Economists and business leaders have long argued that the way to improve low-income workers’ standard of living is to grow the economy. This worked for a while after World War II. However, since the early to mid-70's, productivity and national income have increased, but wages haven’t. For eg., the gross domestic product of the United States was 16.77 trillion dollars in 2013. If you break this down per person, each American produced $140,000 in goods. Yet most people only see a small percentage of this in their wages. The median wage was $27,851 in 2013 which means 50% of working adults made $27,851 or less in the United States.
If each American made half of what was produced, the median salary would have been $70,000. Now, clearly, there are other costs involved: still why aren't people paid more? Why do many jobs pay so little?
Christopher Jencks, professor of social policy at Harvard, says it’s really quite simple. He writes:
A market economy is not designed to ensure that workers get paid what other people think they deserve. The logic of the market is that a worker should be paid the smallest amount to make sure the work gets done and is not intended to pay them what they deserve. It's not meant to pay people what would make a better life for them. It's to pay the absolute minimum that the employer can get away with. Thanks.
