Opinion: Why is there an inverse relationship between worker utility and compensation?
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While attending university, students make one of the most important decisions of their lives. Some of us have reached this decision already while others drag their feet in anticipation of the fork in the road. The profession we plan to enter after graduation will determine how much money we make, the lifestyle we can afford and whether we pay off the debt we’ve accrued while attending university. When making our decision, we have to also consider elements of a career that are arguably more important, such as the impact our work will have on our community. Increasingly, however, it seems that the desire to be paid adequately for our work and contribute positively to the world are at odds.
In a just society, workers should be paid in accordance with the utility of their work. Yet while the wealthiest individuals contribute the least to society, it is the overworked and underpaid that run the world. Shouldn’t the workers that provide the most utility be paid the most as well? Why is there a seemingly inverse relationship between the amount someone is paid and the importance of the work that they do?
It is difficult to study the amount of social utility that a worker provides. Different people will have different perspectives on who is helping the world or harming it. While social utility is important, it is also important to pay workers based on the difficulty of the work that they do, as well as the time and education they dedicate to their profession. Despite these caveats, economists are able to use existing research to evaluate the externalities (social costs) and spillover effects (social benefits) associated with a given profession. In a 2017 study out of the University of Chicago, American economists calculated the average social value of various professions after reviewing the literature on the externalities and spillover effects of each profession.
The study found that the lowest paid workers tend to contribute the most positively to society. Medical researchers and teachers had some of the most positive contributions while those in advertising and the financial sector were associated with the most negative externalities. A study carried out by the New Economic Foundation in the United Kingdom found similar results. City bankers, who averaged the equivalent of $7 million in salary, destroyed $7 of social value for every one dollar they earned; advertising executives destroyed $11.50; and tax accountants destroyed $60. Hospital cleaners and recycling workers, on the other hand,generated an estimated $10 to $12 of value for every one dollar they were paid.
Obviously not every profession fits this pattern, with physicians and dentists as an example of a profession that pays well and is also very socially valuable. Still, the trend exists. There is no one reason that explains this pattern. Some might point to the amount of education or schooling a job requires as being more indicative of worker pay than worker utility. While positions that require a college degree tend to pay more than those without a college degree, this still does not explain why teachers, nurses and public defenders are paid so much less than corporate lawyers, bankers and executives with the former examples generally requiring as much if not more education than the latter.
There are several other factors at play. Some of the most useful and helpful workers are paid by the government or nonprofits, although not all of them. Supply and demand also plays into why some people are paid more than others. If that adequately described pay disparities, we would expect nurses and public defenders to be some of the highest paid workers.
Misogyny likely plays a role as to why workers in some of the most useful and helpful professions are paid the least. The mere presence of women in a given field can cause the wages of everyone in that profession, including men, to go down. Female socialization may lead women to pursue work that is more beneficial to society as a whole, hence why workers in these professions tend to make the least. According to Labor Department data, of the 30 highest paying jobs, 26 are male-dominated and of the 30 lowest paying jobs, 23 are female-dominated.
It is also a common sentiment that those who do good should do so from a place of love or altruism rather than greed. But is it truly greedy to want to make a fair wage? Does it make sense to punish those who help others while rewarding those who do not?
While janitors, customer service workers and caregivers may be paid the least out of everyone, they can leave work knowing that they contributed positively to society. Around a quarter of Americans do not believe their job makes a meaningful contribution to the world. Even the lowest paid customer service workers have something that these people do not: the knowledge that their labor is important and necessary. While those participating in the lowest paid work are exhausted, underpaid, and may even dislike their jobs, their jobs are important to the functioning of society.
Can those in the finance sector say that? Can the advertisers who manufacture fake problems with false solutions say that? While perverse, it makes a peculiar sort of sense that those who contribute the least to the world would need to be paid the most. There’s a burden that comes with being an investment banker or a corporate lawyer and knowing that the world might be a better place if you walked out of the office.
There are a few proposed solutions to this problem, such as raising the minimum wage, a federal maximum wage and allocating more government spending towards paying teachers and social workers. Economists have proposed other creative solutions, such as a tax system that taxes those in socially useful jobs at a lower tax rate. Hopefully these proposals will gain more traction.
While we as college students can advocate for the world we want to see, we have limited power within the federal government. However, we can more effectively advocate for workers rights within our own community. Upwards of 3,000 student workers make the University of Oregon what it is by cooking and serving food, participating in research and maintaining the buildings around campus. The university cannot function without them, yet student workers still have to fight the administration for a two week pay period, adequate pay and workplace anti-harassment measures.
I spoke with Will Garrahan, formerly a student worker at the university until he was fired in February, a move he believes was retaliation due to his participation in the effort to unionize student workers. “It would be against their interests for us to have a union. The university tries to cut costs as much as possible, pay us as little as possible, and work us as hard as they possibly can.”
Garrahan believes that low pay, a lack of training, and poor treatment has led to a high turnover rate, something he noticed while working in dining. “As new workers, it can be easy to take advantage of us. The turnover rate is so high, the university has decided to leave their student workforce behind. They understand that student workers are not going to be there for a long time because of the conditions they’ve established.”
Support UO student workers in their unionization efforts by following @uostudentworkers on Instagram and @uostudentwrkers on Twitter for updates on how to get involved. You can also donate to the Solidarity and Relief Fund to support the unionization campaign. Lastly, if you are a student worker, there are still a few more days to sign a union card. If unionization efforts succeed, it is likely student workers at UO will make up the largest undergraduate student union at a public university.
When choosing a profession, I would urge anyone reading this to pick a career that they believe will contribute positively to society. However, substantial progress will not be made until all workers are properly compensated. University students shouldn’t have to choose between making a positive change and an income. Instead, our economic system should be one that values the workers that are necessary to a functioning society.
