, to note that “value added” can be very different from “real value” – food is cheap but invaluable, agricultural wages are low and the work often grim.

    We could raise the value added by agricultural workers by abolishing combine harvesters and tractors. Same end product, more primitive production method, but lots more “value added”.

    Many folk are getting fucked over doing shit work for shit wages, and its just plain shit and bad and wrong.

  26. If we abolish mechanised agriculture it won’t raise the value added of the individual workers, but it will raise the value added of producing a loaf of bread.

  27. Mr Rincewind,
    Probably because things like office cleaning aren’t readily amenable to assigning an added value to. Mr Davies, above, talks about having to work Xmas Day. Depending, but with things like manufacturing, retailing, some service sector his employer could assign a value his presence accrued to the company. If he wasn’t there, they wouldn’t accrue the value. But office cleaning’s not like that because, if you presume a minimum standard of required cleanliness, not having it done could lose many multiples of the cost of cleaning.
    OK, another analogy:
    You get back from your fortnight’s holiday in August to find you’ve left the drain blocked & it’s bog paper backed up to the u-bend. Assign an added value to your house of getting my guys out to clear it. OK, you can set an upper bound at where you’ll grit your teeth & stick your own arm up the pipe. But where’s the lower? You can’t get round it depending on the competition I’ve got with other plumbers & how much I want the job. Doesn’t matter where you set it, if it doesn’t match the lowest quote you don’t get your house liveable.

  28. But Mr Bonk, your analogy only works if you’ve some sort of totalitarian state. In which case you can set agricultural wage rates & bread prices anywhere you want. Otherwise, one farmer abandoning mechanisation & going back to hand tilling isn’t going to alter the price of a loaf. Just means his labour costs would preclude him being able to produce wheat economically

  29. Incidentally, the blocked bog analogy above is I think useful because our charge would bear no relationship to that for putting in a new downstairs cloakroom. For the latter, you can assign all sorts of added values to the utility of your proposed meditation facility & the enhancement of your house value & reach a decision based on them. In the former we have, in the trade term, got you by the short & curlies. Which the exorbitant price reflects.

  30. My point is that many low paid workers are getting a shit deal for crap work, yet they may be producing the most “valuable” things of all.

    So what is the “living wage” likely to be when 95%+ of your population exist in subsistence peasantry? Because that is what you are actually calling for.

  31. Think that’s the point isn’t it, SE? Heroes of Labour, a Peoples Army to keep an eye on them & each other & a small ruling class with dachas & big cars.
    Been here before haven’t we?

  32. @ PaulB
    You skim over my answer. If the value lost by getting front-line workers to clean up is more than the cost (wages plus NI plus overheads) of a cleaner then you hire a cleaner; if it less you don’t. So when I work in London the office employs a cleaner, when I work at home I don’t and I occasionally dig out the vacuum when I don’t have enough to do.
    At some point the marginal value of hiring a cleaner equals the cost of adding one more cleaner to the UK workforce. The pay of cleaners who add a lot more value will lie somewhere between that value and the marginal rate just as my pay lies somewhere between the value I add and the minimum that I am prepared to accept. Why don’t you complain that the system is exploiting me?

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