Race to The Bottom, by Winter Trabex

For a while now, mainstream articles spurred by Keynesian economic thought have decried that middle class jobs are disappearing. That is to say, those 40,000 dollar or more per year jobs upon which one could live, if not happily, then at least within a modicum of comfort. While automation and the new gig economy (in which stability is a thing of the past) are partly to blame, another, more insidious factor is to blame.

In his seminal work Wealth of Nations, Adam Smith wrote that people want to spend as little money as possible for anything they buy. Employers want to spend as little money as possible (hence maquiladoras and sweatshops), while customers of any business want to have more savings to sit on rather than less.

It hardly need be explained in detail how there are coupon clippers and bargain hunters everywhere trying to squeeze as much as they can out of their shopping experience.

While Smith failed to mention was that employers seek to buy the labor of the people who work for them. Labor is a commodity. An individual person can be sized up like a used good at a thrift store. Different people, from a human resources perspective, can appear to have different values. It often happens that an employer will play favorites within the workplace, promoting a newer person that they like better over someone who has been there longer and has been known to be dependable. Evaluation of people is a subjective process, often prone to error. It’s impossible for one person to completely know another person, let alone judge their potential.

However, it is not only possible but likely for the boss of any company to look at the balance sheets and discover how much money is being earned, how much is being spent. Statistics are far more knowable than individual people. It is for this reason that bosses the world over choose the bottom line over their employees- ie, profit before people. Dollar amounts are just easier to work with.

It might come as no surprise then, that many workers are just earning less money. Nowhere is this more apparent than the new, stultifyingly burgeoning online freelance market. Workers in India, who can bid for 3 to 4 dollars an hour, get jobs over American workers who bid 20 dollars an hour for the same position. The boss quickly looks at the numbers and comes up with the following conclusion:

Spending 16 dollars an hour less means spending 640 dollars less per week, given a 40-hour work week. This leads to a per annum savings of 33,280 dollars. Naturally, any boss who spend tens of thousands of dollars less on employment costs is going to do so. It will take those same workers from India getting wise to the situation and realizing that they too can charge American rates until things really change.

As for the traditional, brick-and-mortar jobs, the situation gets bleaker with each passing year. No matter the experience, time spent within a company, or the skills that an employee has acquired along the way, the boss doesn’t have much incentive to drastically increase pay for any one person.

Supposing that the period of employment (for example, two years) the employee has generally worked well and helped the company make money, the boss has no reason to believe that the state of the company will worsen if raises are not forthcoming. As a result, there is a glass ceiling in wages- a certain point beyond which people cannot get past without changing careers.

Although this is good for bosses, it’s not so good for employees with inflation increasing every year, taxes increasing, everything becoming more expensive. Apartment rent is, at times, ridiculously beyond what anyone can afford. Student loans are so high that they might as well be called ponzi schemes at this point.

Everything costs money- and there isn’t much indication that bosses are willing to hand over greater shares of their profits to help fund the lives of people who just happen to work there. There’s a race to the bottom to make as much money with a business as possible while spending as little as possible.

The phrase, “you get what you pay for” doesn’t necessarily apply in such situations- not when an employee is compelled to try their best or else facing having nothing instead of very little.

Though the unfortunate result, in the short term, is increasing poverty and a disappeared social mobility, in the long term, the result appears to be a bit more fortunate. Talent will always go where the money is. If there isn’t any money to be had working in any particular one job, then people will go elsewhere. If working for a boss isn’t profitable, people will become their own bosses.

What employers today do not realize- for they have no incentive to think of business in such a way- is that wages being suppressed in an information age inevitably leads to people changing careers. Internet startups are on the rise because people would naturally have more money rather than less.

People are self-teaching themselves how to program so that they can release apps through the Google Play Store to make money. Self-motivated individuals who can learn and grow are slowly walking out of the traditional economy. The people who are left are those who finds themselves stuck in those jobs due to whatever odd circumstance.

I can personally attest to how it feels to be stuck in a job, wishing to go elsewhere, not finding any opportunities come open. For a confident, well-read, educated individual like myself, it begins to feel like the system is rigged in favor of those who have massive amounts of capital and resources to call upon- and rigged against those who do not.

A cursory glance at the American Constitution provides a glimpse into the mindset of those who were the upper class of society trying to make their own rules about how things should go. They declared that only male property owners could vote- ie, have a say in how the government worked. Women could not vote.

Poor men could not vote (though they were most often affected by government decisions). People of color were considered 3/5 of a person in the usual insane governmental attempt to redefine reality itself via legal decree.

It was only through prolonged agitation, struggle, and general unrest that all of those restrictions were removed. Fortuitously, no such effort will be required to for employees to improve their own conditions on the job. They need not go on strike and form unions to obtain higher wages, though many undoubtedly will. They need only put down their badge, clock out, take off their uniform, and start working for themselves rather than for others.

This process won’t be easy. Many won’t be able to adjust. Yet, in order to avoid the perpetual race to the bottom, all any employee needs to do is leave the track and stop running.

Both financial freedom and financial success are increasingly unlikely to be found by the supposedly beneficent hand of a supervisor, and more likely to be found by self-motivation and self-direction.

The old saw really applies here: “if you want to get something done right, you have to do it yourself.”

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