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If the populist view of wage determination is true, then we’d see that the only reason firms pay workers more than the bare minimum is to keep workers alive enough to continue exploiting. Further, if that narrative were true, then the only other reason why firms pay more than that amount is because labor market regulations force them to.

I’m not here to dispute that firms are greedy or not. But I think this narrative leads to a simple empirical test. If this is the way that wages are determined, couldn’t one look at the level of wages in the black market, and see how wages in black markets have evolved over time, to answer the question? If the exploitation theory is the only one operating, then wouldn’t folks outside the regulated sectors be paid the barest of bare minimums? Of course, I think I read the original Freakonomics data on drug dealing as suggesting this. But is that the rule, the exception, or am I not reading that data right? 

2 Responses to “What Protects Workers?”

  1. Harry says:

    I feel for WC, being surrounded by people who worry about the exploitation of labor. If they are faculty thinking of themselves as labor, and are members of a union organized to protect themselves from being exploited by management, I am sorry for them.

    So, where elsewhere, at least in the US, is there the exploitation of labor?

    There is exploitation of big corporations, like Exxon, where the government makes them cough up billions of dollars as if they were ahead in line as owners, without having to put up a dime of equity, as if it is their right as Dukes. This money is taken from the stockholders and employees of Exxon, an exploited minority, to serve the redistributive urges of Elizabeth Warren and Chuck Schumer, who have Platonically received a vision of justice.

    So, if ExxonMobil is the archetypical enemy, not the buy local small businessman, how have either exploited labor, and don’t argue it is because Exxon has been unionized?

  2. Harry says:

    I meant to say, “…not the buy-local small businessman…”

    Presumably if you have a local business and still get screwed by the government, you should get the business of the compassionate liberals. You are not bad.

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