WordPlay Weekend: Cut “Workers’” Wages?… A Vector of Orthogonal Dimensions (12/05/2009)

[OLD POST - LINKS MAY NOT WORK]

One of our chief entertainments here at LiteralMayhem is the contortion, manipulation and general abuse of language — primarily at the hands of PR and marketing folks. But sins abound throughout the worlds of business, academia, and politics… and when those worlds collide, watch out.

You're certain to get some truly head-spinning, tongue-teasers like this one:

"We come together to offer a tangential view, not a consensus view, and not the average view. We seek to synthesize information and ideas from different vectors and extrapolate a resultant vector in an orthogonal dimension."

Sometimes you read something and you feel like you've just had brain surgery. It hurts so much you have to ask: Oh for Heaven's sake, what on Earth were you thinking? What does it MEAN??? Please, someone pass the Vicodin.

The quote comes from a blog on Huffington Post by Leslie Pratch, an executive coach who "assesses the leadership potential of executives." Ms. Pratch appears to be a highly qualified academic who:

"helps executives strengthen their capacity for active coping and bring about dramatically improved performance in a relatively short period of time."

In other words (less than the 1,500 or so used on the firm's website to describe its service offering), she counsels CEOs on how not to act like dickweeds.

REDUCING WAGES TO "MARKET-CLEARING LEVELS"

What caught my eye was a recent post by Ms. Pratch entitled: "Are U.S. Workers Overpaid?"

Hmmm… But who, pray tell, is a "worker?" Don't we all work? Doesn't Ms. Pratch herself "work" for a living?

The term "work" comes from Old English "weorc," its original meaning closer to achievement, accomplishment, or deed — the outcome of one's labor rather than the process of one's labor (i.e., doing work). But over the centuries, the term "worker" has evolved to connote more about the process of work, particularly manual, industrial, or manufacturing labor… or as a catch-all: unskilled labor.

For example, Marxists deepened the association of "worker" with manual labor in mid-1800s, as did the U.S. trade union movement during the Industrial Revolution, and Maoists in the 1920s with their identification of "workers and oppressed peoples."

All this is a neat preface to Mr. Pratch's point when she says:

"U.S. workers are overpaid relative to equally-productive foreign workersdoing the same work. If the global economy is ever going to get back into balance, that gap needs to be closed…

"It's possible to run the numbers to show that U.S. manufacturing workers should take average real wage cuts as much as 20% to get into global balance. The required cut may be smaller."

[emphasis added]

And if one follows today's economic debate — about jobs, wages, inflation, and middle class prosperity — the crux of the problem always seems to be these pesky "workers" wages. U.S. "workers" are uncompetitive and they have to suck it up and take a pay cut.

Pay has to be "equalized" to "market clearing levels," according to Pratch, so that poor countries no longer outcompete "rich" countries simply on wages and productivity. The threat hanging over our collective heads is… "something approaching 1930s levels of unemployment."

A "WORKER" HERE, A "WORKER" THERE…

What's interesting here is that the cultural definition of "worker" (i.e., our notions about who is and isn't one) is central to the economic debate and greatly influences its outcome.

The products that all "workers" make are pretty much the same (notwithstanding Chinese drywall, pet food, kid's toys, heparin, etc.). A running shoe made in India is usually not materially different from one made in Indiana.

So it begs the question: If that shoe up on the shelf is worth $100 no matter where it's made, then why shouldn't the worker's share of the price be the same no matter where he or she lives? The aggregate work contribution is the same, whether it takes two man-hours on an expensive machine, or twenty man-hours at a wooden bench in thatched hut.

The answer is that if we can get away with paying less to "workers" who live somewhere else, it's better for profits… and thus, shareholders.

But such wage penalties are only applied to a subset of "workers"… only those whose jobs are mobile. It's mobility that's being penalized. Not intrinsic talent, contribution or worth.

The relevance of linguistic hair-splitting becomes clear when one considers other types of "workers"… say, of the over-paid, linguistically challenged consultant variety.

These "workers" get to charge $200 to $300 an hour to tell a CEO not to act like an asshole because that particular job isn't mobile… the CEO lives in a rich country and won't move to a poor country to save the company money.

THE DOUBLE STANDARD FOR EXECUTIVE "WORKERS"

Here's a funny thing about executive "workers": Even if the CEO did decide to move to a poor country, he'd probably get paid MORE to do so. It's called a "foreign service bonus" or a "hardship bonus."

When "work" shifts overseas for the LOCAL talent to do it, the "worker" gets paid less. But when a U.S. "executive" has to move to such a country, he actually gets paid MORE. Living with substandard amenities earns you a premium, but only if you're starting out from a place of privilege.

There's something pretty hinky about insisting that I deserve to be paid more to go live among you in your foreign, peasant shithole… but since you already live there and you're used to it, you deserve to be paid a lot less than a non-shithole-dwelling (i.e., Western) "worker" gets paid for doing the same job.

Economists will no doubt tell me I have it all wrong. It's all about capital flows, and efficiency gains, and labor cost equalization, and productivity measures, and a whole lot of other intricacies that the un-schooled do not understand. I would reply that it's about language: meaning, understanding, and perception.

Instead of saying that U.S. wages are too high, why can't we just say that really really poor "workers" deserve a really really big raise?

After all, whether I pay the "worker" 15 dollars an hour to work on a machine, or 5 cents an hour to work at a wooden bench, I'm sill going to charge you $100 for the sneakers. And I'm still going to pay Ms. Pratch her First-World salary to show me how to do it in the nicest, most humane, gender-neutral kind of way. With an "active coping style" of course.

The question gives lie to Pratch's assertion about the "required cut" in U.S. wages. There is nothing "required" about it. No invisible hand is signing U.S. pink slips. No unseen irresistible cosmic force "requires" that poor workers get paid less.

These are choices that people make because we can. And while we may look to the complex jargonistic labels of economics for rationalizations and justifications, there really aren't any. Wage levels (for both the unskilled and skilled alike) are a relative value based simply on an accident of history: where you were born. Keeping them that way is a choice, not an act of God.

LEVELLING THE CEO

To the author(s) partial credit, in the comments section of the blog post, Ms.Pratch's colleague clarifies their position on CEO pay:

"In our article we classify CEOs as workers. CEOs are employed by the shareholders via the board. Most CEOs are not owners of their business. CEO wages need to get normalized as well."

Well actually, in the article Ms. Pratch says no such thing. There is no mention anywhere of "CEOs as workers." And CEO wages being equalized DOWNWARD is about as likely as Rush Limbaugh tongue kissing John McCain on the Capitol steps.

All the references in Ms. Pratch's piece clearly are to "workers" of the manual, industrial, manufacturing, unskilled, under-educated variety. And her partner Raj's hostility to "workers" of this ilk is evident in his comment:

"Lazing in a recliner, claiming exploitation, blaming the world and reminiscing about past glories is not the playbook to compete globally."

Unless of course you're an ousted CEO who flew off on his golden parachute to a comfortable retirement in Boca. Or an academic with a thriving CEO baby-sitting practice.

Economists treat "workers" akin to vivisection subjects only because they don't identify with them. The word "worker" has a precise cultural meaning that splits them off from all of us who "work" for a living, but whose jobs are not mobile enough to be vulnerable.

All of that is changing. For those of us lucky enough to have jobs these days, "work" is a blessing. But it's also a source of angst. Even many "workers" of the executive variety are now finding themselves just as vulnerable as workers of every other kind.

Figuring out a solution to our employment, wage and quality of life issues requires dropping our current limited concept of "worker" — as well as its narrow implications. Everyone is vulnerable, even Ms. Pratch and her fellows in the consultant class. Have you seen the quality of the robots coming out of Japan these days?!

[P.S. "orthogonal" = perpendicular; and if you teach yourself how to "extrapolate a vector in an orthogonal dimension" you'll have job security for life!]