Actually, the idea that wages for jobs in the middle of the normal curve of skills/intelligence are set according to the difficulty of the job is completely false. The prices of all items in a market economy, including labor services, are set by the relative bargaining power of the employer and employee.

Bargaining power has several components of which skill-related supply is only one part. The lack of alternatives for the seller or buyer is another. The financial desperation of each side is another. The ability of the seller or the buyer to join together and present a unified bargaining position is another.

The assembly-line auto workers who are receiving about $38/hour plus benefits are no more intelligent or skilled than most fast-food workers. You could take most fast-food workers and put them on an assembly line with only a week or two of training.

The major difference in pay is that manufacturing facilities are far more subject to union and strike pressures than fast food locations which are decentralized. Union pressure increases the workers’ bargaining power.

An high imbalance in bargaining power on one side or another of a transaction has very little to do with value, skill, fairness, sweat, effort etc. It has everything to do with the factors that make the bargaining power on one side of the buyer/seller equation vastly stronger than the other.

Here is the link to a detailed discussion of how product and service pricing actually works in a market economy. For jobs in the middle of the normal curve of skills or abilities wage levels have very little to do with skill levels an almost everything to do with relative power levels.

Real-World Limitations On Bargaining Power, Not The Law Of Supply & Demand, Are The Primary Reasons For The Low Price For Unskilled Labor. — Supply And Demand Are Only Two Of The Many Factors That Affect Bargaining Power, And Bargaining Power, Not Supply & Demand, Is The Main Factor That Determines Price

— David Grace

Graduate of Stanford University & U.C. Berkeley Law School. Author of 17 novels and over 200 Medium columns on Economics, Politics, Law, Humor & Satire.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store