Pay Compensation Should Employers Ask

Economics and Global Capitalism: Comments

Article 1

I do not like the fact that employers ask an employee about past compensation: many workers are not happy with their current pay and seek out new jobs because they feel they deserve more compensation. When an employer assumes that whatever the employee earned at the last job should be satisfactory, the employer ignores the fact that wages have been stagnant for years, prices of virtually everything have gone up (from food to education to health care to homes to stocks), and that the value of the dollar has diminished. Employers should be more concerned about putting people before profits. The analysis of the article Scheiber (2018) essentially points out that employers have a responsibility to keep payroll low and also to pay fairly. If this is true, employers are in a lose-lose situation. Fair wages would mean increased wages, and increased wages would mean a higher payroll (assuming all positions are filled).

The article by Scheiber (2018) focuses mainly on the ways in which a law banning employers from asking about past compensation could be good and bad, but it views the topic through the lens of the gender wage gap. For me, this issue is not really that important because the gender wage gap is first of all a myth and is based on a misconception of statistics about hours and type of work done by men and women. The big issue with employers asking about past compensation that I see is that inflation is on the rise, the economy is late in the business cycle, workers have not seen significant increases in their wages for decades and meanwhile the 1% has gotten much wealthier thanks to stock buybacks, bailouts, and central bank interventions. Employers wanting to know how one was compensated in the past are missing the big picture: they should instead be looking at what they can do to make sure their workers feel they are getting paid fairly and at a level they feel they deserve.

Article 2

The tariffs imposed by Trump are actually quite weak and only impact a handful of nations (and even give them a route to obtaining a waiver so that they are not impacted by the tariffs). The main target of the tariffs is of course China, but the U.S. does not import the majority of its steel from China—only a small percentage really. The bulk of U.S. imported steel comes from Canada and Mexico and these two nations are not included in the tariff—mainly because Trump wants to work out a separate NAFTA deal with these two nations and is using this current tariff break as leverage to see if he can make a better deal for the U.S. with these two nations. If not, the threat of leveling the same tariff aimed at China can be used against Canada and Mexico.

The article by Swanson (2018) focuses mainly on how Trump is potentially instigating a trade war, and the analysis of this article neatly summarizes it but does not really provide any commentary or insight into what Swanson (2018) is saying. The fact is that there is much more to what is happening behind the scenes than what is being reported. Additionally, stocks took off (they went up) once Trump signed the tariffs last Friday—mainly because the market was relieved that the tariffs were so weak. The bigger indicator of why the global economy is in danger is not a trade war but rather the currency war that is going on, the insane credit bubbles that have been blown by the central banks of the world, from the Fed to the BOJ to the ECB to the PBOC, and then the endless chatter about Russian meddling, which Russia is very clearly taking seriously as it prepares its new hypersonic nuclear missiles in response. These are the more alarming indicators of things to come. Trump’s supposed foray into trade wars is the mere tip of a very large and dangerous iceberg that has been building for decades.