The Law of Compensation - What People Should be Paid
The Law of Compensation is very simple. It says what a person is paid is determined by three things:
1) The type of work they do. (Brain surgeons are paid more than day-care workers.)
2) How well they do it. (A highly skilled worker with 20 years of experience is paid more than a novice.)
3) The difficulty of replacing them.
Labor unions exist largely to defeat the law of compensation. They violate the Sherman Act which prohibits collusion with others to set prices. Of course, unlike businesses, they are given an exemption to the Sherman Act.
For example, the National Football League owners cannot even discuss ticket prices among themselves without violating the Sherman Act while the players union can "negotiate" terms that say no rookie will be paid less than $340,000 per season and no five-year veteran will be paid less than $650,000 per season.
Public sector unions "negotiate" with friendly politicians for wages and benefits that generally exceed those of average taxpayers. Politicians willingly promise benefits, especially pensions, that are unaffordable because the politicians know the bills will come due long after they leave office. (Not to mention campaign contributions!)
Long after has now arrived. "Houston, we've got a problem."
Likewise Madison, Columbus, Indianapolis, your state capital, and Washington D.C. Perhaps it is time to fix the problem by applying the law of compensation.
No one who can easily be replaced by a similarly qualified and competent person at significantly lower pay should have their job and benefits protected simply because they collude with others in similar circumstances to shut down their employer if they do not get what they demand.
Labels: benefits, compensation, pay, unions