(individual) Almost everyone at one time or another has used the term a fair wage. What does it mean? Evaluate each of the following definitions of a fair wage. What insight does it express? What reality does it overlook?
- A wage that reflects the social value of the work
It expresses that the true value of work is in its good to society. It misses that its value is zero if everyone does that work and no one does other work. Thus the marginal value is not the same for all participants in that line of work.
- A wage that reflects the danger, difficulty, and general arduousness of the work
People ought to be compensated for their effort. However, it overlooks the fact that some of the most necessary tasks are not that arduous. Food inspection, perhaps.
- A wage that adequately compensates the employee for the time and trouble spent learning the trade
Somewhat related to the previous answer. And in general it is followed. Except that one could spend lots of time learning a trade of little worth, such as basket weaving. Why would anyone want to pay the high price necessary to sustain the principle for a product they do not want?
- A wage that meets the employee's needs
It reflects the combination that people should not starve, and that they should have the method to earn their own keep. However, it definitely ignore differences in markets and discourages employees from economizing on their needs.
- A wage sufficient to support a family
Same as previous answer.
- A wage that reflects the profitability of the employer's business
If an employee helps create wealth, he ought to share in it. And to some degree the laws of supply and demand will tend toward this definition, though will not ever reach it. If two employers with equal profitablty are competing for the same scarce pool of workers, they will bid up wages at least until they cannot afford it. If the supply is large enough that that does not apply, workers will leave the profession for greener pastures in increasing numbers.
- The customary wage
You want a wage that isn't widely varying from time to time and person to person. However, why deprive a worker of an opportunity if an employer can't afford to pay that much. It's better than nothing.
- The wage established through collective bargaining
It puts the workers on a more equal bargaining position with a large employer. However, it shuts out those not in the union.
- The same wage for everyone
It certainly gets rid of inquality, but loses incentive to innovate (or work more productively).
- A wage the employee considers fair
Some people have wild ideas of what is fair.
- A wage of which the employer is not ashamed
Some employers have no shame.
- The wage that clears the market
It will encourage new entrants to the market. And the supply curve is never flat.
- A wage agreed upon by employer and employee when both are adequately informed
Makes for efficient market mechanics, but allows for poor decision makers to really hurt themselves (or others in some cases).