Via Pierre Rimbert in Le Monde Diplomatique (English Edition, sorry, subscription required) comes this really great British study by the New Economic Foundation whose conclusions and implications apply beyond the UK. The idea is to calculate the actual value of different kinds of jobs based not on what they are paid (surplus value) but on what they actually contribute to society.(social value). Occupations that produce social benefits and low social or environmental externalities have high social values whereas occupations that produce social ills and high environmental externalities have lower social value.
The occupations examined are
* Low pay
o Hospital cleaner
o Recycling plant worker
o Childcare worker
* High pay
o City banker
o Advertising executive
o Tax accountant
Based on comparing compensation and social value, the results are as follows (the full methodology is available in the study, of course):
Bankers: with salaries between £500,000 and £10 million, bankers destroy £7 of social value for every £1 in value they generate. The negative social effects should by now be obvious.
Advertising executives: paid between £50,000 and £12 million, they destroy £11 of social value for every £1 in value they generate (for example, through their promotion of environmental destruction and labor exploitation in the promotion of the consumption of cheap goods.
Tax accountants: paid between £75,000 and £200,000, they destroy £47 of social value for every £1 in value they generate (for instance, through their contribution to tax evasion).
Childcare workers: for every £1 they are paid, they generate £7 to £9.5 worth of social value.
Hospital cleaners: for every £1 they are paid, they generate £10 in social value.
Recycling plant workers: for every £1 they are paid, they generate £12 in social value.
In addition to this comparative study, the report also debunks ten myths regarding the relationship between pay and value (against, based on the UK but applicable beyond that):
Myth 1: the City is essential for the UK economy. Again, by now, we can clearly see the damage done by the inner workings of the financial centers of the Western world primarily. And financial practices like the ones that got us where we are do not even really contribute to growth. The report states, for the UK, the City generates a 3% a year in value added compared to 12.5% for manufacturing.
Myth 2: low-paid jobs are not locked. There are opportunities for advancement open to all. Well, that is, if one completely ignores the various forms of capital (economic, political, cultural and social) that the wealthy can accumulate and use more easily than those lower on the social ladder (see here and here).
Myth 3: Inequalities do not matter as long as poverty is reduced. Well, not so, as has been brilliantly demonstrated in The Spirit Level, inequalities are bad for society in and of themselves, regardless of the poverty level. More equal countries are produced better outcomes (in health, for instance) for all social classes, including the wealthy.
Myth 4: high salaries are needed to attract and retain talents. Boy, did we hear that one on TV when someone dared suggest that Wall Street pay and bonuses were obscene. Clearly, considering the outcomes, high salaries do not correlate with talent and other considerations factor in the decision where to work. More equal countries do not seem to have trouble retaining talented and innovative people.
Myth 5: highly paid workers work harder. No, a thousand times, no. First, low-paid people cannot afford hired help, so they do more housework and childcare. Also, they sometimes work two jobs with limited leisure time and vacations.
Myth 6: the private sector is more efficient than the public sector. No, no, don’t laugh. Only two examples suffice: health care, and private military contractors. ’nuff said.
Myth 7: If the rich get taxed at a proper level, they will take their money and run. Well, first, they can do that already without running thanks to extremely favorable tax codes and the existence of tax shelters. Also, again, residency decisions are often based on more than this one factor. And, again, life is more comfortable even for the wealthy in more equal countries as society is overall more secure, less violent and risky. Think of the very wealthy in Brazil who have to live in fortress-like gated communities, hire bodyguards to protect their children against kidnapping and commute by helicopters to avoid being assaulted in traffic.
Myth 8: the rich contribute more to society. Actually, again, they pay less taxes than other less wealthy, either through favorable tax laws or through regressive taxes (such as VATs). As a proportion of their income and wealth, they even give less to charity.
Myth 9: some jobs are satisfying, so, they don’t require as much pay. That one is often mentioned in relations to teachers, who are supposed to work out of pure dedication. And actually, the most dangerous / physically demanding jobs in society are not well-compensated at all.
Myth 10: pay always rewards profitability. Again, that is one of the (many) things that this recession has made clear: in the financial sector especially, pay and bonuses are not related to talent or profitability.
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