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Aug. 8, 2017 - Freedomain Radio - Stefan Molyneux
09:51
3782 The Wage Gap Explained in 10 Minutes
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Hi everybody, it's Stefan Molyneux from Free Domain Radio.
Welcome to your daily argument.
So, when I was 14 or so, I had like three jobs.
I like cleaned offices, I cleaned people's houses, and I had a job in a hardware store.
Now, when I interviewed for the job in the hardware store...
The manager, the owner, he said to me, do you know how to fix screen doors?
And I was like, yeah, I'm pretty sure I know how to do that.
And I wasn't, you know, really sure, but I figured I could figure it out.
You tend to be pretty entrepreneurial and optimistic when you're desperate.
And so for the first couple of days that I worked there, though, I kind of avoided the basement of the store where the screen doors were all lying waiting to be fixed because I didn't really know how to fix the screen door very well.
So what I did was I like swept and I tied it and I, you know, in the hardware store they have those like buckets of nuts and bolts.
I lifted them up, these are wire buckets.
I lifted them up, cleaned underneath and makes his store look really good and so on.
And at some point he just kind of cornered me the store and he was annoyed.
And he said, hey man, can you do something that's going to make me some money?
I mean, how do you think I'm paying you?
It's not out of the goodness of my heart.
Make me some money and that way I can afford to pay you.
And I was like... I think I'm getting some inkling of where my salary comes from.
And so I said, okay, can you just run over with me again how to fix a screen door?
We went down to the basement. He showed me.
Ten minutes later, I got it sorted out.
And then I was getting paid a couple of bucks an hour.
And I could fix like two screen doors in half an hour.
And he could sell the screen doors being fixed for like ten bucks a pop.
So that was my first real inkling of how I got paid, of why I got paid, what I got paid.
Because it wasn't him, it wasn't the hardware store owner who was paying me, you understand?
He was just the flow-through mechanism for the customers to pay me.
The customers wanted fixed-screen doors.
And so they paid him the $10.
And out of that $10, he paid me a couple of bucks.
I can't remember if it was $4 or $5.
He paid me a couple of bucks to fix the screen doors.
And he kept some for himself because he had the store to run and all that.
And that all made sense to me.
But I really sort of understood that it wasn't his whim.
Me tidying up his store, it was kind of okay.
It's not a bad thing to do if you're...
If there's nothing going on, but it didn't actually really make him much money.
So what he wanted was to give me the money that his customers were giving him.
And if the customers weren't giving him money for my services, there was no money to pay me.
Because there's two approaches to salary.
One is, well, you just get paid whatever the boss wants.
Whims to pay you. And this is, of course, what happens if you're not able to provide much economic value.
In other words, if you've gone to government schools and crap, if you're not able to provide much economic value, then what happens is if you can't produce more than 10 bucks worth of value to an employer, he's really not going to be able to pay you more than 10 bucks, right?
And so if I said, I want to be paid 50 bucks an hour to this guy for fixing screen doors, he says, well, you can only fix screen doors.
You can only fix two an hour.
That's 20 bucks for me.
I can't pay you 50 bucks to make me 20 bucks.
I'm going to lose 30 bucks and go out of business.
So, this is important to understand when it comes to wages.
It's not just some arbitrary whim of the employer.
And the employer doesn't pay your wages.
The employer facilitates or provides an environment wherein it is convenient for the customer to pay your wages.
Like, if you're some movie star, right?
Tom Cruise, whoever it is, right?
Brad Pitt or whatever. What's called open a movie.
In other words, if people will come and see you in a movie just because you're in it.
Oh, it's a Brad Pitt movie. I've got to go see it or whatever.
And if you can get free publicity, free marketing, if you can get interviews, if people will put you on TV, if you can get a press conference going and people will show up because you're this movie star, then let's say you're producing $15 million worth of value to the movie.
And what that means is it's not the movie studio or the producer or the director or anyone else like that who pays you your salary.
It's the moviegoers.
It's the people who are going to buy the tickets who pay you your salary.
This is really, really important to understand.
And so if you can provide $15 million worth of value to a movie, they're going to pay you $15 million.
I mean, you know, I understand there's a little flexibility in there, but this is just for the sake of simplicity.
And that's because it's the movie-goers who pay your salary.
But the reason people want to take the customers out of the equation is that people...
I mean, you always have a choice.
If you're not being paid enough, if you want to be paid more, you have two choices.
Like, one, you can work hard to increase the value that you're providing to the customers.
You can work hard to up your skills.
You can work hard to increase your...
Human capital. You can work hard to increase your skills.
Whatever it is, right? You can invent something.
You can create something. You can learn how to sell stuff.
Lots of different things you can do.
And that way, you provide more value to the customers.
And because you provide more value to the customers, you will be paid more by the owner of the business, by your boss.
Or at least he can make a good case for it.
Or if he won't, someone else will.
So, that's one thing.
The other thing you can do is you can whine and complain and have the government force people to pay you more.
So, in the real world where the customers pay your salary, what's the government going to do?
Is the government going to herd up people and force them to go and see movies?
Is the customer going to herd up clients and force them to buy from you?
It doesn't make any sense. That would be wrong and obviously bad.
So what people love to do is they take the customers out of the equation so that the relationship is like boss-employee because you can force the boss to do something in a way that it's really hard to force the customers to do something.
So that is really, really important to understand.
It is the customers who pay the salary.
So the question is...
People start bringing up the gender pay gap, right?
If somebody is undervalued...
What that means is that a boss is paying him, or let's just say her, a boss is paying a woman far less than the customers are valuing her.
Right? That's really important, right?
So let's say that there was a woman next to me in the hardware store and she could fix 10 screen doors an hour and I could only fix two.
Should she be paid more?
Well, sure, because she's providing more value to the customers, assuming the quality is equal and so on, right?
And so, if he doesn't Pay her more for her greater productivity.
Then she's going to get annoyed.
She's going to get upset. She's either going to cut back on what she does.
Like, why should I work so hard and be so fast and do all of this stuff if I'm not going to get paid anymore?
So he loses the value of her productivity.
He loses her motivation if he doesn't pay her what she's worth.
That's really important to understand.
Or she's just going to go elsewhere.
She's going to start looking for other work.
They're going to go and interview. They say, how many screen doors?
An hour can you fix? She's like six.
Wow. Okay, well, I'm going to pay you 20 bucks an hour, 25 bucks an hour, whatever, right?
So he's going to lose her productivity if he doesn't pay her more, either through inertia, like just don't want to bother, or through competition.
So if people say, well, it's unfair that women are paid 75 cents on the dollar, 70 cents on the dollar, Then all you have to do is ask them and say, okay, let's say you are in a store.
So you're in a computer store.
You need a computer. And the identical computer is there.
And one costs $1,000 and one costs $700.
They're absolutely identical.
Absolutely identical. One costs $1,000, or maybe like the sign fell off the one that costs $1,000 that says $300 off or whatever.
Same computer, $1,000 or $700.
Which one are you going to buy?
And of course, every sane human being will say, well, I'd buy the $700 one.
Everything's the same. Why would I buy the $700 one?
Right. Exactly.
And that's how you know there's no such thing as a gender wage gap.
Because if men and women produce identical outputs, have identical value to the customer, but one is being paid 70 cents on the dollar.
One's being paid 7 bucks, the other one's being paid 10 bucks, but then they're going to bid people up.
You understand? Or what the man will do is he'll say, wait a minute, if I only have to produce 7 dollars worth of value, I'll only produce 7 dollars worth of value to get paid 10 bucks.
In the same way the woman is going to cut back on the amount of screen doors she fixes if she's going to get paid the same as slow me.
So this is how you know that it's choices women are making.
They choose to work part-time.
Women spend significantly less time at work than men.
The education that women pursue is lower paying than the sort of high-end, you know, petroleum engineering and all of these kinds of things that men pursue.
So women make choices which make them less valuable.
To customers. Customers in the marketplace prefer or find more valuable a petroleum engineer than a social worker or something like that.
And so it's just choices that women make.
And of course, choices are wonderful, don't we all?
Love having and being able to make choices.
Ask people, how do you think someone gets paid?
Or why is it that someone gets paid a certain amount versus another amount?
Why do some people get paid more and some people get paid less?
Ask them if they understand anything.
And, you know, it's always useful to say, well, have you ever hired anyone?
Have you ever been responsible for payroll?
If not, well, what are they doing?
They're living in the realm of ideology and manipulation and social control.
And kiss those arguments goodbye until they learn better.
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