Posted by: Middleclass Search | September 26, 2012

Wages Part 2

Today in America, wages are still linked to labor categories that were defined by large corporations.  As these corporations “go global”, wages for some of these categories have stagnated or decreased. As was noted previously here are only two options that labor has for leverage in a non-fully employed global labor market they are union participation and minimum wage.

The economists have failed to provide us of the way out of this conundrum. From a pragmatic system engineering approach it appears there is a need look at wages. We have been taught that the only way to set a wage is by supply and demand.  I believe it would be difficult for an economist to argue that the wages of some sport figures, entertainers, and many CEOs are established using a rational economic methodology.

CEO’s have found a way around the supply and demand method by using compensation committees. Using the precedent set by CEOs labor can use similar methods to establish salaries in a global market. One method would be to look at the salaries paid for a job 1973 (the Golden Age of the middle-class) correct it for inflation to develop a recommended current salary. The second method would be to look at the current cost of the items that made-up the salary in 1973 to determine the current salary.

These are just two methods of addressing the establishment of a middle-class wage in a global economy.  Perhaps someday economists will provide a better solution.

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