The 'You're Paid What You're Worth' Myth
by Robert Reich
It's often assumed that people are paid what they're worth. According to this logic, minimum wage workers aren't worth more than the
By this same logic, CEOs of big companies are worth their giant compensation packages, now averaging about 300 times the pay of the typical American worker. They must be worth it or they wouldn't be paid this much. Any attempt to limit their pay is fruitless because their pay will only take some other form.
"Paid what you're worth" is a dangerous myth.
Fifty years ago, when
Does this mean the typical GM employee a half-century ago was worth four times what today's typical
The real difference is that the GM worker a half-century ago had a strong union behind him that summoned the collective bargaining power of all autoworkers to get a substantial share of company revenues for its members. Today's
Today's CEOs rake in 300 times the pay of average workers not because they're "worth" it but because they appoint the compensation committees on their boards that decide executive pay. Or their boards don't want to be seen by investors as having hired a "second-string" CEO who's paid less than the CEOs of their major competitors.
Or consider that bonuses on
People who park their savings in these banks accept a lower interest rate on deposits or loans than they require from America's smaller banks, because smaller banks are riskier places to park money. Unlike the big banks, the smaller ones won't be bailed out if they get into trouble.
This hidden subsidy gives
According to researchers, this hidden
America's low-wage workers don't have privileged positions. They work very hard -- many holding down two or more jobs. But they can't afford to make major campaign contributions, and they have no political clout.
They don't get hidden subsidies from
The "paid what your worth" argument is fundamentally misleading because it ignores power, overlooks institutions and disregards politics. As such, it lures the unsuspecting into thinking that nothing whatsoever should be done to change what people are paid, because nothing can be done.
Don't buy it.
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Article: Copyright © 2014, Tribune Content Agency.
"The 'You're Paid What You're Worth' Myth"