The “Paid What You are Worth” Fairy Tale
Along with getting paid what you are worth is the story, you need a college degree in order to get paid more. That is kind of true if you complete higher education in a field which pays more. What if you do not pick the right field and you are burdened with debt? Your pay is low and it may take a decade, or two or even three to dump the student loan. And if you do not get a degree? Some education “may” be better than no education. The pay may be less. And you may still have those pesky loans to pay off with less of an income. And your family and a wife and two kids?
Well, I will declare bankruptcy! Except you can’t go bankrupt like business can and have their debts forgiven. Student Loans stay with X-Students till you die. We talked about this earlier today. The hard Financial Lessons for Two Entities, Angry Bear. There is almost no way out of a student loan and Congress makes sure you can not escape. The fairy tale of needing a college education to make money may be true in many instances; but then getting paid what you are worth may not be true. Just some thoughts for today.
“Busting the ‘Paid What You’re Worth” Myth‘”, Robert Reich
You’ve probably heard that everyone is “paid what they’re worth.” Don’t buy it.
According to this mythology, workers at the bottom are “unskilled” and don’t deserve more than what they currently earn.
Minimum wage workers at McDonald’s are paid what they are worth in the so-called “free market.” If they were worth more, they’d earn more.
By the same logic, the CEO of McDonald’s is worth his multi-million dollar compensation package.
The notion that people are paid what they’re “worth” is by now so deeply ingrained in the public consciousness that many who earn very little assume it’s their own fault that they don’t earn more. That they simply lack the skills they need to be paid more.
But there’s no such thing as unskilled workers. Only underpaid workers. Their productivity — that is the value of what they produce — has been growing for decades. The problem is that their wages haven’t kept pace with their productivity.
The “paid what you’re worth” mythology also lures the unsuspecting into thinking nothing can be done to change what people are paid. It’s simply the way the market works.
Meanwhile, according to this same view, CEOs who rake in tens of millions and Wall Street traders who rake in hundreds of millions, are simply being paid what they’re “worth” because that’s what the market has dictated.
Rubbish. The “paid what you’re worth” fairytale ignores power and disregards policies that have made inequality skyrocket. Like the demise of antitrust enforcement, which has given big corporations the power to set prices, make record profits, and reward their CEOs unprecedented compensation. This fairytale ignores the attacks on labor unions that have reduced union membership from over a third of all private-sector workers in the 1950s to just 6 percent today. All of this resulting in a massive shift in power and wealth from workers to owners.
Those at the top justify their staggering wealth, and they’re “worth,” three ways:
The first is trickle-down economics. They claim that their wealth trickles down to everyone else as they invest it and create jobs. Just wait for it… But as we know, wealth at the top has soared for decades and nothing has trickled down.
The second is the “free market.” They talk about market forces beyond their control. But remember, markets are created by rules. These rules don’t exist in nature; they are human creations. The political power of the wealthy has let them change the rules for their own benefit — busting unions, monopolizing industries, and reaping big tax cuts.
The third is the idea that they’re superior human beings. Sure, they may be talented but this doesn’t justify the staggering amount of wealth they are now taking home. Nor does it justify the amount of wealth they will pass down to heirs. The biggest intergenerational transfer of wealth in history will occur over the next 25 years as the richest 1.5% of Americans hand down roughly some $36 trillion dollars to their children and grandchildren. That doesn’t make those heirs superior. It makes them lucky.
The reality is there’s no justification for today’s extraordinary concentration of wealth at the very top. Or for how little people are paid at the bottom.
The “paid what you’re worth” myth has proven to be a cruelly effective way to put the blame on workers for not getting ahead — while giving the rich and powerful cover to rig the game for their own benefit.
It is distorting our politics, rigging our markets, and granting unprecedented power to a handful of people while millions of Americans struggle to get by.
Don’t fall for it.
of course he is right, and i have said so. but he doesn’t say what we can do about it.
lucky we are not to have been born 3000 years ago in Egypt. or 30 years ago in Egypt.
looks like there must be some trickle down, or i missed the revolution. it wasn’t televised you know. but there are also hideously unjust poverty. stupid poverty, caused by criminals in suits. and in Congress. all this could be cured by just making predatory business illegal. but Congress, you know. anyway it wouldn’t take “making the rich pay.”
i don’t have time to waste on envy.
Rich people always say that, but they make a point of envying poorer people.
If I were counting it as an investment, it depends on how you look at it. Starting three blocks back of everyone, I eventually got one, master of science, bit of a phd. I don’t how you would measure that, quantify that, because strictly as a business investment it was a bad one.
It was time and borrowed money wasted …
Life is largely a crap shoot, dontchaknow.
On student loans, having effective credit assessments is hard for students. I do think these loans need to be dischargeable, but lenders would be tightening in ways that many would find objectionable. If the premise of these loans was very reliable that the education purchased with them gives the individual a much brighter financial future, there would be fewer demands for relief and reform. Higher education isn’t working well enough to fund it so heavily on credit. There needs to be cheaper options and these probably will require a change in attitude by credentialing gatekeepers. This might be underway now.
My neighbors’ daughter left college her first year to work at the kind of job that was “requiring” a degree pre-pandemic. Yes, she won’t have the experience of four college years, but her current employer doesn’t mind. It will be interesting to follow if subsequent employment possibilities value her actual experience as fully offsetting a lack of degree. Anecdotal, sure, but I suspect there will be a rush towards this because it will work well enough to continue and expand. This will put many institutes of higher education under some pressure, but that should sharpen their product. As for getting what you are worth, well the important perspective is that of the employer. An employee can ask them what would make them more valuable, but they often struggle with that question and sometimes from bad intentions. Self -employment or job hopping has to be considered as sort of the normal default I think.
Eric:
Hey, I split the comment. It reads better and easier. It is a good comment addressing the issue. Thanks for the comment.
“things employers value”
Employers are allowed to expect employees to provide “human capital” without the employer having to make the investment in creating human capital. The cheaper option to higher education that Eric suggest should come from subsidies provided by those employers who demand degrees.
Higher education is far more expensive today than it was 60 years ago when I was choosing a college, and I had no concern then for making a living. My passion after 12 years of education was physics, the best of my secondary education courses, although I had some formative library experiences that should have suggested something entirely different to me.
I put no thought into how I might a living at that point in my life.
Of my three closest friends in college, two became lawyers, and did well for themselves, but back then even a legal education was not super expensive. Two closest friends in high school became physicians and also did well, and that cost a bit more I think. But nothing like what higher ed and advanced degrees cost now. I wonder if young people today generally put more thought into ‘career choices’ now than I did when I was young.
In my adult life, I have spent more time ‘working’ in libraries than I did in the career I finally settled on, which was writing software, but I spent nothing at all to learn how to do library work, which was all OJT & free. However, I would certainly agree that people should not be required to spend outrageous sums on education (unless they – or their parents – can readily afford to.) In any case, higher education has become far more expensive than it should be. Blame the higher ed ‘industry’ for that.
OTOH, I paid nothing to learn how to do library work, just as I am paid nothing to perform it. Yet the folks in the medical community I serve assure me from time to time that my service is ‘invaluable’.
Mrs Fred & I are wealthy enuf that I can endulge my penchant for ‘librarianship’ to my heart’s content, because it’s clear to me that, for my local hospital and the other hospitals around the country our library supports, someone has to do the work. Our hospital just isn’t willing to pay to have the work done. (It seems to require computer & internet-browsing skills that few have.)
I should add that we also depend on the services of other medical libraries around the US & Canada, who mostly have paid staffs, to provide our hospital staff with material that we require, at no cost to us. This is how many medical libraries operate, just not strictly with volunteers as in our case.
So, some things in life actually ARE free.
(It seems to require computer & internet-browsing skills that few have.)
That is, … and are willing to provide them & not get paid to do so.