Why Do Some Jobs Pay So Little?

(Photo: The Eyes Of New York)

A recent one-day strike by fast-food workers has called attention to the low wages in the industry. James Surowiecki offers one reason that the issue’s visibility has increased recently:

Still, the reason this has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have. Historically, low-wage work tended to be done either by the young or by women looking for part-time jobs to supplement family income. As the historian Bethany Moreton has shown, Walmart in its early days sought explicitly to hire underemployed married women. Fast-food workforces, meanwhile, were dominated by teen-agers. Now, though, plenty of family breadwinners are stuck in these jobs. That’s because, over the past three decades, the U.S. economy has done a poor job of creating good middle-class jobs; five of the six fastest-growing job categories today pay less than the median wage. That’s why, as a recent study by the economists John Schmitt and Janelle Jones has shown, low-wage workers are older and better educated than ever. More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.

Given that reality, Surowiecki writes, raising the minimum wage by a few bucks a hour won’t fix the problem. His prescription: more truly middle-class jobs and an expansion of the social safety net. “Fast-food jobs in Germany and the Netherlands,” he writes, “aren’t much better-paid than in the U.S., but a stronger safety net makes workers much better off.”


mike

Patrons of these places need to get use to paying a little more for dinning out or fast food to help provide a living wage and some type of bennifits. if not eat at home . Most grocerie stores provide decent wages and bennifits...exsept for the big elephant in the room, wallmart,

Paul M.

Wait, so he is advocating for a taxation program to support a better safety net, as opposed to just requiring that employers pay higher wages, making the "improved safety net" unnecessary? Isn't that just saying "We know you are paying a completely unlivable wage, but we are going to let you do it as long as we can fund the programs that will, incompletely by the way, replace that absence of increased wages"?

Why is he suggesting jumping the fence, running around the house, and entering through the window when we have a key to the front door?

caleb b

Living wage: please define it first. Enough for one person to pay rent in a decent apartment, plus a car, insurance, health care, food, gas, and clothes (retail or thrift store prices)?

The concept of a living wage is too subjective for me. In Dallas, all that stuff could cost $30k/yr (easily). For 40hr/week, 52 weeks a year (I'm assuming a living wage shouldn't include 2 weeks paid vacation, but maybe I assume too much), that is $14.42/hr. Is that a living wage?

Or is it that a living wage should support a family of four?

caleb b

Maybe some people should understand that if you have no skills and no education, you will probably need to work (gasp!) MORE than 40 hrs/week. I've checked, it is not illegal to have TWO jobs, or three. FYI - "rich" people work more than 40 hrs/week all the time.

Mike MacDonald

Pardon me, but isn't this an economics blog? People are paid what they are worth - PERIOD. If people are underpaid they need to brush up on skills other than two opposable thumbs. If posters are unhappy with what fast-food workers are paid, let them open "Living wage burgers" and charge twenty dollars for a quarter pounder with cheese, and let us all know how it works out!

Tong

@Mike-that's very mean of you. I deserve to earn more at a McD job because I have a PhD in theatre in the Victorian era even though what I do at the counter can be done faster and in a more efficient way by a young teenager. When I went to college, I was never concerned about job prospect, I never thought of brushing up skill sets for other jobs, I never thought of saving because I knew that either a minimum wage bill will pass or the taxpayers will take care of my food stamp. I allowed myself to delve deep in victorian age romance (on which I could still lecture you for a few minutes if I could remember a few words from my thesis) and rest of the time I spent partying, travelling. Now you say that I don't deserve minimum wage? I don't care whether it's subsidised by the government, or passed to the consumers to bear or comes from the company's pocket. I need it, so I want it, so someone gotta pay for it. If you say otherwise, you are a mean, insensitive jerk.

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Chiang

This post in quora summarizes the issue well.

https://www.quora.com/International-Economics/Is-the-American-population-unable-and-unwilling-to-accept-global-wage-arbitrage

caleb b

One other note: when you make it easier to be poor (food stamps, free phones, reduced rent, massive disability, 2 years of unemployment, etc.), you get more poor people.

nkt

That means higher taxes for the rich if you want a society more like Germany or the Netherlands. In Canada, our social safety net seems to be a bit stronger than what you have in the US. University education is still somewhat affordable for everyone who wants it.
I think one of the fundamental problems is relying on housing construction to keep the economy going and then allowing rich foreigners to snap up prime real estate, leading to higher rents for everyone else; at least that is the case in Vancouver. Governments should intervene to prevent speculative investments by foreigners into basic necessities of housing, food, clothes, healthcare and education.
I also think that companies like McDonald's, rather than raising wages, could offer subsidized smart phone plans (since they probably could qualify for a major discount from a carrier with their clout and the number of employees who would potentially sign up) , or education so that workers who want it can use the available technology and money towards tuition to acquire new skills and obtain better paying jobs, or perhaps McDonald's will reap the benefits through employees who begin offering insight into improving existing ways of performing work.
I am a finance graduate from a top 30 global university but I feel that there is an over-emphasis on finance/financial services/financial engineering in the global economy, especially North America, Europe and Singapore which is forcing companies to focus on short term gains demanded by shareholders.
How else do you explain the increase in total wealth among the rich outpacing, by a large margin, overall economic growth?
I think the US being the sole superpower has lost focus on the fundamental focus of economic progress; to improve living standards for the majority and leave something for the next generation. The US is stuck in a mode where current consumption is being favored over investment for the future. Faster cars, flashier clothes, more toys, fancier vacations...
Meanwhile a lot of current consumption is damaging the environment and depleting the resources with which to handle this coming crisis in the future.
Science education needs to be ramped up in order to increase the amount of R and D into biotechnology, nanotechnology, environmental technologies and IT.
What I foresee is the US government easing restrictions on highly qualified professionals with technical expertise to immigrate to the US. Hence, the decline of the US is grossly overstated. The US still remains a highly sought after destination for talented individuals from developing countries who want to live in a cleaner environment.
This still does not solve the problem stated in the article but I believe that McDonald's can do some of these things.
One other note is that in Asia, a lot of low income workers are provided free or subsidized housing rather than high salaries. Obviously this is more difficult to implement for older workers who have families but not impossible.
Many of these things can be accomplished through the restructuring of the US tax system which would provide credits for these types of investment in people and at the same time eliminate tax avoiding behavior by rich companies like Apple or rich individuals like Mitt Romney.

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