Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Perhaps. But there are lots of cultural and structural factors that can lead lots of people to think that, and for lots of employers (but by no means all) to try to underpay workers. Here are some:
WHAT ONE LEARNS FROM GOVERNMENT PROCUREMENT
1)In public bidding for jobs (e.g., construction, services) governments are required to take the lowest bid. Thus:
1a)Most businesses trying to get govt contracts try to underpay workers (if they are on the up and up and not bribing politicians), and
1b)Most people are aware of this rule, and on that basis presume that price drives most decisions. Thus, they presume the vast majority of business is driven by price, not quality, and, therefore, quality workers are not as much in demand as are workers willing to take lower pay.
WHAT ONE LEARNS FROM HIGH PROFILE BUSINESSES DECISION-MAKING
2)Very high profile moves of some very high profile businesses are consistent with trying to underpay workers. Things such as:
2a)Moving production off-shore--usually (not always) very hard to justify on the basis of quality.
2b)Automating that removes jobs.
2c)Opposing minimum wage, overtime, and workers' comp laws when those laws come under discussion.
WHAT ONE LEARNS BY WORKING IN LOW- AND MODERATE-SKILL JOBS
3)Most people do not work in high-skill jobs. Most jobs are low- and medium-skill jobs. Most employers with such jobs to offer--coffeeshops, temp agencies, retail sales, fast-food, van drivers, delivery people, and so on--see an almost unlimited supply of mostly interchangeable workers, and pay accordingly. An employer who paid more would probably still have lots of turnover and, even if not, would probably not reap any compensatory productivity gain. Because most people are in such jobs, most people will experience being paid as little as possible. Consequently, most people will conclude that most employers want to pay their employees as little as possible--and perhaps even underpay them.
I believe a lot of businesses put worker quality ahead of price. But, looking at the landscape, can anyone of integrity maintain that MOST businesses put quality ahead of price? Most people put price ahead of quality. Why should we expect businesses--set up and run by people--to be different?
Businesses move offshore because the consumer demands lower prices. So if a business can deliver a product of equal quality to the market while reducing the cost to produce those goods, you betcha that they'll offshore it.
Let me put it this way. You have two equivalent products. One costs $5 while the other costs $10. Which do you choose? Yep. For all our yammering about buying domestic, people will go for price every single time.
About ten years ago, the chairman of Intel pointed out a simple fact. Build two identical chip plants in the United States and Asia. The total cost to build and operate the plant in the United States was roughly twice that to build and operate the plant in Asia. And only 10% of the cost difference was in wages. The rest was in either corporate taxes or regulatory requirements. Yet when it comes time for that chip maker to sell to a computer or appliance manufacturer with a far higher price, they can't say, "Well, we make them in the United States. That should count for something." Mind you, I'm not against regulations to protect the environment and worker safety. But the mushrooming of Federal regulations over the past ten years is very well-documented.
The domestic cost of doing business is why corporate taxes were slashed at the beginning of 2018 to EU levels. Because when a country such as Sweden had a corporate tax rate of 22.5% and the US had a corporate tax rate of around 38%, that was an enormous millstone around the neck of manufacturers. Anyone who tries to argue otherwise doesn't know bupkis about business. I'm no Trump supporter, but cutting corporate taxes was indeed the right thing to do. Heck, unless you think it's strictly a GOP thing, remember that Obama proposed cutting them to 28% in 2012.
As far as minimum wage jobs are concerned, it's essentially a red herring. I haven't looked at the statistics in a couple of years, but I do know that minimum wage for full time employees over the age of 25 constitutes a tiny percentage of the working population, something like 1/2 of 1%. The very large majority of minimum wage workers are instead either kids or service workers who gain substantial income by means of tips. Just last year, New York City attempted to raise the minimum wage for restaurant workers and the entire workforce went nuts--chiefly because they made more money on tips than a $15/hour wage could provide. If you make minimum wage past age 25 and don't wait tables or something similar, then you have likely made some terrible life decisions.
It boils down to this, OP. A company is not a commune or an entitlement program. You are getting pretty much what you're worth. If you want to earn more money, learn skills, make yourself invaluable to your employer, and leave if your efforts don't bump your W2. Have constant bottom-line awareness on how your daily work affects your employer's revenue and profitability. Because if you're earning a crappy wage in a job market with historically low levels of unemployment, then that's all on you.
Last edited by MinivanDriver; 06-10-2019 at 08:22 AM..
Businesses move offshore because the consumer demands lower prices. So if a business can deliver a product of equal quality to the market while reducing the cost to produce those goods, you betcha that they'll offshore it.
I did not say otherwise. Don't understand your quoting me and repeating my point.
Quote:
Originally Posted by MinivanDriver
Let me put it this way. You have two equivalent products. One costs $5 while the other costs $10. Which do you choose? Yep. For all our yammering about buying domestic, people will go for price every single time.
I somewhat disagree. MOST of the people MOST of the time care almost solely about price. But SOME of the people SOME of the time care more about quality. I know this to be true because I often do not take the lowest bid for work on my house, or work on my body, or where to buy my books, or . . .. You make a point similar to mine, but make it far too extreme.
Quote:
Originally Posted by MinivanDriver
About ten years ago, the chairman of Intel pointed out a simple fact. Build two identical chip plants in the United States and Asia. The total cost to build and operate the plant in the United States was roughly twice that to build and operate the plant in Asia. And only 10% of the cost difference was in wages. The rest was in either corporate taxes or regulatory requirements. Yet when it comes time for that chip maker to sell to a computer or appliance manufacturer with a far higher price, they can't say, "Well, we make them in the United States. That should count for something." Mind you, I'm not against regulations to protect the environment and worker safety. But the mushrooming of Federal regulations over the past ten years is very well-documented.
The domestic cost of doing business is why corporate taxes were slashed at the beginning of 2018 to EU levels. Because when a country such as Sweden had a corporate tax rate of 22.5% and the US had a corporate tax rate of around 38%, that was an enormous millstone around the neck of manufacturers. Anyone who tries to argue otherwise doesn't know bupkis about business. I'm no Trump supporter, but cutting corporate taxes was indeed the right thing to do. Heck, unless you think it's strictly a GOP thing, remember that Obama proposed cutting them to 28% in 2012.
Again, nothing in my quoted material disagrees with you. If you think back to 1992, big corporations were signed on for national health care. Why? Because they were having to pay employees' health care while their Euro competitors did not. But the AMA, big pharma, and insurance companies collaborated with Hilary Clinton incompetence to derail it. When Obama got in office, the lesson he learned was "Don't anger the insurance companies!" Thus, he created the unwieldy beast of Obamacare, which is really "InsuranceCompanyCare" in that everyone has to pay insurers. National Republicans, blinded by their hatred of Obama, repeatedly attempt to destroy that program and put nothing in its place, which would undermine the health of many and seriously weaken those companies. It's a lose-lose proposition. Worse health, weaker companies. Yay? We really live in BIZARRO-land.
Quote:
Originally Posted by MinivanDriver
As far as minimum wage jobs are concerned, it's essentially a red herring. I haven't looked at the statistics in a couple of years, but I do know that minimum wage for full time employees over the age of 25 constitutes a tiny percentage of the working population, something like 1/2 of 1%. The very large majority of minimum wage workers are instead either kids or service workers who gain substantial income by means of tips. Just last year, New York City attempted to raise the minimum wage for restaurant workers and the entire workforce went nuts--chiefly because they made more money on tips than a $15/hour wage could provide. If you make minimum wage past age 25 and don't wait tables or something similar, then you have likely made some terrible life decisions.
Not really. Changes in the minimum wage lead to changes in the pay for jobs slightly above the minimum wage. So changes ripple through the low-skill and medium-skill parts of the labor market. So, the number of workers whose pay is connected to the minimum wage is far larger than the number of workers being paid minimum wage.
Quote:
Originally Posted by MinivanDriver
It boils down to this, OP. A company is not a commune or an entitlement program.
True.
Quote:
Originally Posted by MinivanDriver
You are getting pretty much what you're worth.
You may be right. But, this is the point under discussion. Asserting an answer does not establish an answer. If I said "No one gets paid what they're worth" it would not establish that no one gets paid what they're worth.
Quote:
Originally Posted by MinivanDriver
If you want to earn more money, learn skills, make yourself invaluable to your employer, and leave if your efforts don't bump your W2.
Those would all be good ideas, if this were purely an individual matter. But learning more skills does not help if the companies are outsourcing the jobs one can do with those skills. Making yourself invaluable to your employer assumes you have a job already and work in a place where the employer is looking for value and will pay for it. Some will, some won't. Leaving is not always an option if you have other commitments--spouse, kids, can't pick up and move, live somewhere near older parents, and on and on. These constraints don't mean that employers MUST pay more, but they do explain why people may not leave as easily as one would predict based purely on labor economics.
Quote:
Originally Posted by MinivanDriver
Have constant bottom-line awareness on how your daily work affects your employer's revenue and profitability. Because if you're earning a crappy wage in a job market with historically low levels of unemployment, then that's all on you.
Again with the historically low levels of unemployment. The civilian labor force participation rate is 62.8%, down from a 1997 high of 67%. Some of the 37% are students, some are homemakers. A chunk of the remainder are discouraged workers--those are people who have given up looking, and thus do not count in the unemployment rate. For this reason the unemployment rate is not an ideal indicator of labor market strength. When times are good for labor, the unemployment rate may rise because more discouraged workers are coaxed into looking for jobs. When times are bad for labor, the unemployment rate may fall as more people become discouraged workers and stop looking for a job, which technically (i.e., in Bureau of Labor Statistics analyses) removes them from the denominator in the calculation of the unemployment rate. In other words, maybe things are more complicated than an off-the-cuff remark may suggest, especially when that remark blames people for having low wages instead of complimenting their willingness to work for something, even if its pennies, instead of staying home and lazing the day away.
I did not say otherwise. Don't understand your quoting me and repeating my point.
I was agreeing with your premise. You realize that, correct? I just felt that the OP was detached from reality.
I somewhat disagree. MOST of the people MOST of the time care almost solely about price. But SOME of the people SOME of the time care more about quality. I know this to be true because I often do not take the lowest bid for work on my house, or work on my body, or where to buy my books, or . . .. You make a point similar to mine, but make it far too extreme.
Sure. It is an axiom of business that all markets divide in low-cost and high-touch. And very few just will buy the cheapest item around regardless of quality. But assuming a basic standard of quality, low price wins. And this is especially true if you're dealing with a purchasing manager in a B2B situation.
Again, nothing in my quoted material disagrees with you. If you think back to 1992, big corporations were signed on for national health care. Why? Because they were having to pay employees' health care while their Euro competitors did not. But the AMA, big pharma, and insurance companies collaborated with Hilary Clinton incompetence to derail it. When Obama got in office, the lesson he learned was "Don't anger the insurance companies!" Thus, he created the unwieldy beast of Obamacare, which is really "InsuranceCompanyCare" in that everyone has to pay insurers. National Republicans, blinded by their hatred of Obama, repeatedly attempt to destroy that program and put nothing in its place, which would undermine the health of many and seriously weaken those companies. It's a lose-lose proposition. Worse health, weaker companies. Yay? We really live in BIZARRO-land.
Again, I agree with you.
Not really. Changes in the minimum wage lead to changes in the pay for jobs slightly above the minimum wage. So changes ripple through the low-skill and medium-skill parts of the labor market. So, the number of workers whose pay is connected to the minimum wage is far larger than the number of workers being paid minimum wage.
Even in that situation, we're discussing workers who are either entry-level or low-skill, or a combination of both. But to be accurate here, the hue and cry has been not about those workers you discuss, but rather minimum wage itself. What's more, arbitrarily raising the minimum wage is thought by many to actually lower overall employment, ultimately hurting the people such an increase is intended to help. Not to mention the effect such an increase would have on a small business such as your local restaurant. The owner of that place has razor-thin margins as it is.
You may be right. But, this is the point under discussion. Asserting an answer does not establish an answer. If I said "No one gets paid what they're worth" it would not establish that no one gets paid what they're worth.
Actually, I've seen plenty of people who were paid more than they were worth--and vice versa.
Those would all be good ideas, if this were purely an individual matter. But learning more skills does not help if the companies are outsourcing the jobs one can do with those skills. Making yourself invaluable to your employer assumes you have a job already and work in a place where the employer is looking for value and will pay for it. Some will, some won't. Leaving is not always an option if you have other commitments--spouse, kids, can't pick up and move, live somewhere near older parents, and on and on. These constraints don't mean that employers MUST pay more, but they do explain why people may not leave as easily as one would predict based purely on labor economics.
But this is a complex matter. Sure, a company is outsourcing those jobs for a number of reasons, not all of which are necessarily because of a lack of available workers. But, in the end, the individual is all that matters in this equation. It is not up to a company to increase pay for a worker whose ability or skills do not justify it. Instead, it is incumbent on the worker to prove as valuable as possible to any potential employer, including the one where he currently works. As far as the other commitments are concerned, you're absolutely right. But those are not the concern of the employer. The problem with the OP's thesis is that he is making the employer responsible for low pay rather than his own inability to demonstrate greater value to his employer.
I disagree with the other aspect of your point regarding the constraints on moving. We live in a country that, historically, is made up of people who moved elsewhere for brighter economic prospects. Unless you are 100% native American, you have an ancestor who walked away from his or her homeland, made sacrifices, and came here for greater opportunity. This continues to this day.
Even in our own history, a constant internal migration has taken place in this country's history, with people picking up and moving someplace where the prospects are better, often at personal sacrifice. So if you are currently living in a depressed economic area such as the Mississippi Delta, West Virginia, or a Rust Belt city, things won't be getting better for you and your family any time soon. It's not as if we have suddenly grown taproots. I certainly don't claim it to be easy, but it's far better to move where the work is than wait around for things to get better.
And even if you stay in place, there are skills training programs galore. I do a lot of consulting in the manufacturing sector, and I can say that the #1 problem they face is simply finding qualified workers. Some have resorted to actually teaching skills to candidates whom they would have never considered hiring in the past. Have a good driving record? Get a CDL. Spend twenty minutes talking to trucking lines and they'll tell you how excruciating it is to find drivers. That's why almost every truck on the interstate has a want ad plastered on its back door.
Again with the historically low levels of unemployment. The civilian labor force participation rate is 62.8%, down from a 1997 high of 67%. Some of the 37% are students, some are homemakers. A chunk of the remainder are discouraged workers--those are people who have given up looking, and thus do not count in the unemployment rate. For this reason the unemployment rate is not an ideal indicator of labor market strength. When times are good for labor, the unemployment rate may rise because more discouraged workers are coaxed into looking for jobs. When times are bad for labor, the unemployment rate may fall as more people become discouraged workers and stop looking for a job, which technically (i.e., in Bureau of Labor Statistics analyses) removes them from the denominator in the calculation of the unemployment rate. In other words, maybe things are more complicated than an off-the-cuff remark may suggest, especially when that remark blames people for having low wages instead of complimenting their willingness to work for something, even if its pennies, instead of staying home and lazing the day away.
I'm quite familiar with the BLS data, but it also misses out some key drivers that have zip to do with discouraged workers. For example, the number of Baby Boomers leaving the workforce. Or perhaps the number of two-income households where the spouse decides he/she no longer has to work, again a function of age as the expense of raising children begins to wane--in itself a product of our overall aging population. Or, given the notable decline in household debt service ratios (Not overall household debt) to levels not seen since the 1970s, perhaps enough couples have decided it's no longer necessary to be two-income families in order to make ends meet. All of these factors could easily explain why the employment-population ratio has declined to the same levels as we had in the mid-80s.
Last edited by MinivanDriver; 06-10-2019 at 11:48 AM..
Business Owners: Is it true that most business owners like to underpay their employees?
........
It would be a rare area of the country where a business could under pay employees. If pay is below market, the employees just move to an employer that pays closer to market rate.
If no one else will pay more, then that is fair market rate.
As an employer, I also belive that paying an employee the max I can afford for their skills is worth every penny. No need to low ball when all that does it create moral issues and expensive turnovers. Most employers I know pay in excess of what some employee's true value to the company is really worth just to retain a good employee.
I think this notion of employers underpaying deliberately is based more to way too many workers having some delusional belief in what they think they are worth to the business community.
Whenever I had people who came in asking for unreasonable pay I simply told them I would love to keep you here but I can’t match or come anywhere near the offer you have. I want to wish you good luck with your new endeavor.
No. I don't think businesses like to do it, but they in some cases have to.
It's not just people who are squeezed, it's businesses all over the place. Labor is one of the largest costs, and it's something which needs to be watched expense wise. Think about being responsible for delivering someone elses' paycheck every two weeks - not to mention managing and training them. It's terrifying, especially if it's a larger paycheck.
how am i going to underpay my employees and still retain them?
Move your business to Vermont. Pay there has always been low, as there are few employers and many jobs are tourist service scut jobs. There are people so enamored with the state that they will accept being underpaid just to live there. Something similar happens in Key West.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We really live in BIZARRO-land.
