Another basic but important point about this stuff is that when right-leaning people complain about the size of raises, they're violating their own basic philosophy on prices. When someone complains that insulin is insanely expensive, for example, the typical right rejoinder is that the price of insulin is simply what the market and underlying conditions will bear, that there is no moral component to it because it's just a reflection of amoral forces. But so is the price of labor! If the UAW can extract a 25% pay raise from the car manufacturers, that's simply what the market and underlying conditions will bear, exactly like the price of insulin. The raises are no more a reflection of the morals of the union than the price of insulin is a reflection of the morals of Eli Lilly, if we take conservative economics seriously. The cost of labor should be treated like every other cost, according to that philosophy. The only difference is that conservatives like corporations and hate unions, so they bend their own basic economic logic to indict one and not the other.
"We should have price controls for wages, but not for insulin" is a pretty good metonym for conservative morals generally.
After college (1987), I moved to NYC and got a job as an editorial assistant at a publishing house. It paid $15,000. After six months, I was promoted to assistant editor and got a raise, to $17,680 (which is actually a lot in percentage terms, although of course that's because the original salary was so low).
After I was in the new position for about six more months, the company instituted a new series of salary guidelines. Each position was assigned a "level" (Level A, Level B, etc.), and each level had a salary range. As it turned out, the minimum, rock-bottom salary for my position's level was $17,800 — slightly more than I was making. So my boss called me in and said, "Congratulations, you're getting a raise! Your salary is now $17,800."
In other words, the company was acknowledging — according to *its own criteria,* not mine — that it had been underpaying me. But did they give me any back pay to make up for this? Of course not. And did they set my new salary above the minimum? No — in return for six months of work, I'd worked my way up to the bottom.
When I pointed all of this out to my boss, she said I was being an ingrate and that she'd have to put a note about it in my file.
I was happy to get out of publishing and get into a more lucrative industry like, uh, journalism....
Hamilton, would you consider writing something about the move from pensions to 401ks? I put in as much into mine as possible, but of course, there’s no guarantee that I’ll earn enough for it to cover my retirement. Also, it makes me a shareholder, which seems to go against my status as a worker. It’s something I’ve been thinking about lately and this great piece gave me the impetus to ask. Thanks!
I guess you’re right, but when it’s that obvious I feel as though I’m missing something. Also, if I were to say that to people I work with, I know I’d at best get a “huh?” from them, and I wish I had more talking points so I could better play the annoying leftist aunt at Thanksgiving if I needed to
^This! It's all part of the same story of the evils of our current capitalist system. Why do companies say they can't give workers raises? Because they need to return profits to their shareholders. And who are those shareholders? Because of the move from pensions to 401ks, workers are reliant on those returns for their retirements too. It's a human shield strategy. Awful!
If workers collectively owned the business, there would be no more employer/employee relationship and the majority would make the decisions instead of the privileged few.
Absolutely! All of this is why our governments should NOT be run like a business. The sole purpose of a business is to make money and that should not be the sole purpose of governments.
Excellent piece, Hamilton. How much do you think it applies to non-profit institutions whose missions are at least ostensibly not to maximize profit, but whose leaders will employ many of the same strategies to deny workers a fair wage? Asking for a friend who works in private higher ed 😔
Interesting question. I'm sure it varies but it does seem that many nonprofits are still run with a mandate of minimizing labor costs--although keeping down labor costs may be more appropriate depending on the mission of the place. In general nonprofit unions seem to have fights every bit as bitter as unions at for profit companies. It may just be inherent in the management-board-donors-labor relationship.
(And where, I should add, occasional and very small pay bumps are framed as acts of administrative munificence, but actual cost-of-living increases are dismissed as financially unsustainable nonstarters)
This piece is so fundamental and so good. I have come back and read it several times and each time i send it to more people to read (and sorry to those i've sent it to repeatedly). Every contract victory is the boss figuring out the least amount they have to give you to avoid a strike or end one.
Just wanted to say how much I love and appreciate everything you write for being so clear and yet 🤯, this one especially so. Looking forward to getting my book!!!
There are only a few companies that can produce cars or insulin. When they are forced by their workers to raise wages, they can just pass it on to the customers who don’t have the option to go somewhere else. The bosses never give up anything.
Another basic but important point about this stuff is that when right-leaning people complain about the size of raises, they're violating their own basic philosophy on prices. When someone complains that insulin is insanely expensive, for example, the typical right rejoinder is that the price of insulin is simply what the market and underlying conditions will bear, that there is no moral component to it because it's just a reflection of amoral forces. But so is the price of labor! If the UAW can extract a 25% pay raise from the car manufacturers, that's simply what the market and underlying conditions will bear, exactly like the price of insulin. The raises are no more a reflection of the morals of the union than the price of insulin is a reflection of the morals of Eli Lilly, if we take conservative economics seriously. The cost of labor should be treated like every other cost, according to that philosophy. The only difference is that conservatives like corporations and hate unions, so they bend their own basic economic logic to indict one and not the other.
"We should have price controls for wages, but not for insulin" is a pretty good metonym for conservative morals generally.
Well said!!
After college (1987), I moved to NYC and got a job as an editorial assistant at a publishing house. It paid $15,000. After six months, I was promoted to assistant editor and got a raise, to $17,680 (which is actually a lot in percentage terms, although of course that's because the original salary was so low).
After I was in the new position for about six more months, the company instituted a new series of salary guidelines. Each position was assigned a "level" (Level A, Level B, etc.), and each level had a salary range. As it turned out, the minimum, rock-bottom salary for my position's level was $17,800 — slightly more than I was making. So my boss called me in and said, "Congratulations, you're getting a raise! Your salary is now $17,800."
In other words, the company was acknowledging — according to *its own criteria,* not mine — that it had been underpaying me. But did they give me any back pay to make up for this? Of course not. And did they set my new salary above the minimum? No — in return for six months of work, I'd worked my way up to the bottom.
When I pointed all of this out to my boss, she said I was being an ingrate and that she'd have to put a note about it in my file.
I was happy to get out of publishing and get into a more lucrative industry like, uh, journalism....
At least it's good to know there are less lucrative fields than journalism.
Fun fact: Publishing historically had a low pay scale because it was historically a field with a lot of women.
Some other less lucrative fields that are historically with a lot of women: dance, education, child care...
Yes and
every layoff is a mis-managed company - see Google today
thx!
brianna
Hamilton, would you consider writing something about the move from pensions to 401ks? I put in as much into mine as possible, but of course, there’s no guarantee that I’ll earn enough for it to cover my retirement. Also, it makes me a shareholder, which seems to go against my status as a worker. It’s something I’ve been thinking about lately and this great piece gave me the impetus to ask. Thanks!
I will think about it but "It's a scam that benefits companies at the expense of workers" covers a lot of it .
I guess you’re right, but when it’s that obvious I feel as though I’m missing something. Also, if I were to say that to people I work with, I know I’d at best get a “huh?” from them, and I wish I had more talking points so I could better play the annoying leftist aunt at Thanksgiving if I needed to
^This! It's all part of the same story of the evils of our current capitalist system. Why do companies say they can't give workers raises? Because they need to return profits to their shareholders. And who are those shareholders? Because of the move from pensions to 401ks, workers are reliant on those returns for their retirements too. It's a human shield strategy. Awful!
If workers collectively owned the business, there would be no more employer/employee relationship and the majority would make the decisions instead of the privileged few.
Absolutely! All of this is why our governments should NOT be run like a business. The sole purpose of a business is to make money and that should not be the sole purpose of governments.
Excellent piece, Hamilton. How much do you think it applies to non-profit institutions whose missions are at least ostensibly not to maximize profit, but whose leaders will employ many of the same strategies to deny workers a fair wage? Asking for a friend who works in private higher ed 😔
Interesting question. I'm sure it varies but it does seem that many nonprofits are still run with a mandate of minimizing labor costs--although keeping down labor costs may be more appropriate depending on the mission of the place. In general nonprofit unions seem to have fights every bit as bitter as unions at for profit companies. It may just be inherent in the management-board-donors-labor relationship.
(And where, I should add, occasional and very small pay bumps are framed as acts of administrative munificence, but actual cost-of-living increases are dismissed as financially unsustainable nonstarters)
Great piece. Always important to point out the obvious and shameful facts. Lee Hepner had a good piece over at Big on how labor unions are industrial policy (https://www.thebignewsletter.com/p/labor-unions-are-industrial-policy), and it also reminded me of Blair Fix's article about the problems with equating price and productivity (https://economicsfromthetopdown.com/2019/11/14/productivity-does-not-explain-wages/)
By the way, one more comment:
"The only group of people who are presumed not to understand it are the workers themselves"
They understand how it works. They are not silly, but they are afraid to be sacked, they are cowards.
Can we blame them? Unemployment is a sad place to be, the capitalism is exploting this weakness. The Union is the answer.
This might be your best yet. And its got a lot of competition
Thanks Hamilton. Keep the fire alive. The passion is always there. Stay safe.
This piece is so fundamental and so good. I have come back and read it several times and each time i send it to more people to read (and sorry to those i've sent it to repeatedly). Every contract victory is the boss figuring out the least amount they have to give you to avoid a strike or end one.
Just wanted to say how much I love and appreciate everything you write for being so clear and yet 🤯, this one especially so. Looking forward to getting my book!!!
There are only a few companies that can produce cars or insulin. When they are forced by their workers to raise wages, they can just pass it on to the customers who don’t have the option to go somewhere else. The bosses never give up anything.
"Compromise is not reconciliation, it’s no man’s land. Or it’s where everyone would already be if they weren’t so damned greedy."
https://endlesschain.substack.com/p/how-i-writecomment-jecrishoe-ik-schrijf
https://endlesschain.substack.com/p/a-bird-in-the-hand-is-worth-two-on