Doctor Cleveland's picture

    Your Neighbor's Paycheck Is Your Paycheck

    Here's the deal: how much money you get paid is based on how much other people get paid. This is a fact of life. Your paycheck is based on what other people get in other jobs like yours, and what other people in your area make, and what other people with your qualifications make. The price of those people's work sets the price of replacing you if you quit your job. If you make less than they make, it can only be so much less. If you make more than they make, it's only realistically going to be so much more. If you're making too much less than similar workers, it will be cheaper to give you a raise than to replace you. If you're making too much more, it will be cheaper to hire someone else. You may feel like your paycheck is just between you and your boss. But you will always, always be in an important economic relationship with other workers who have other bosses. This basic truth about the world is called "the labor market."

    If other people make more money than you do for more or less equivalent jobs, or if they get some benefits that you don't get, you have two ways of thinking about it. You can think of their pay as a reflection on you, and make everything of a question of self-esteem, or you can think of their pay as a market indicator and make it about money.

    People who look at it as a comparison end up resenting the other workers and wanting to see them lose their jobs, or have their pay and benefits cut. That way the person doing the comparison can feel good because they're making more, or not as much less, than other people, so they can feel like winners. From this viewpoint, it's not about making more money than you're making now, but making more than other people. If you make five hundred dollars a week and other people make five hundred fifty, and they get two paid sick days a month, this mindset says that the someone else should have their pay cut seventy-five dollars and lose the sick days, because they shouldn't be treated better than you.

    People who look at other people's pay as a market indicator, on the other hand, want the people who are making more money to be paid even more. If you are making five hundred dollars a week and get no sick days, but someone down the street with basically the same job makes five-fifty and gets to call in sick two days a month, you should want that person to get another raise, so they make five-seventy-five or even six hundred dollars a week. If they get that much, your boss will eventually have to give you five fifty, and maybe one paid sick day a month, to keep you from quitting and getting a job at the other place. If your boss won't give you a raise, but other bosses keep giving raises to their workers, eventually you will be able to quit and make more money at another job. The point isn't to make more money than someone else. The point is to make more money than you're getting.

    If people at some other company get their pay cut, you get to feel better about yourself. If people at that company get a raise, sooner or later you get more money. In fact, the way it generally works in the second case is that you get more money and that makes you feel a little better about yourself.

    The Republican position is that you should want other people to lose what they have. Why should they get health care? Why should they have a union? Why should they get a pension someday if you don't? The Republican position is that they will take things away from other people, to show those people that they are not better than you. Then, later, they will take things away from you, because they can. What are you going to do about it? Get another job? All the other jobs you qualify for are worse than yours ... wasn't that what you wanted?

    The liberal position is that you should want other people to have good jobs, and for their job to get better, so that yours will get better. If someone gets health benefits and you don't, you should hope that everyone gets health benefits, so that your boss will have to give them to you. If someone else is in a union and you are not, you should hope their union get them a really good deal, because that will raise the market price for your work, too.

    This is a basic fact of life. Workers are in it together, like it or not. Bosses are in it together, even if they never hold a meeting. If someone else's boss cuts their pay, your boss will be able to pay you less. If some else's boss gives them raises, yours will eventually have to give you one, too. This is called "the free market."

    One of the many freakish oddities of our current political life is that most of the people shrieking about the evils of socialism take an essentially socialist position to questions of wages and benefits. The Tea Party doesn't want workers, and especially public workers, to make what the market demands. They want them to make what they deserve, in the particular Tea Partier's opinion, which is always less than the free market price. The Tea Party may worship "capitalism" when "capitalism" means a very small group of people getting obscenely wealthy, but when it comes to everybody else, everybody who works for a living, the Tea Party is just a pack of raging pinkos.

    Remember, any time you hear someone complaining about this or that group being "overpaid," they mean you.

    Comments

    What an excellent post, Doc.  I hope you don't mind if I share it at Facebook.  :)


    I could say so much more....I could mention how my family members complain about union workers and pensions and all that.  But -- lol -- I get the feeling you understand.


    "This is a basic fact of life. Workers are in it together, like it or not. .....This is called "the free market."

    Any American worker who thinks free trade or that NAFTA, or illegal immigration is the greatest thing for mankind; has no common sense or idea how these trade agreements or immigration policies have undermined the free market of the American labor force or movement.

    American labor is a commodity; American labor cannot compete if Corporations want to skew the laws of supply and demand, to favor the Corporations. 

    If the American worker demands too much money or benefits, corporations will just export the jobs or else bring in foreign workers. 

    The Corporations can just import foreign goods and dumb Americans will buy cheaper goods, cutting their own throats, Undercutting there own leverage, unable to make any demands for better wages or benefits. 

    Corporations play us all for suckers, because some Americans are.  


    You forgot one thing. The more industry shipped overseas, the fewer dollars are earned in the US. That means with a tightening money supply ...fewer dollars in the pockets of consumers, business will have fewer customers to make purchases. And inventory can't sit on a shelf forever...the space alone costs money daily as it waits to be purchased. And let's not forget, people have a needs hierarchy to fulfill...food, shelter, clothing...that must be satisfied first before they can consume other products. And that's where the bulk of their money will be spent first. Kind of silly to move everything overseas, ship it back and expect to make a profit.


    Excellent Doctor C ! I think those who cheer on rolling back wages and bene's for public workers aren't aware once the stage is set their own salaries and bene's will come under the axe by their employers. After all, union wages and bene's are the baseline used by private industry. Of course, they play a game with more salary and fewer bene's than union workers, but it all washes out and both earn equilivant salary packages. Unfortunately, the political situation imples workers will have to lose financial ground before the impact of their folly is realized. And then it will be a struggle to get back to a level playing field they should never have surrendered


    C;mon Doc, you're making way too much sense here.  Tone it down a little, won't you?  The masses being paid well?  That's so mid 20th century.  Next you're going to be advocating card checks and other socialistic crap like that.


    I understand your big picture view here, but you underplay a few key factors.

    - With public employee pay, many people making less money have to pay for the public employees that make more. Somehow, when you have to take a paycut or lose your job, you're not real happy about being asked to pay higher taxes for public employee salary increases and benefits. 

    - The Republican position is not socialist and anti-market - they want the market to really come into play. With sky-high unemployment, there are many people who are happy to fill public jobs at far less pay and benefits than the current ones receive.

    - I disagree with your argument that "The Republican position is that you should want other people to lose what they have." That's the Democratic position, which has always been about taking from haves and giving to have-nots. We may be seeing more resentment between people with smaller differences in economic class than before, but Democrats have always played off of resentment of large class divisions.


    but Democrats have always played off of resentment of large class divisions.

    Allow me to introduce you to this excellent book.


    OK, but look one comment down and you see this statement that proves my point:

    " If you want to talk about greed, lift your sights higher to the top 2%."

    So Dems/liberals/anti-Republicans don't appeal to resentment of large class divisions?


    Simply the facts, Patrick.  The top 2% had no problem accepting--no, demanding--a tax holiday while we face major deficits.  When I see them recognizing the need to pay their fair share of taxes in order to keep our country going, I might actually learn to have some respect for them.


    I bet you have some justification for why you think the top 2% deserve their excesses, but for the life of me, I can't imagine what it is.


    No, Ramona, that is NOT "just the facts."

    Terms like "greed," "weath saturating certain classes," your later comment about "fair share" and Verified Atheist's use of the word "excesses" are loaded and subjective, far apart from an objective "just the facts."

    Both of you are wonderful examples of lefties, as I said before, appealing to resentment of class differences, the very thing the good Doctor here chastised Republicans for doing.

    You're also both acting as examples of lefties wanting people that have more to lose what they have, also the very attitude the Doctor accuses Republicans of having/fostering.

    I'm not really defending it from either side. But it's the same tactic, only targeted at different people. Pot, meet Kettle.


    I'll admit that the use of the word "excesses" is loaded, but it's hard to come up with a non-loaded term that accurately conveys the significantly large discrepancies between what the top 2% earn for their 40 (or even 60-80) hours of work versus what the median wage earner earns for his or hers.

    That said, I don't want anyone to lose anything. I believe in the greatest good for the greatest number.

    I think there's a great difference between the type of "resentment of class differences" caused by using the word "excesses" and the type of "resentment of class differences" caused by saying that the poor deserve to die from medical conditions they can't afford to have treated, especially when much of that resentment is only thinly veiled racism. (I'm not arguing that's always the case, just that it's especially odious when it is the case, as with Glenn Beck and his slavery restitution comments.)


     With sky-high unemployment, there are many people who are happy to fill public jobs at far less pay and benefits than the current ones receive.

    But, see, that's the problem.  How low is low enough?  Minimum wage?  Less?  Why, with the kind of wealth saturating certain classes in this country, should anybody be willing to work for less?  This is a game the Republicans want to keep playing.  Just be "happy" you have a job.   Don't pay public employees what you wouldn't pay workers in the private sector. And don't even think about paying workers in the private sector the wages they demanded before we let former American companies go almost 100% foreign.

    What nonsense.  We're talking about reasonable, livable wages.  If you want to talk about greed, lift your sights higher to the top 2%.  We can't keep lowering wages and benefits and still expect a growing, thriving America.  If you think we can, let's hear how it'll be done.  


    There are too many assertions buried in here, and too few arguments, for me to deal with the whole thing.And you have turned this into a discussion of public employees, when the post says nothing about public employees. But in the limited time I have to give to this, let me point out two arguments you make.

    First:

    many people making less money have to pay for the public employees that make more.

    So your problem is that poor people are taxed too much to pay for public services. But wait:

    That's the Democratic position, which has always been about taking from haves and giving to have-nots.

    So now the problem is that rich people are taxed too much for public services. It's wrong to tax poor people, and it's wrong to tax rich people. Forget balancing the budget, I guess.

    Your objection to taxing the rich doesn't make any sense as policy. The rich have gotten tax cut after tax cut over the last thirty years and are currently paying the lowest rates they've paid since the Great Depression. (Both parties cut those taxes for them.) The result of this investors' paradise is the smoking rubble that is America's current economy. Meanwhile, public budgets become unbalanceable. Shifting the tax burden onto the middle-class and poor only makes up for part of the revenue lost to high-end tax cuts, but cuts lower- and middle-class purchasing power so badly that it deepens the recessionary cycle, throwing more people out of work and leading to more revenue shortfalls. It's the most fiscally irresponsible thing possible.

    But of course, you're making a moral case: it's wrong to tax the wealthy. Forget that we're talking about taxing people who now control 24 percent on the nation's wealth at the rates that Clinton taxed them, or Reagan taxed them. It's wrong to tax them! So very, very wrong!

    So increasing taxes on the top 1% or 2% offends your morals, because that top 1% deserves to own fully a quarter of the country. But paying public employees a big $24,000 annual pension is also wrong, because those workers do not deserve it. I'm sure this seems right to you. But I hope you'll understand why some other people don't see that position as even remotely moral.


    Forget that we're talking about taxing people who now control 24 percent on the nation's wealth at the rates that Clinton taxed them, or Reagan taxed them.

    Unfortunately, personally I see a lot of promotion in the liberal blogosphere for reinstating the Eisenhower-era tax rates that JFK thought were bad for the economy, not for Clinton or Reagan rates. If I notice it, surely conservatives do.  It's this wish for overkill that feeds the right's arguments that the commies are coming to take all of the money of the successful and ruin the meritocracy.

    I see very few advocates in the liberal blogosphere for returning to Clinton or Reagan era levels. I really really wish I'd see more. Instead there seems to be great hunger for class war rhetoric giving the right exactly what they want to hear. And even a hunger to put the Clinton team in league with a conspiracy to destroy the middle class.

    I paid a lot of attention in the Clinton era to how many of the wealthy were angry about the income tax rates, I couldn't find many examples. Those rates were carefully calibrated not to be counter productive and they really really worked that way, and the expanded earned income credit at the same time reallly did start to diminish the poverty level numbers. I really find it a bummer that we have to do this class warfare thing when we have a successful example in the recent past that was executed without any of that baggage. But so many on the left seem to think Clintonomics, which I basically just saw as attempting to micro manage economic problems as they appeared, and mostly succesfully, as evil and in league with what ails us now.


    Huh. I have never in my life seen the phrase "Eisenhower era tax rates" in the left blogosphere before now. I'm very accustomed to phrases like "Clinton era rates" and the newer meme "Reagan era rates." I mean, those Eisenhower rates were so bad for growth that the 1950s had a massive sustained economic boom, but I don't see people calling for them.

    Maybe people say that in diaries on Kos, and maybe I spend too much time reading policy wonks like Ezra Klein or Matt Yglesias. But if that's a failing, I'm unlikely to correct it soon. And I never see liberal policy wonks, let alone politicians, calling for that kind of tax increase. So my sense of what "the Democrats want" tends to be governed by that. The left policy wing of the party, the think tanks cats, don't talk about hikes like that, ever.


    FWIW, I have the same experience as you, Doc, and arguably for the same reasons.


    Clintonomics kicked the can down the road, We Democrats are going to suffer for the shortsightedness.

    "But so many on the left seem to think Clintonomics, which I basically just saw as attempting to micro manage economic problems as they appeared, and mostly successfully, as evil and in league with what ails us now.

    What ails us now, is because of lousy trade agreements; we are reaping what Ross Perot warned us would happen if NAFTA was enacted ...That giant sucking sound as industry moved overseas, would destroy the tax base.  

    The tax burden was shifted to the middle class, as industries moved overseas, decent wages left too, Tax revenues significantly reduced, the debt increased.  

    The seed was planted for the TEA PARTY

    Thanks President Clinton, for NOTHING   

    Corporations and Chambers of Commerce convinced the public, free trade would be good for America......How was that supposed to work again? We could by cheaper goods, and the American working class would live happily ever- after?  

    It takes money to run the government of WE THE PEOPLE,

    Corporations are just like everyone else, they don’t like taxes. ......So what did Corporations and Chambers of Commerce do……shifted the paying of taxes onto the middle class.

    A middle class to stupid to realize, that every time they bought that $25.00 TV from a foreign country, or that cheap refrigerator, or foreign car, or washing machine, the dumb working class American was advancing the agenda of those wanting to do away with Social Security, Medicare and  the safety net., all of those programs needs a tax base.

    The sucking sound Ross Perot warned would happen; happened not by accident, but by design . With a destroyed tax base, creating inadequate revenue therefore creating large deficits and eventually enslaving the American worker to compete in the global slave market, to pay back the debt. No money for educating the slave class, no more safety net 

    Now because some dumb NAFTA supporters, couldn’t realize the law of unintended consequences, scheme, the trap was sprung; aided by the Democratic President Bill Clinton  

    Now middle class America, under the banner of the TEA Party movement says, “Taxes are to high” …Well DOH…… Corporations shifted the burden onto YOU, the middle class. 

    Corporations only care about defense, because someone’s going to have to defend Corporations.   

    In Arizona the Republicans are talking about cutting business taxes in order to attract businesses to come to Arizona.  I suppose other States will do the same?  

    Well guess what folks; the taxes the businesses would have paid will not be paid the burden has been transfered onto the working class.  

    That is what our bad trade policies have done, that is what Exporting jobs has done, shifted the burden onto the middle class who is now working for lower wages, generating less taxes to support the people. 

    What a heck of a trade off, can you hear that sucking sound?  Maybe if you kneel down you can hear it?


    Um....go back and read my original response. I'm NOT taking the full Republican position or making moral arguments or saying that the rich shouldn't be taxed, though everyone seems to want to put those words in my mouth.

    My point was that some of your observations needed more qualification or needed to recognize that the tactics you accuse Republicans of are just Democratic tactics turned in a new direction.

    Just because I don't drink the leftist Kool-Aid doesn't mean I'm swilling the stuff from the Right.

    You are correct that I inserted "public" into this. My bad. I kinda had that on my mind since that's the big crisis in Wisconsin and Ohio at the moment.


    I'm NOT taking the full Republican position or making moral arguments or saying that the rich shouldn't be taxed,

    You're also both acting as examples of lefties wanting people that have more to lose what they have,


    OK, I'll try again.

    You state: "The Republican position is that you should want other people to lose what they have."

    The immediate response that pops in my head is,"That's what Democrats suggest all the time about the rich!"

    So I note that this is the same attitude lefties have toward the wealth of the upper class. Pot, kettle and all that.

    Your commenters object, saying basically, "No we don't," while throwing around loaded language that supports my point. "Yes you do," I say back. Somehow that makes me the enemy voice of the Republican party, I guess. Heaven forbid that anyone might suggest that motives should be examined by everyone.

    Pointing out that both sides are guilty of fueling and feeding off of class resentment does not make me a Republican fanatic, or even sympathizer. A foul is a foul is a foul, regardless of what team you're rooting for.


    Okay, I'll try again.

    You did not, in fact, say what you now claim to have said. You did not make a claim that both parties traffic equally in divisive rhetoric or, as you put it, taking away what others have. You said this:

    I disagree with your argument that "The Republican position is that you should want other people to lose what they have." That's the Democratic position, which has always been about taking from haves and giving to have-nots. We may be seeing more resentment between people with smaller differences in economic class than before, but Democrats have always played off of resentment of large class divisions.

    There's no "both sides do it" there. You plainly say that this is "the Democratic position," not a position that both parties take. Your later claims that you were just saying that I was a pot, or a kettle, or whatever kitchen appliance you purport that I am, are not borne out by what you actually wrote.

    On the other hand, you did ignore the actual wording of my original post. That post makes an argument in general terms about the way the labor market operates, and the ways in pay cuts to other workers leads to one's own pay getting cut.

    Rather than responding to the general point, or indeed to any of the arguments actually put forward in my post, you fixated on a specific instance (albeit a topical one) in which you think workers' pay should be cut. Then you list a bunch of reasons for why those workers should be forced to take cuts. You clearly aren't looking at both sides of the question; you put all your energy into arguing for workers to lose wages or other compensation. You don't seem to have met an argument for cutting workers' pay that you don't like.

    And of course, you ignore the basic problem that my post puts forth, that it's impossible to cut those people's pay without affecting others'.

    Several other commenters responded to you as if you were a conservative because you put forward a list of arguments for cutting workers' pay (but no arguments against it), and because you demonized Democrats as people who appeal to class divisions (and despite your later change of song, because you denied that it was the Republican position). In short, you got taken for a conservative because everything you contributed to the thread made you sound like one. You can claim that you aren't, but dude, there are Kool-Aid stains all over your chin.


    Fair enough, that my original point was defending Republicans vs. Democrats. But note that I started by noting your overall point and saying you underplay a few factors. Not that the whole thing was wrong, that you underplay a few factors. Your original post was strongly anti-republican and I offered some contrarian points to offsetand temper  it.

    Yes, my position became more even over time. I became more focused on having folks on the left understand that they do the exact thing you accuse Republicans of. My challenge was to the premise that Republicans want people to lose what they have, but Dems don't. If the second part of that premise doesn't hold, the whole thing fails. I don't think Part I is true overall, though it can be debated and is true in some petty and mean-spirited circumstances. The second part is obviously false.  Class resentment is a card Dems play over and over and over, and commenters leapt at a chance to do it. Do you still argue that your premise holds?

    And yes, I focused on public employees. That is the debate of the moment. The same issues also came up regarding the UAW during the bailout of auto companies. Why? Because tax dollars are involved. Those pay increases and benefits come out of the public's pocket, totally changing the dynamic. You are far more likely to resent someone getting a better deal than you when you pay for it. When a union gets a good deal from a private company (that's not seeking a bailout), the public generally applauds.

    I fully appreciate your overall point that people should want others to be paid more - it feeds an upward cycle rather than a downward spiral. Agreed.

    But in a place like Ohio now, that's hard for everyman to see. Even if people see that bigger picture, it's hard to pay for. The greatest resentment here is toward teachers unions, because every raise, every cost-of-living increase, every health care cost increase, every experience step raise means your kids' busing gets axed, extracurricular fees go up or a property tax increase goes on the ballot amid a foreclosure crisis.

    On that level, it's not bosses vs workers. It's a machinist who has his hours and pay cut vs. teachers seeking raises (or maintaining the status quo). The more that public employee compensation differs from that of the masses that pay for it, the more the masses will feel squeezed and cry foul. 

    That said, there are some structural funding issues that contribute to those two people being at odds. In Ohio, if Republicans are not responsible for creating those, they are at least responsible for ignoring them, (as did the recently-departed Democratic governor).


    My challenge was to the premise that Republicans want people to lose what they have, but Dems don't. If the second part of that premise doesn't hold, the whole thing fails. I don't think Part I is true overall, though it can be debated and is true in some petty and mean-spirited circumstances. The second part is obviously false.

    For most Dems (maybe not all, but most), it's not that they want the rich to have less, but that they want the poor to have more. There are lots of ways to achieve this, with some methods more fruitful than others. (Trickle-down economics has shown to be anti-fruitful, i.e., the poor actually got poorer under that experiment.) Raising minimum wages is one way to do that, and yes, that means that the über-rich might lose a little of what they have. An alternate approach is the earned-income tax credit, which also costs the rich; however, in neither case is the goal to take from the rich. (There are also less fruitful means of helping the poor that some well-meaning liberals advocate.)

    The greatest resentment here is toward teachers unions, because every raise, every cost-of-living increase, every health care cost increase, every experience step raise means your kids' busing gets axed, extracurricular fees go up or a property tax increase goes on the ballot amid a foreclosure crisis.

    This is a valid argument, and I'm sure it goes a long way towards explaining the attitudes of many working class people who dislike public unions. In some cases, I think these attitudes have merit, but in other cases they can be short sighted. I've never seen a situation where teacher salaries were too high, but I do think that, at least where I used to be a public high school teacher, firing poorly-performing teachers is too difficult. Of course, I've also never lived in a state that wasn't right-to-work. (What's the proper name for states that aren't right-to-work?)


    Canada?


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