Posts Tagged ‘wages’

Wages: Some personal Experience

April 27, 2010

Nominal wages have risen continually since the 1930s, a natural result of perpetual legal counterfeiting. Thus prospective employers assume that they must offer you more than your wage on your last job.
At one point I was working as a production engineer for $65 a week. I quit there and applied for a job at another company. The only opening they had was as a technician at $60 a week. I was willing to take that, but they wouldn’t consider paying less than the $65 I’d been earning, so they gave me the title of engineer which paid $75 per week. I didn’t complain!
Working on military contracts is feast and famine. Years later I had a very successful job which I really liked. When the company ran out of contracts, they laid off every engineer but kept their technicians, who could work in production until another contract came through. I offered to downgrade to technician but the company wouldn’t consider it. Apparently that was against company policy.
On the other hand, many workers are determined to never accept a wage cut or a reduction in “status”. After many jobs and many titles, I’m convinced that titles are meaningless. Pay, and freedom to solve problems my own way, are the rewards that matter to me.
I have been laid off 5 times in the 44 years between school and retirement. Each time I moved on to a better job at better pay. The stress in the interval between jobs is painful. My shortest interval between jobs was 2 hours. The longest was 4 months. At one point I got a temporary job mopping floors, at the minimum wage, while my next employer spent 6 months obtaining a security clearance for me. All in all, I have probably spent 1% of my working life between jobs. I believe that is what a free labor market could achieve for all workers.
Workers, too, tend to spend up to the limit and “couldn’t possibly” live on less. When they have to, they find that they can live on less.
As a libertarian, I believe an employer has the right to hire and fire on any basis they choose, just as I have the right to accept or reject a job offer for whatever reasons I choose. If our reasons are foolish, we suffer the consequences, but liberty includes the right to be wrong.
I was once offered a good job in what I considered a good company, on the condition that I shave off my beard. I refused the offer. I sell my services, (and serve with enthusiasm), but not my personal freedom. Another prospective employer refused to even interview me because I didn’t have a college degree. I figure such arbitrary standards diminish their opportunities, as well as mine.
One of my employers, a government contractor, put on a drive to get every employee to buy government bonds. On principle, I refused. I was threatened with reprisals. When the drive ended, they froze my wages. That was their right. I found a much better job and left. I was the only electronics designer they had. They needed me more than I needed them.
Workers, as well as the entrepreneurs who start and guide companies to success, must be able to adapt to changes, and move on when necessary. There is no security, but endless opportunity in the free market.

The Minimum Wage Law

April 25, 2010

The Minimum Wage
The minimum wage law is at best an excellent example of the simple minded stupidity of our lawmakers. Or perhaps it is their cynical deference to the voting power of labor unions. It certainly illustrates the naively simplistic thinking of the altruistic voters who elect those lawmakers.
Let’s say the law sets a minimum wage of $5 per hour.
The law, on the surface, is supposed to give a helping hand to the unskilled and inexperienced workers who would, in the free market, earn less than $5 an hour. Of course it doesn’t achieve that. Since employers would take a loss from the increased wages, they could simply fire those employees. The fact that the employees have chosen to work at $3 an hour rather than not work at all shows their preference. So neither the employer nor the employee wants such a law. Who does want this crazy law?
The labor unions very much want a minimum wage law, and continually demand increases of the minimum wage level in line with price inflation. Their motive is not obvious but yes, even the unskilled workers compete with all other workers and so reduce all wages. Reducing the pool of available labor in any way makes it easier for the unions to demand higher wages. They base their reasoning on the idea of Karl Marx that all employment is exploitation, that they are “wage slaves”. Never mind that the $3 an hour wage is a voluntary agreement between employer and employee. Voluntary slavery is a self-contradiction.
The best way to illustrate the illogic of the minimum wage is to ask ;
Suppose that there were no minimum wage. Unemployment would be a few percent; those temporarily seeking their next job.
Suppose the minimum wage were $1,000 per hour. Yes, there would be a few people employed, but nearly all of us would be permanently unemployed.
Government unemployment statistics don’t reflect permanent unemployment, but I would guess that there are between 5% and 10% of potential workers permanently unemployed as a result of our ever rising minimum wage.
The effective minimum wage is actually much higher than the nominal minimum wage, because an ever-growing list of mandatory fringe benefits adds to the cost of each employee to an employer. There are also a growing number of people in “temporary” or “part-time” employment to avoid the cost of mandatory fringe benefits. My last job was “temporary” and lasted the two years until I turned 65 and retired.