Posted by: Middleclass Search | September 24, 2012

Wages Part 1

From a system point of view if the desire is to maintain a strong middle-class presence in the United States, then there are two areas in the present economic/political system that both require the attention of our leaders and citizens: wages and regulations.


The first system area needing economic and political attention in order to maintain a strong middle-class is wages. Employee compensation is an area that is not addressed adequately in The Wealth of Nations.  The assumption appeared to be that anyone willing to work and willing to obtain the necessary skills would be sure to find a job.  When The Wealth of Nations was written, the industrial revolution was beginning and this assumption may have had some validity.  In today’s global market the only two options that labor has for leverage in a non-fully employed global labor market are union participation and the minimum wage. Over the years economists have failed to provide any alternatives. Neither of these current options are accepted as very good solutions if you want to maintain a strong middle class in America.

If our economy is to work for the middle-class there needs to be a middle-class wage structure.  If we are to have a middle-class wage structure, the price of a products and services must include the complete cost of materials and the complete cost of labor. Complete labor costs means wages adequate to maintain a middle-class standard of the living which includes the cost of healthcare (corporate or privately paid) and the cost of a retirement plan (corporate or privately paid).

A different way to look at what should be included in employee compensation is to consider the employee in the same light as an item of equipment needed to produce a product or service. The employee requires maintenance just like a piece of equipment. The maintenance includes proper pay (power), healthcare (repair), updating (education), and proper disposal (retirement). For a piece of equipment, all such costs are passed on to the consumer in the price of the product or service; so why shouldn’t the employee’s “total maintenance cost” also be included the price of a product or service?


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