Americans have a funny idea about what the middle class is compared to what I know in the UK.
He talks about people working in meat processing as being middle class if they get a good wage. WTF? In my mind middle class jobs are doctor, lawyer, professor, politician. Then the aristocracy are upper class. I guess you don't have an aristocracy in the US who I don't know what counts as upper class there.
In the U.S., we have four classes: poor, middle, upper middle, rich. Poor is if you're on welfare (excluding Social Security). Nearly everyone else is middle class. Most doctors or lawyers would consider themselves upper middle class, but so would say a former construction worker who bought his construction business and now pulls in similar income.
Very few people consider themselves "upper class" or "rich" and not for altogether invalid reasons. First, people compare themselves to the people around them, not against the whole population. People who you might expect to self-identify as "rich" have tremendously less occurrence of single-parent households, which drags down the national median household income of $50k/year. The national median household incomd for a married couple with kids is much higher, at $80k. In a major metro area, say DuPage County in the Chicago suburbs, the median household income for a married couple is over $100k/year. Second, it's difficult for people to consider themselves rich when even with a $200k/year income, their kids might have to take out student loans (top-notch American schools can cost over $50k/year). At the extremes, this phenomenon leads to some people working on Wall Street in New York self-identifying as upper middle class. The median price for a two-bedroom apartment in Manhattan is $1.35 million. It's hard to call yourself "rich" even making $250k/year HHI when you can't even afford a modest home near your work!
Yep, and I think there's a hump that's in the $100-300k range where you start really socking away money for retirement and get your investment portfolio started which siphons money away from your raw purchasing power. In that hump your purchasing power doesn't increase linearly with income like it did before which contributes to the feeling of... futility maybe? Like, man this is a great big pile of cash and all I'm doing is saving it for when I'm 65. I still can't buy a house. What am I doing with my life?!
Yep. I watch those house hunting shows on TV and see houses in like the Midwest that I could buy outright with what I paid as a down payment on my house. But then... I don't want to live in the Midwest. :) And if I did live there, I probably would not have made a big enough salary to get that much cash in the first place. Catch-22 I guess.
In America, the majority of the country self-identifies as middle-class, and in conversation and political rhetoric we basically use it as a synonym for "normal people." Not that the UK is wrong, but I think our usage matches the name a bit better. Doctor/lawyer-type professions are a bit exclusive to call them the middle.
If someone is trying to pull statistics, "middle class" is defined by income to usually be either the middle 3 quintiles (60%) of the population, or an income between $25k-ish and $200k-ish. Doctors, Lawyers, etc. are usually on the top end of that range, and called upper-middle class.
If you are using the mean for the average (which is quite common), then it is completely possible for most people to have their IQ be above average (not saying it is, just saying there's nothing mathematically wrong if it is).
I am from the US and when I hear fast food workers being referred to as middle class it always surprises me. Can you really afford to rent or buy a house, or buy a relatively new car, or pay on any substantial debt with the income from KFC? I guess more importantly do we really expect that someone should be able to? Should even the lowest paying of jobs be enough to do such things? I know as a kid working a minimum wage job I never expected that I should be able afford more than gas, snacks, and games until I had a "real job". I am curious if our economy could even afford to provide a "living wage" for virtually all jobs.
I didn't realize that minimum wage earners make enough to afford video games. I realize that minimum wage is not much money, but if a KFC worker tunnels her off-time into something other than personal growth, that's a different problem.
Video games are dirt cheap, especially on a per-hour basis. A given game may be expensive, but if you just want "a good game", even $10 can buy you some good stuff if you spend it carefully. Hardware may not be free, but if you don't mind not having the latest & greatest it isn't necessarily expensive compared to other entertainment options either.
I seem to recall reading an article several years ago about how video games are becoming the entertainment of choice for poor people, because it is becoming the cheapest option available (again, especially per hour). And good stuff has gotten cheaper since I read that.
"I never expected that I should be able afford more than gas, snacks, and games until I had a "real job"."
Rent/mortgage is notably absent from that list, so presumably they do not expect a minimum wage earner to be living on their own. With that assumption, it is reasonable that a minimum wage earner is making enough to keep themselves entertained when not working (though ideally they should of course be saving).
Minimum wage really is not built as an independent living wage (let alone a living wage for people that have children, despite what some people think). Some other form of support is assumed.
"Minimum wage really is not built as an independent living wage"
This is exactly what I have always thought which is why I am always surprised to hear outrage about minimum wage jobs that do not provide a living wage yet they seem to think they should...or at least that is what I assume when they propose unions as a "solution".
The purchasing power of a minimum wage salary peaked during the 60s and 70s, which has given many people some very unrealistic ideas on what the minimum wage is for, and what they should be able to do with it.
It isn't just memories of the 60s though, there is some strong "the grass was greener on on the other side" biasing going on. The minimum wage in 1968, in today's money, was $10.56. Hardly the "buy the house in the suburbs, two cars, and raise a family of five" type of salary that many people mistakenly remember it as: http://economy.money.cnn.com/2013/02/14/minimum-wage-history...
Often people outraged about the minimum wage will talk about a "living wage". Living wage, as it is talked about today in "minimum wage outrage discussions" is a horrifically poorly defined concept. Nobody ever mentions just what neighborhood a minimum wage should enable you to live in (Malibu? I'd love to get a minimum wage job and afford a home in Malibu...) or just how large of a family this concept of a "livable wage" should support. Is a "living wage" what it takes to afford rent, with a roommate? Is it what it takes to afford rent with a stay-at-home SO? Afford rent with a small child? Afford rent with three small children?
Even if we bought into the idea of "minimum wage should be a livable wage", we'd have to specify a cutoff for our "livable wage" definition. Right now that cutoff is "is a dependent, has no dependents of their own", but people often act offended at that concept.
Its enough if you're a kid still living at home under the age of 18 :) but you're right about anyone beyond that, I would hope they don't spend the money on video games!
It seems that the UK places a much greater emphasis on social factors when determining class. Class has as much to do with what accent you speak with, where you went to school and what your parents did for a living as it does your bank balance.
Right. Michael Jackson's doctor earned a much different salary from the pediatrician you had growing up. Lots and lots of lawyers earn barely enough to get by, especially these days.
I tend to break "middle-class" from "upper-class" right around the $100,000 salary mark.
If you're making $100,000/year, you're very likely upper class in the U.S. Of course, this doesn't work well in big cities (where the cost of living raises the bar to upper class a bit,) but it's remarkably accurate for most places in the country.
it might be enough to make a 22 yr old in Mississippi upper class, but in no sense of the word is 100k upper class. Especially if you've got a family. I'd say upper class starts where you have enough money to live off the interest. Drs, lawyers, etc are upper middle. And industrial wage earners and most fresh college grads are lower middle. 100-200k earners would be middle middle. Aristocracy isn't really much of a thing. Yeah, there's plenty of "old money", but that falls into the upper class category. As stated in another comment, in the US, it's really the size of you bank account, not your name, or your accent, or where your from, or what school you went to, or what "estate" you live in that matters.
100-200k for households puts you in the top 10%. Individuals, maybe top 5%. How is that not upper class!?
I wish I was even low middle according to your scale...
For reference:
Income in 1999
Households..................................105,539,122 100.0
Less than $10,000............................10,067,027 9.5
$10,000 to $14,999............................6,657,228 6.3
$15,000 to $24,999...........................13,536,965 12.8
$25,000 to $34,999...........................13,519,242 12.8
$35,000 to $49,999...........................17,446,272 16.5
$50,000 to $74,999...........................20,540,604 19.5
$75,000 to $99,999...........................10,799,245 10.2
$100,000 to $149,999..........................8,147,826 7.7
$150,000 to $199,999..........................2,322,038 2.2
$200,000 or more............................. 2,502,675 2.4
Median family income (dollars)..................50,046
Per capita income (dollars).....................21,587
Median earnings (dollars):
Male full-time, year-round workers..............37,057
Female full-time, year-round workers............27,194
Unless you live in a city, I'd put lower-middle somewhere around 45k-90k per household. The kind of range where buying and maintaining one or two slightly used cars isn't a big deal, and the idea of choosing between rent and groceries is alien.
Middle-middle probably kicks in when buying a nice new car every few years isn't a big deal, and your kids all have college funds started.
Upper-middle kicks in when buying a nice german car every few years is assumed, and you plan on paying your kids college tuition without much thought.
I've been hearing a meme going around recently that says that the middle class literally no longer exists.
Pointing people who buy into this idea to >100k workers will get you excuses about college debt, sky-high rent in select US cities, or flat out denial (I cannot count the number of times that Reddit has told me that I do not exist... I should stop going there but reading what some people actually believe can be illuminating.) When they claim that 100k is actually not middle-class but instead the new lower class, then pointing out that it is more than twice the median income in the US will get you objections along the line of "middle class doesn't mean 'less poor than dirt poor'". When asked about people who make two or three times more than 100k, you'll typically get a response along the lines of "people who are self-employed cannot be middle-class, because middle-class is suppose to be something that regular factory workers can obtain."
The "middle class does not exist" idea is not well thought out, and is frequently self-contradictory, but I think there are a few things perpetuating the idea. One aspect is that many people do not want to admit that they are middle class because realizing that they have it pretty good would throw a wrench into their whole "class warfare" thing, which they want to hang onto for fashion reasons. Similarly, it is essential to them that other people are not middle class, and if they self-identify as such then they are necessarily deluding themselves.
That's a weird claim for people to make. $100K for an individual is pretty high compared to the rest of the country! Other commenters are suggesting that it is actually the upper bound for middle class.
I wonder if people are actually answering a different question: whether they personally feel middle class. Where you live will greatly affect this; there's a HUGE difference between $100K in SF vs Pittsburgh.
No, you are definitely not the upper class if you are making 100k. If you live somewhere like Bay Area or NYC you are not even upper-middle class. And usually to be considered upper class you have to have enough wealth to afford not to work at all.
Oh, you mean if you live in one of the two highest cost-of-living areas in the country? Give me a break. 100k puts you in the top 5%. If you choose to live somewhere with an astronomical cost of living, that's fine, you might not have much after rent, but you still have the ability to live there. Most of the country couldn't even afford to.
Well... they might not be able to afford to on the salary they make in most of the country. But they probably could if they made the higher salary that goes with the higher cost of living places.
Average Salary:
San Francisco, CA: $79,000
Austin, TX: $55,000
Iowa City, IA: $54,000
Average House Price:
San Francisco, CA: $637,100
Austin, TX: $200,500
Iowa City, IA: $169,700
(For house prices, I picked CA and a couple other random states and picked the city with the highest average house price for each state listed on http://www.zillow.com. Then found the average salary for each of those places on http://www.indeed.com. I didn't have time to list them all. This is by no means a complete, dead-solid picture... but you might get the idea.)
Also, I don't know if there is a better calculator out there now but I recall this one[1] being passed around back when it was a fairly new trend to hate on the 1%. Currently, $100K puts in at 81% on its scale... or "the top 19%" to use your scale. You would need to make $220K to be in the top 5%.
It's frustrating that the people making these calculators don't state how many working individuals makes up one household. One of the problems I'm seeing in these comments is that some of us are talking about individual income, and some household/family income.
Or for that matter, how many non-working individuals are in the household. A couple making $200K/yr is going to be far better off financially with 0 kids than with 3 kids.
Someone making 100k/year in wages likely couldn't afford to stop working for more than a few years unless they already spent decades saving money. That means they aren't upper class. Someone who is upper class could maintain a high standard of living indefinitely without ever working.
You should move to India then, with 30k salary you will be able to afford a couple of servants and a part-time cook. That will definitely feel like an upper-class living. Unfortunately, your 30k salary won't move with you to India.
I agree for most areas of the US. But for someone living with a family in NYC or the Bay Area, I think this would still be middle class. A lot of this comes down to housing and rent costs.
According to some data I forget where I read (does someone have the citation handy?) a family of 4 needs a household income of $76k/yr to support themselves in the SF Bay Area.
Assuming that that number is accurate, I do not at all feel guilty about calling my tech salary "middle class" when adjusted for cost of living.
In fact, a lot of people (at least in my family) consider 'middle class' to mean 'can afford a house'. By that measure, I'm lower class. I can barely afford rent aroun dhere.
Having lived in the area, I definitely agree. I think on the Peninsula it would be higher. Our federal system doesn't deal with these geographic disparities well, especially when it comes to things like federal taxes and college aid. $120k/year in a place like Mississippi really is wealthy though.
I'd say we split middle class into groups, and the meat processor might be something like 'lower middle', while a professional would be 'upper middle'.
The lower class will never get a mortgage, the upper class will never need a mortgage, the middle class live or die by the mortgage rate. I don't know who said it originally, but that's the most useful way to describe it that I've found.
What percent of the population has those jobs? And what's the average income of those jobs?
There are 317 million Americans, for example, and the average income is around $50,000. I think these jobs are a small percentage and pay well above average.
> According to the laws of the free market, though, none of that is supposed to matter. All that is supposed to matter is how many people are capable of doing your job.
While by no means do I disagree with the article as a whole, this seems obviously false. Why would you not expect a higher wage for a more dangerous job, even if otherwise it doesn't have a higher skill or knowledge barrier to entry? I know I'd certainly want to make more money shoveling taconite into a blast furnace compared to taking fast-food orders. Given two such jobs at the same wage, I'd take the second one.
the author should have said "capable and willing", not just capable.
I did disagree with the article as a whole though- it was union wages and government enforced monopolies on union labor supply that pushed many jobs to countries with lower costs. What this purely nationalistic view fails to account for is how much wages worldwide have risen over the past 50 years.
This article could be summarized as: "Things were better for working people when this country had strong unions."
A response could be summarized as: "Times, they are a' changin'"
* There are 50% more people in the US than there were in 1965, the year used as an example in the article. Up to 316MM from 194MM [1]. This means more people competing for jobs, which weakens the power of unions. Many of those people are immigrants from countries where the US dollar goes a long way. It's hard to bargain when there are dozens of applicants lined up, many of which have at least a two year degree.
* Market consolidation happened. This means that workers can't easily move to another job if they don't like their wages. Consolidation also means more competition with big enemies and fiercer battles for margins. Small companies have room to negotiate. Big companies live and die by quarterly earnings reports, and lowering wages is always a convenient go to.
* Unions cause obvious financial problems. Most unions do far more good than harm. But there are multiple examples of cutting open the golden goose. Many unions have collectively bargained too well, nearly bankrupting their employers with poorly calculated pensions and benefits. Once a union fights hard to earn a concession they can almost never give it back, no matter how damaging it becomes.
Unions are not bad things. Corporations have a fiduciary responsibility to get as much work out of employees for as little compensation as is practical. It's good to have that balanced by organizations who have a responsibility to their members to get as much from the corporation as is practical.
The lack of unions and organized labor isn't what's ailing the middle class of this country. Capitalism is a greedy optimization function. At the extremes it doesn't do "middle". Not to discuss a different topic, but ideas like basic income combined with increased automation could be like a collective bargaining for every citizen. By making work effectively optional, employers will lose some of their leverage and employees won't have to be on the defensive.
> Corporations have a fiduciary responsibility to get as much work out of employees for as little compensation as is practical.
Only in the current backwards mindset that your employees are an expense.
Properly managed people are capable of amazing things, and can be turned into an asset easily.
In theory the prevalence of white collar work should make this easier, but the stock market has turned everyone into thinking of just the next quarter. And honestly you will never get a raise out of an employee in the first quarter.
Only for unsolved problems, and only if you can actually afford it (both mostly mean competition is limited or non-existant).
Otherwise, that won't work. It's a matter of time (decades, probably, but limited) until IT work turns into that as well. There was a time when helpdesk work was a well-paid satisfying job. Unions were merely a consequence of effectively 100% employment, and a pretty horrible one at that.
We're returning to the middle ages, it's as simple as that. I don't mean technologically (the middle ages weren't all that primitive, they had knowledge, they just didn't have any economic application for it in a lot of places. But look at the cathedrals and trading houses they built : the problem was not that know-how had disappeared entirely, it just wasn't useful in 99% of places). I mean the employment situation : 95%+ unemployment (if you don't count subsistence farmers, and you shouldn't).
> Only for unsolved problems, and only if you can actually afford it (both mostly mean competition is limited or non-existant).
You are taking a very naive viewpoint of work. If you abstract everything away, of course it is impossible to find value in your employees.
Lets take a simple example, say a Walmart employee who stocks shelves. Walmart will figure out how efficient they think a person should be, lets say they determine it should take 20 minutes to stack a shelf.
Now lets take Bob, Bob can do a shelf in 15 minutes without too much effort. Unless Walmart finds a way to encourage Bob to go above and beyond, Bob will never do 15 minute averages, why would he?
By treating Bob as an expense you have thrown away 33% of your capacity. The difficulty becomes finding the Bobs and deducing how to encourage them properly.
> Corporations have a fiduciary responsibility to get as much work out of employees for as little compensation as is practical.
This is a myth. Under the prevailing (Delaware) law, corporations actually have a lot of leeway in this regard. If corporate executives wanted to pay more, they would be totally entitled to do so, and lawsuits wouldn't be able to stop the practice. What they would have to worry about is the private equity companies. An otherwise functioning business paying higher salaries than absolutely necessary could be a ripe takeover target.
Even if it were true, it would not be a tall order for a company to tell their shareholders that paying their employees more, or giving them more PTO, allowed the company to ultimately extract more value from the employees.
A world in which this strong notion of fiduciary responsibility actually exists is not a world where Google pays their devs minimum wage. They would still pay them more than is "naively necessary" despite this hypothetical fiduciary responsibility.
>Stanley’s wages would be the equivalent of $17.17 today — more than the “Fight For 15” movement is demanding for fast-food workers. Stanley’s job was more difficult, more dangerous and more unpleasant than working the fryer at KFC (the blast furnace could heat up to 2,000 degrees). According to the laws of the free market, though, none of that is supposed to matter.
Employee wages are governed by supply and demand in a free market- ie, outside of government interference, unions, etc.
|According to the laws of the free market, though, none of that is supposed to matter.
I'm surprised this statement made it through editing. There is a lower supply of workers for dangerous jobs hence they are paid better (see any number of dangerous jobs).
Sure, but a job being more difficult, more dangerous and more unpleasant should result in a lower supply of workers for that job. If two jobs pay the same, a worker will choose the less unpleasant one.
"Even in recent years, when no one questioned that the health care tab had been ballooning, city leaders failed to cut costs because of intense pressure from unions. Adverse court and arbitration rulings also stymied the city’s best efforts to cut. The city’s spending on retiree health care soared 46% from 2000 to 2012, even as general fund revenue fell by 20%."
From the article: "The anti-labor movement’s greatest victory has been in preventing the unionization of the jobs that have replaced well-paying industrial work."
This is such a myth. Right now there's a HUGE shortage of skilled labor in this country - most in non-unionized fields:
"Companies that make tangible products are struggling to find candidates for about 237,000 job openings. To put that figure in perspective, it's 89,000 more than the entire U.S. economy created in September."
"But worse, the under 30 crowd simply does not see manufacturing work as an attractive option. That may be due to some misconceptions about new age manufacturing jobs, says Paul Gerbino, head of ThomasNet News.
Many young workers don't even think about manufacturing as a career "because they don't realize that factory jobs are not what they were in the old days," says Gerbino. "Many of these jobs involve sophisticated technology" he told Fortune, and with that comes improved pay. Salaries can start at $50,000 or more, and climb to well over $100,000 a year for skilled, experienced engineers and technicians.
The Thomas.Net study found that 59% of small and medium-size manufacturers are planning to hire skilled trade workers - that is, if they can find them."
Not exactly a ringing endorsement for the author's assertion we need more unions to protect the "working wages".
I'm not buying that - not only from the OP's article, but all of the press fast food workers are getting because they feel they aren't getting paid enough.
From what I know and what I've read, you have to be at least an assistant manager before you'll see the same wages you can make as a skilled worker. Most asst. managers make around $40K a year plus benefits. Just like my article pointed out, most skilled laborers START at $50K and go up from there. If I was 23 and making $50K with a car payment and no kids and no family, I'd be living the high life!
most skilled laborers START at $50K and go up from there
"At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance."
40 hours a week for 52 weeks a year on 10 an hour comes out to 20888 dollars. That's a lot less than 50000.
Got a degree and been there for several years? 40 hours a week for 52 weeks a year on 18 an hour comes to 37440. That's a lot less than 50000.
Those are the mean annual wages. Starting wages are much, much less than the 50000 starting wage (and most of those mean annual wages are themselves less than the "50000 starting wage").
What will it matter what a US-based slaughterhouse worker is paid, when WalMart gets its way and is able to import Chinese-produced, Chinese-slaughtered, and Chinese-packaged meat?
Already much of the seafood is from Thailand and Chinese sources (check the label at your local supermarket).
(And how often is such food tested for antibiotics that are legal there, but banned here? Is a question I would like the answer to...)
Agreed. And also, wouldn't effectively raising the minimum wage to ~$20 and jacking up wages across the board cause the price of goods to increase enough such that a $20/hr wage is below the poverty line? That money has to come from somewhere, and I imagine most employers would elect to pass those costs on to the consumer.
Smaller companies would fold, larger companies would pay more in the short term, and become much more capital efficient in the long-term. When the minimum wage increases, the ROI of replacing people with machines changes, and yields higher R per I.
If just the "companies that can bear it" bear it, you'll get less of those stores, as the expected profit yield per store decreases. Less stores is less competition, which will yield higher prices.
A big challenge with imports is quality, and the quality of imported Chinese food products has been found highly wanting.
It's even considered suspect in China, which is among the reasons Smithfield Foods, an American pork processor, was bought by a Chinese company last year:
> According to the laws of the free market, though, none of that is supposed to matter. All that is supposed to matter is how many people are capable of doing your job.
This statement about the "laws of the free market" is an erroneous claim. Look up "compensating differential."
Nice try. The author tries to give the credit to unions. The author forgets to note that the steel industry was in a 100-year long boom in the United States. We were making the majority of steel used in the world.
He also uses the year 1965. Just a few years later in the 1970's the steel industry in this country started to take a huge dive. Why? They priced themselves out of the market. Steel was cheaper everywhere else.
One look at this graph tells a grim story. Imagine if it went back to the 1900's instead of just 1980.
Can you imagine what the air quality, or lack of was like back then?
Now, just multiply the loss of the steel industry with all of the others that we've lost over the years, like the auto industry. It's easy to see where the jobs went. The rest of the world simply caught up.
Food industry is actually one of the easiest for consumers to change since a good percentage of the population in the US does have access to markets with lots of providers, right? I know it's like that in most (all?) European counties. You go to the supermarket and you decide which pockets you want to fill: the local producer or the guy from the other continent far far away.
It's easier in some counties. For example, while in London, I was able to buy a very good percentage of local food, even bio stuff. As I travelled through Europe last year, I was able to do the same in every country I went to. I was driving around and that certainly helped getting to the big supermarkets but I also went to smallers shops and, while not perfect, it was still possible to choose products based on its origin.
This is kind of obvious but if there are no local producers of something, like bananas in Australia, you have some options: do not buy it (you don't need to eat everything), buy it from a responsible source (tip: buy bananas from the Madeira Island, those are great!), add an exception to your .localignore brain file.
Now here is the problem: since Australia is "protecting" local producers and does not allow foreign grown bananas on the market Australians have to pay ridiculous prices for them, or wait until they rot and pay half the price, or just not have them at all.
I think perhaps in the US, unions have given themselves a bad name with some particularly excessive contracts. I'm thinking of the unions who hold their companies hostage to the point of bankruptcy.
While there's some truth in this article, there's a lot of confusion as well.
Edward McClelland claims that "the laws of the free market", differing compensation for different types of work, and for work of differing degrees of unpleasantness and risk, should be compensated equally. While there are some within present economic circles who'd argue that, if you go back to Adam Smith (insufficiently read by either economists or their critics), you'll find he actually expands at some length on this in Chapters VIII and X of Book I of The Wealth of Nations. Edited for length (the 18th century was a time of considerably more leisurely writing...).
The precis: general wage levels should cover the basic needs of survival, and are established by whether or not general employment is growing, steady, or declining, with the favorability to labor being best in the first and worst in the last case. Compensation for specific types of works varies according to five factors identified by Smith: agreeableness of the work (which reduces pay), cost of acquiring a skill (which increases it), regularity of employment (decreases), trust required of the worker (increases), and the probability of success (less risk: lower reward).
Incidentally, this answers the question of why college professors are relatively poorly paid ("If you're so smart, why aren't you rich?"): while the job requires considerable education, it's agreeable, highly regular, relatively low on the trust metric, and (for tenured positions) carries very low risk. And hence: the pay is adequate, but generally modest. Back to Smith....
First, Chapter VIII notes that it's the increase or decrease in the economic output of a country, not its total size, which sets the prevailing wage rate. A smaller economy growing faster than a larger one will pay better yet have lower prevailing prices. Smith also notes that pay must always be sufficient to cover living expenses, a point somewhat lost on WalMart and McDonalds of late:
A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation....
There are certain circumstances, however, which sometimes give the labourers an advantage, and enable them to raise their wages considerably above this rate, evidently the lowest which is consistent with common humanity.
When in any country the demand for those who live by wages, labourers, journeymen, servants of every kind, is continually increasing; when every year furnishes employment for a greater number than had been employed the year before, the workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid against one another in order to get workmen, and thus voluntarily break through the natural combination of masters not to raise wages....
It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest.
In Chapter X, wage differentials by type of work:
The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others. First, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them.
First, the wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness, of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier....
Hunting and fishing, the most important employments of mankind in the rude state of society, become, in its advanced state, their most agreeable amusements....
Secondly, the wages of labour vary with the easiness and cheapness, or the difficulty and expense, of learning the business.
When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expense of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines....
The difference between the wages of skilled labour and those of common labour, is founded upon this principle....
[I]n order to qualify any person for exercising the one species of labour, ... [custom imposes] the necessity of an apprenticeship.... During the continuance of the apprenticeship, the whole labour of the apprentice belongs to his master. In the meantime he must ... be maintained by his parents or relations... Some money, too, is commonly given to the master..... [O]n the contrary, the labourer, while he is employed about the easier, learns the more difficult parts of his business... It is reasonable ... [that] the wages of mechanics, artificers, and manufacturers, should be somewhat higher than those of common labourers.... This superiority, however, is generally very small: the daily or weekly earnings of journeymen in the more common sorts of manufactures ... are, in most places, very little more than the day-wages of common labourers. Their employment, indeed, is more steady and uniform, and the superiority of their earnings, taking the whole year together, may be somewhat greater.... Education in the ingenious arts, and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and physicians, ought to be much more liberal; and it is so accordingly.
Thirdly, the wages of labour in different occupations vary with the constancy or inconstancy of employment....
A mason or bricklayer ... can work neither in hard frost nor in foul weather... What he earns, therefore, while he is employed, must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments [he awaits employment]...
[Any contractor should be familiar with this circumstance ... Ed]
When the inconstancy of employment is combined with the hardship, disagreeableness, and dirtiness of the work, it sometimes raises the wages of the most common labour above those of the most skilful artificers. A collier working by the piece is supposed, at Newcastle, to earn commonly about double [or more] ... the wages of common labour ... [arising] altogether from the hardship, disagreeableness, and dirtiness of his work....
Fourthly, the wages of labour vary according to the small or great trust which must be reposed in the workmen.
The wages of goldsmiths and jewellers are everywhere superior to those of many other workmen ... on account of the precious materials with which they are entrusted.... Such confidence could not safely be reposed in people of a very mean or low condition....
[Entrepreneurs pay attention to the next .. Ed]
Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them.
*The probability that any particular person shall ever be qualified for the employments to which he is educated, is very different in different occupations.... In a perfectly fair lottery, those who draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession, where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the unsuccessful twenty.
He talks about people working in meat processing as being middle class if they get a good wage. WTF? In my mind middle class jobs are doctor, lawyer, professor, politician. Then the aristocracy are upper class. I guess you don't have an aristocracy in the US who I don't know what counts as upper class there.