What Does Minimum Wage Represent In Capitalism?

What does minimum wage represent?
Aug 30, 2022
6 min

A wage is a periodic payment (of money) for a person's time. In a similar manner, a salary also represents a periodic payment for time; but usually over an annual period. In any case, a salary is a wage. As an example, a worker who earns $15 per hour is paid a wage or an equivalent salary of $31,200 per year. A person who earns a wage is known as a wagie.

The Efficiency of Time Tracking

In contrast to objective work (i.e a service), the time a worker spends working does NOT result in a specific amount of output. Instead, the output of a worker who works for a specific time period (such as an hour) will vary based on their individual effort and field. The significance of this phenomenon is that wagies are not paid based on the value they provide; rather the market rate of their time (within their specific field).

The mismatch in the actual output of a wagie vs. the expected output of a wagie causes a few problems. Namely, it results in wagies being measured by their expected time input AND an expected objective output. In other words, wagies must meet time requirements in addition to other objectives. As an example, a wagie may be expected to flip 60 burgers in an hour or ship 60 packages to avoid being shitcanned. These objective expectations — which are benchmarked based on prior output — do not favor the wagie in most cases.

Paying For Time

The theoretical value proposition of a wage is time; specifically the wagies’. In practice, most people paying for time actually expect an objective result (derived from the wagie’s time). In other words, very few people are paid to sit around and do nothing. When you walk into a fast food restaurant, the workers are expected to use their time — that the restaurant pays for — to satisfy the customer: “Would you like fries with that?”

Due to the factors explained above, paying for time is inefficient. On one hand, wagies can place a variable amount of effort per hour (or per any other time period) while their compensation remains unaffected. On the other hand, companies can raise the objective expectations (that bring the company value) of a wagie without increasing the wagie's underlying compensation. In either case, efficient payment of time — where a wagie is paid fairly for their time — would require the employer to track the employee's time AND their use of it.

How To Track Literal Time

Time is an abstracted concept by humans representing progression through a dimension(s). While humans have created clocks and computers that allow us to track time, these methods of measurement are flawed. Modern time measurement is based on the movement of the Earth in relation to the Sun. While this measurement suffices for business purposes, it's not 100% correct. Have you ever wondered why leap years exist? The concept is a correction in the flaws of our time measurement. The How Earth Moves video showcases how slight movements of the Earth can alter the amount of time that passes in a given period.

The other reality is that time on Earth isn’t even consistent. The Earth’s rotation isn’t constant due to a variety of factors, as explained in “It’s time to leave the leap second in the past (Facebook Engineering)”. This results in humans having to make their computers “go back in time”; a practice Meta, Google, and Amazon wish to end. Perhaps, Jeff Bezos has figured out the solution to this problem with his 10,000 Year Clock. Otherwise, the significance of these facts is that the modern measurement of time by humans is always wrong.

As we have stated, companies — in the real world — pay wagies for the effort that is derived from the time (a wagie spends working). As a result, companies do NOT want to simply track time; but also the use of it. When a company tracks the use of a wagie’s literal time, the company wants to know that the wagie is continuously putting in effort throughout a given time period (in which the wagie is paid). Unfortunately, a stopwatch will not be enough to solve this problem. Instead, you need physical cameras and advanced behavior heuristics — such as the Amazon Warehouse Time Tracker — to track and categorize how time is spent for each task. This is impractical for most companies.

Time Tracking of Objective Work

The time tracking of objective work occurs when a wagie is compensated for the amount of time it takes them to complete an objective. For all intents and purposes, paying for the time spent completing objective work faces the flaws that paying for literal time does; albeit inversely. In the wagie’s case, a periodic rate (i.e hourly) may be established prior to the completion of a given objective. Once completed, the wagie is paid based on the periodic rate * time it took to complete said objective.

As an example, you can contract a wagie at $15/hr to cook 60 burgers. The contract states that the wagie’s compensation will be the result of hours spent * $15 once the 60 burgers are completed and satisfactory. If the wagie takes 2 hours to cook 60 burgers, they will be paid 2 * $15 = $30. If the wagie takes 3 hours to cook 60 burgers, they will be paid 3 * $15 = $45.

The example above shows how paying for the time spent on an objective is inefficient and flawed. The payment structure is inefficient because you will always pay a different amount for the same objective. The payment structure is flawed because the wagie is rewarded for taking extra time (regardless of its need). These issues can be avoided through the use of a service model, where a person is paid to complete an objective directly; instead of their time.

Time Tracking of Knowledge Work

The time tracking of knowledge work occurs when a wagie is compensated for the amount of time it takes them to complete an objective involving knowledge work. A knowledge worker spends time collecting information (or is expected to have already acquired said information) to complete an objective. Programmers, physicians, pharmacists, architects, engineers, scientists, design thinkers, public accountants, lawyers, editors, and academics are all examples of knowledge workers.  The issues with this payment structure mirror the same issues that other payment structures — involving the tracking of time — face: There can be a mismatch in the actual output of a wagie vs. the expected output of a wagie.

The other issue with the time tracking of knowledge work results from its unknowns. To be specific, the amount of energy required to complete an objective — that involves knowledge work — is usually unknown. While the amount of time it takes to cook a burger can be estimated (based on the oven temperature and number of burger flips), the amount of time it takes to research AND implement a burger flipping machine can NOT. This results in a humongous inefficiency that wagies can benefit or suffer from.

See xkcd #1425 (tasks).

What Does Minimum Wage Represent?

We have established that a wage represents the (market rate) cost of a person's literal time; derivative of the person’s output. As a result, a minimum wage represents a price floor used to ensure wages do not drop too low. The requirement of a minimum wage price floor (law) implies that people would be paid less without said law. In other words, a lack of a minimum wage would allow a person's time to be worth less; approaching $0 or even becoming a negative value. When the actual minimum wage is negative, wagies must pay to work. 

“You should pay me to work."

When minimum wage is less than a livable wage (which allows an individual to support themselves), it means that an individual's time is not worth more than that individual living. One can argue on this basis that it would be beneficial — to other wagies — for the total amount of wagies to be lowered in supply (when demand remains constant). In other words, it’s better for them to die rather than continue living.

This contradicts the modern capitalist belief that the economy is never overpopulated.

What Is The Problem With a Low Minimum Wage?

When the minimum wage is too low, people will begin to enter survival mode. Someone who is hungry will engage in theft to sustain themselves. Others will riot and loot those that enforce the system that has placed them — the rioters — in their current predicaments. In short, a low minimum wage indicates a failure of society for everyone involved. This means that the only thing protecting our society from complete collapse is a 300 year old political system that has faltered once before. If a low minimum wage represents collapse, the enforcement of a minimum wage — in the first place — represents mitigation. It implies that there is a flaw in Capitalism.

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