National Public Radio Gets It Wrong Again: How Are Salaries Determined?

National Public Radio did an odd story today on how wages are determined. You can find that piece here. We have spent a lot of space on this blog addressing this issue. See most of our Basic Marxism item labels to follow that discussion.

The NPR piece makes it sound as if wages are determined by accidental or mystical processes and confuses the salaries or wages workers receive on the job with the money a real estate agent makes as an entrepreneur. You are not an entrepreneur if you're on someone else's payroll, drawing a wage and exchanging your ability to work for that wage.

There is nothing accidental or mystical about how wages are determined. Workers produce commodities and provide services by definition. Part of the day or week or month of that work provides for the worker's upkeep. Part provides for the upkeep of the workplace. Part pays other bills for the owner, capitalist or administrator or agency. The rest of the product or production is taken by the capitalist as profit. It's in the capitalist's interest to take more profit and reduce all of the other costs. It's in the worker's interest to get more for her work. Antagonism is built into the system.

"Wages," Marx says, "are not a share of the worker in the commodities produced by himself. Wages are that part of already existing commodities with which the capitalist buys a certain amount of productive labour-power." The worker is not an entrepreneur and does not legally own the product or some portion of the product. Wages are paid from what the capitalist steals from the worker.

How are your wages determined? Your labor or labor-power--your ability to work--is a commodity just like every other commodity. "Wages," says Marx, "are the price of a certain commodity, labour-power. Wages, therefore, are determined by the same laws that determine the price of every other commodity."

The price of a commodity is determined "by the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer," adds Marx. In general, then, this is how the price of labor as a commodity (wages) is determined. Here we see again how antagonism is built into the system: workers and bosses compete, or are forced into competition, and this competition generally determines your wages. The capitalists understand very well what the costs of maintaining labor or labor power are. These are the costs of producing and reproducing that labor power. It is in their interests to lower or cut those costs or to shift the burden on paying those costs on to others. The lower these costs, the higher their profits. It is in the interests of workers to insure that the capitalists shoulder more of these costs and pay higher wages. Workers will understandably struggle to sell their labor as a commodity at the highest prices possible. Communists point out that commodity production as we know it is crisis-driven and bound to collapse and argue that society can be organized around human needs instead.

So NPR completely ignored this historically-grounded and logical explanation of where wages come from and made it a more complicated or mystical prices. Their agenda is increasingly determined by their American Enterprise Institute sponsors. If you have read this far, you probably get the point of how wages and salaries are set. You may be asking yourself why NPR doesn't get it or won't say it.

In other articles NPR raised the question of whether or not raising the minimum wage will cost jobs and how close the recession/depression is to ending. As for the first question, we believe that the capitalists have a choice and should be held responsible for the choices they make: buy labor as a commodity at a higher price at the expense of some profit or not. It is in their nature to resist and it is in our nature to demand more. Moreover, the minimum wage is set artificially low and is not the minimal cost of producing or reproducing labor power.

On the second question, we communists project that capitalism carries with it these crises at regular intervals. The end of this crisis will only point to another one and recovery for the capitalists and the banks does not mean that we will see more jobs created. Indeed, companies and banks can recover in large part without increasing full or full-time employment, and especially so if the costs of maintaining a working class can be shifted to government or social services agencies or privatized services run for profit. It sometimes seems that much of the current crisis has been very much about finding what the minimum numbers of workers needed to run the economy are and driving down the wages of the people who remain working. In this regard, then, the debates about healthcare are not so much about keeping and making people well as they are about insuring profits for a few.