Busting the ‘paid what you’re worth’ myth

It is distorting our politics, rigging our markets, and granting unprecedented power to a handful of people while millions of Americans struggle to get by.


You’ve probably heard that everyone is “paid what they’re worth.” Don’t buy it.

According to this mythology, workers at the bottom are “unskilled” and don’t deserve more than what they currently earn.

Minimum wage workers at McDonald’s are paid what they are worth in the so-called “free market.” If they were worth more, they’d earn more.

By the same logic, the CEO of McDonald’s is worth his multi-million dollar compensation package.

The notion that people are paid what they’re “worth” is by now so deeply ingrained in the public consciousness that many who earn very little assume it’s their own fault that they don’t earn more. That they simply lack the skills they need to be paid more.

But there’s no such thing as unskilled workers. Only underpaid workers. Their productivity — that is the value of what they produce — has been growing for decades. The problem is that their wages haven’t kept pace with their productivity.

The “paid what you’re worth” mythology also lures the unsuspecting into thinking nothing can be done to change what people are paid. It’s simply the way the market works.

Meanwhile, according to this same view, CEOs who rake in tens of millions and Wall Street traders who rake in hundreds of millions, are simply being paid what they’re “worth” because that’s what the market has dictated.

Rubbish. The “paid what you’re worth” fairytale ignores power and disregards policies that have made inequality skyrocket. Like the demise of antitrust enforcement, which has given big corporations the power to set prices, make record profits, and reward their CEOs unprecedented compensation. This fairytale ignores the attacks on labor unions that have reduced union membership from over a third of all private-sector workers in the 1950s to just 6 percent today. All of this resulting in a massive shift in power and wealth from workers to owners.

Those at the top justify their staggering wealth, and they’re “worth,” three ways:

The first is trickle-down economics. They claim that their wealth trickles down to everyone else as they invest it and create jobs. Just wait for it… But as we know, wealth at the top has soared for decades and nothing has trickled down.

The second is the “free market.” They talk about market forces beyond their control. But remember, markets are created by rules. These rules don’t exist in nature; they are human creations. The political power of the wealthy has let them change the rules for their own benefit — busting unions, monopolizing industries, and reaping big tax cuts.

The third is the idea that they’re superior human beings. Sure, they may be talented but this doesn’t justify the staggering amount of wealth they are now taking home. Nor does it justify the amount of wealth they will pass down to heirs. The biggest intergenerational transfer of wealth in history will occur over the next 25 years as the richest 1.5% of Americans hand down roughly some $36 trillion dollars to their children and grandchildren. That doesn’t make those heirs superior. It makes them lucky.

The reality is there’s no justification for today’s extraordinary concentration of wealth at the very top. Or for how little people are paid at the bottom.

The “paid what you’re worth” myth has proven to be a cruelly effective way to put the blame on workers for not getting ahead — while giving the rich and powerful cover to rig the game for their own benefit.

It is distorting our politics, rigging our markets, and granting unprecedented power to a handful of people while millions of Americans struggle to get by.

Don’t fall for it.

Read it on Robert Reich’s blog.


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Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.