The question is asked, "How is the vast income disparity between business employees and business owners/executives not exploitation? There would be no business without the owners founding, but there would also be no thriving business if there weren't employees working the business."
People are frustrated with the cost of living, not making enough money, and offended by growing income inequality. Let's look at some responses of what people have to say about this subject, and I'll add my commentary.
1) First and foremost, many argue that it's not considered exploitation simply because you agreed to it. Nobody is being FORCED to work at whichever job or location you're frustrated with. However, there is a point I will highlight at the end where just because someone chooses a better deal in a job, doesn't mean they're not being exploited when the vast income difference and company's ability to pay is considered. You agreed to the better deal, even though the fairest deal is hidden under the table during this agreement and deal making.
People whine that it's not voluntary because you are forced to work or starve. I think this is nonsense and I don't understand how people make sense of it. Unless you are very rich to where your investments fully fund your living (which I understand people not liking this concept), you have to work SOMETHING to survive. You have to either work to build your own shelter and grow and raise your own food or work for someone that will give you money to buy those necessities.
The voluntary aspect isn't the biological needs, it's the fact that you can choose which job you work and where you live. Obviously, there are situations that can be discussed on why some people have less choice and ability to move, and that's worth a conversation, but the reality is that we still have that voluntary aspect and can increase our own market value which should lead to better jobs.
Here's a response I read online:
"If you think you're being exploited, get a different job or start your own company. If you don't have the skills to do so, acquire them.
I think this is a good response that covers all the common tropes, but let's talk about why people are upset about their situation and don't just "get a better job."
2) There's only so much someone can do. Not everyone is cut out to be a rich professional. Maybe it's too late for big career changes. Many think it's offensive to just say, "Get a better job" because it ignores the fact that this is hard to do and has a lot of barriers to make happen. Here's one response to this that I liked:
"Sure, let me just jump to a $150K salary job. Why doesn't everyone do this? Increase your market value, sure, but doing so requires a lot of time and money invested, which people don't have. These decisions are important in your early 20s when you're deciding on and building towards a career path. If you don't make it then, you are royally screwed, and this attitude insinuates that everyone DESERVES to suffer. People agree to the best they can get, and the best isn't good enough. There is a limited amount of high paying jobs. The barrier to entry is too great for the rest."
So why aren't there better alternatives? Why do people feel stuck like there is no choice? I'm going to leave this open for participants to weigh in, but I'll start with my own experience. I've thought often about changing careers to make more money, but everything I look at requires more education and time to dedicate starting out. I can't dedicate to full-time education because I have a family I still need to support. I have to keep working my current jobs. Note I said jobs with an "s." Suppose I go through with it and finish the required educational background. I now get to compete for jobs with people that have already been in the industry for years, or take a pay cut from where I’m currently at to start over in a new industry with no experience. Yikes! Yeah, there's some success stories of people that made it and that's great, but what about the people that didn't? What's their story?
You can work in the same general industry and still hop jobs doing the similar type of work, but in most cases you'll eventually be capped out unless you get superior title changes. In my personal example, I've used this to get raises and keep my options open, but I reach a cap. Nobody would be willing to pay much more than where I was for the type of work I was doing, but I also lacked the knowledge and qualifications to get a superior title position/responsibilities. That required time to get that.
So what's holding you back? Why aren’t you out there getting a better job; or maybe you did? Tell us about it!
3) "Start your own business" is the other common retort for this income disparity or low wage complaints.
Starting a business takes a tremendous amount of costs. This isn't realistic to say to people and I find it disingenuous. Even low-cost startups take a lot of time and A LOT of marketing to make it profitable enough to be better than just working a job somewhere else, unless you have some serious connections to hook you up with clients/customers. This is a distraction from the general discussion about income inequality and it sounds like, "Oh, you have a problem with something happening on Earth? Why don't you just move to Mars and do it better there than?" Come on.
4) Business owners should be given some credit when they have built success stories and people need to understand this side too. Here's where I'll go into why owners feel justified in taking a lot of the business income.
Business owners do all the work and carry the risk to set this up. Employees just come in for the job with the knowledge/skills needed for the position. Now, I welcome criticism to this list and those that wish to add to it to make sure we're all in understanding, but the above list really seems to only apply to new and small business owners. A generation later, or once the business is sold to an investor, this concept feels lost. The machine was already built, the original founder retired with their bag of money, and now the machine runs itself with employees at the helm and managers making adjustments as needed.
Corporate executives typically don't have this type of personal connection to the business. They're just appointed or hired for that management role. The children or relatives of original business owners have a little more connection, but it also usually isn't their work and risk on the line; yet, these parties still consistently take far more share of the earned profits for themselves and proponents of the income inequality argument would say they are starving out and robbing the poor and middle class.
I want to end with another interesting example I pulled from online:
"Let’s say you paint houses on your own and you charge $15 an hour. A “capitalist” comes along and says, “Work for me and I’ll pay you $20 per hour to paint houses.” You sign on and he brings you to paint your first house in a rich neighborhood. You’re the only one working the job. You find out that he’s well known and has word of mouth recommendations in this rich neighborhood and is able to charge them $200 per hour. He doesn’t do any painting; all he does is shake hands with rich people who trust him and have them sign the dotted line.
I can see how exploitation can still be found in this example. Again, the salesman business owner with connections can't paint all the houses himself, but the painter employee doesn't have those connections. Maybe they do a good job and would be hard to replace for the business to keep its integrity. The painting business needs this partnership, but one partner is taking in wildly more in income.
The very definition of exploitation is to use someone unfairly and benefiting from their work. Just because the painter is offered a little bit better deal, shouldn't mean they're not being exploited when the vast difference in pay and ability to pay is considered. The employment is agreed to, but there aren't many or any alternatives because market forces don't trend that way. Why pay more for painters when the average market value of painters in this example is $17.50/hr, even though the capacity is much higher, up to $100/hr if earnings split 50/50 between painter and manager? Maybe $60/hr if it's split 70/30.
There isn’t any mention of overhead costs in this example and I understand there is a difference between the business revenue and business profit. Maybe the owner pays $150 in business expenses like supplies and advertising, then he only keeps $30/hr. and pays the painter the remaining $20/hr. I think that's a fair deal struck then.
The biggest question underlying this concept is how to overcome the market forces to raise wages. As I just said in my example, the market wages for a painter is low compared to what companies are capable of in this case. They can get away with paying so low because they’ll keep finding capable people to agree to work for those wages and provide the quality of service required. In the post-COVID economy, many businesses struggled to hire. People were no longer willing to put up with low wages and mistreatment by employers. The “Nobody wants to work” phrase became popular. I see this as an example of people finally able to start pushing for higher wages. I also think unions can be that powerful bargaining tool for higher wages as well.
In the end, I think we'd be better off as a society and have a stronger economy if a larger share of the vast profits companies pull in was distributed to more employees as higher pay or bonuses instead of concentrating income to the top and with stock buybacks. I understand the difference between revenues and profit. Costs pay for all the overhead, investment, and WAGES. WAGES can still be different among employees for different roles, but PROFIT should be distributed and shared more fairly among all, but I don't know if there's a way to enforce this. If the boss takes all the profit themself and counts is as their own wages, then *shrug* I'm not sure how to reconcile that, but I wish they wouldn't.
So if you complain about the income inequality with income disparity between employees and employers being a problem, what are your ideas for legislation or other means that would take corrective action to the problem?
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