Paying Workers Their True Worth, To the Benefit Of All

IF EVERY WORKER were paid according to the value of her production, there would be no profit for the owners, no dividends for shareholders, no reason to own a business or invest in one. Exploitation of labor is inherent in capitalism, a necessary attribute, wherein the worker agrees to labor in return for less than the value of her production. The salient question becomes: how much less? What is the proper degree of labor exploitation? The way to find out is to measure the amount of profit, or profit margin, and the amount of revenue paid out to shareholders in dividends. For the past several decades the corporate business model has placed the highest emphasis on share value, which is to say, the plan has been to minimize labor costs, to maximize the percentage of corporate revenue invested in share price, and to pay managers and executives a substantial part of their salary and benefits in stock shares. Thus, share prices climb higher, pleasing investors, and executive salaries increase dramatically. Prior to the 1970s, management and labor coexisted as coequal partners in a less adversarial, more cooperative relationship than today, workers were paid much higher wages relative to the value of the currency, and share prices climbed far more slowly. A concerted effort on the part of executives, shareholders, and conservative pro business politicians, bought and paid for by business ownership, to reduce the power of labor unions has been largely successful, as real wages for workers have remained stagnant for decades, while investors and executives have benefited enormously. This is a primary cause of the increasing gap between the rich and the poor in America. Partly as a result of this trend, nearly half the wealth in the United states is now in the hands of one percent of the population, and the same is true worldwide. This is not a sustainable system. Abraham Lincoln said: "labor is prior to capital, which would never have existed had labor not existed first. labor is superior to capital, and should always be given the higher consideration." Were we to return as a society to this ethic, a far greater share of earned income would be transferred to the working class, the demand for goods and services in the free market would expand as more people obtained or gained more purchasing power, and the economy would return to its most productive state of being, which was manifested between the end of World War Two and 1980. But don't hold your breath.