One of the first things you learn in any intro economics class is the theory of Supply and Demand. What you will be told is that the supple of a product and the demand of a product will impact the price of said product. When prices are higher, suppliers are willing to supply more. When prices are lower, demanders will demand more. The final price will fall where there will be not too much back order, nor too much surplus. In layman’s terms, that is the theory.
However! This theory is VERY simplistic. This theory only takes into account the price of the product and no other factor — such as the factors that go into determining price.
The phrase “supply and demand” arises frequently in discussions about wages — ESPECIALLY the minimum wage. You may hear arguments or comments similar to these:
Burger flippers shouldn’t make as much as an ambulance driver.
Nonskilled people shouldn’t be making more than our armed forces
They should go to college.
They should get a better job.
These are just a few off the top of my head that I have heard or read. The argument that is typically used to defend the person’s stance is … you guessed it! SUPPLY AND DEMAND! I would like to propose that as a privileged argument. Not everyone can be a CEO of fortune 500 company. Besides, if it REALLY was about supply and demand, our teachers and armed forces would be paid better.
The Other Factors
Some of the factors that go into accepting a wage or salary at an organization:
- comparable wages and salaries
- communication expenses
- type of work
- is it entertaining/enjoyable?
- does it come with well being risks?
- is is prestigious?
- human capital (if you have more or less skills than your co-workers)
- fixed expenses
- car payments
- cost of living in the area and surrounding areas
Those are obvious. You may even be able to think of a few more. Yet, there are is one factor is not included in that list and is seldom thought of from those of privilege (for which there are many levels) — the alternative.
If a job is not obtained, what will happen? Will you have housing? Will you be able to eat? Will you have transportation? Will you be able to make your fixed and necessary expenses? The answer to these questions influence people’s wage demand and tolerance toward unemployment.
A person’s access to housing AND alternative housing will influence their ability to attain a higher paying job and thus the demand for such a job. For example, what if you are offered a well paying job, but it requires a move for which they won’t pay for. Before you accept, consider these:
- You will need first and last months rent
- Application fees
- housing permit fee
- down payment for electricity
- moving van
- gas for move
- groceries between then and first check
- transportation to work and errands between then and first check
- mini trip before hand to scout out areas and apartments
- travel expenses
Could you afford a hotel for a few weeks if you couldn’t get an apartment right away? Keep in mind, not everyone has family who can give them a few hundred dollars to get them by until EVENT X. Not everyone has family they can stay with until EVENT X.
Sometimes bad events happen, but you still need a roof over your head, a hot meal in your stomach, and bills to pay. Sometimes you can’t say “no, you must pay me more” because if they disagree then you have to look again which takes time–which you might not have much time. If you are in that situation, it can make it difficult to do the more that is needed for more. If you take that bad paying job, you may not have the money to get a better education — or you may not have the time or energy. You might not even be able to assist your child or dependents in getting educated or trained. Thus, a cycle is started. You can’t so you don’t so you can’t so you don’t so you can’t so you don’t ….
Any person who works what our society deems a full time job should be able to afford the necessities in life — and yes, a smart phone is a necessity in the 21st century, though it can be substituted by other technologies if needed.
An argument against raising the standard wage (minimum wage) is inflation. If the minimum wage is raised than the cost of goods and services will skyrocket … and that is the other issue we have as a society. You should not need an above average salary to afford decent housing, health care, etc. Slum lords shouldn’t be a thing.
To solve all our aliments as a society, we will need to tackle these issues from multiple points: regulation (because some people behave unethically whether it is legal or not) and from ethics education (because some people need to taught that whether an action is legal or not it is unethical).
Tell me what you think!