The Impact of the Economic System, Occupational Segregation, Unionization and Geography on Wages and Benefits
1. Introduction
There are many factors influencing wages and benefits in the workplace. In this paper, we will discuss the impact of the economic system, occupational segregation, unionization and geography on wages and benefits.
2. The conflict theory of Karl Marx
Karl Marx’s conflict theory is based on the idea that there is a struggle between different social classes in society. According to Marx, the capitalist system is responsible for creating two main classes: the capitalists (the ruling class) and the workers (the working class). The capitalists own the means of production (e.g. factories, land, machinery), while the workers sell their labour power to the capitalists in return for a wage.
Marx believed that the capitalist system is unfair because it allows the capitalists to exploit the workers. The workers are exploited because they receive a wage that is less than the value of their labour power. The difference between the value of labour power and the wage paid to the worker is called surplus value. The surplus value is used to make profits for the capitalists.
Marx argued that the exploitation of workers under capitalism would lead to a struggle between the working class and the ruling class. He believed that eventually, the working class would overthrow the capitalists and create a classless society.
3. The capitalist system
The capitalist system is an economic system in which private individuals or businesses own the means of production (e.g. factories, land, machinery). These private owners produce goods or services for profit, rather than for use. Under capitalism, production is driven by competition between different firms vying for profits.
4. Exploitation under capitalism
As we have seen, Marx believed that workers are exploited under capitalism because they receive a wage that is less than the value of their labour power. This happens because capitalists buy labour power from workers at its market value, but then use it to produce more value than what they paid for it (i.e. they extract surplus value from workers). For example, if a worker is paid £10 per hour for their labour power, but produces £20 worth of goods or services in that hour, then the employer has extracted £10 of surplus value from that worker.
5. Surplus value
Surplus value is the difference between the value of a worker’s labour power and the wage paid to them by their employer. As we have seen, surplus value is created when workers produce more value than what they are paid in wages – i.e. when they create wealth for their employer beyond what their employer has given them in exchange for their work (i.e. their labour power). Surplus value is essentially unearned income for capitalists, which they accumulate through exploiting workers’ labour power.(2) It should be noted that Marx’s theory only applies to workers who are paid a wage for their work (i.e. those who do not own their own means of production). It does not apply to self-employed individuals or those who own their own businesses.(3)
6. Social class
Under capitalism, there are two main classes of people: the capitalists (the ruling class) and the workers (the working class). The ruling class are the owners of the means of production, while the working class are those who sell their labour power to the capitalists in return for a wage.
7. Wages and benefits: the white men’s advantage
White men have always been the highest earners in the labour market. In 2018, median hourly earnings for white men were £15.97, compared to £12.86 for black men, £11.82 for women and £9.93 for Asian men.(4)
There are several reasons for this. Firstly, white men are more likely to work in high-paying jobs, such as management roles. Secondly, white men are more likely to be unionized, which gives them more power to negotiate higher wages and better benefits. Thirdly, white men tend to live in areas with higher wages and benefits.
8. Wages and benefits: the black men’s disadvantage
As we have seen, black men earn less than white men, on average. This is because they are more likely to work in low-paying jobs, such as manual labour roles. They are also less likely to be unionized, which gives them less power to negotiate higher wages and better benefits. In addition, black men tend to live in areas with lower wages and benefits.(5)
9. Women’s wages and benefits: the glass ceiling
Although women have made great strides in the labour market in recent years, they still earn less than men – on average £11.82 per hour compared to £15.97 per hour for men.(4) This is because women are more likely to work in low-paying jobs, such as cleaning or caring roles. They are also more likely to be part-time workers, which means they earn less over the course of a year than full-time workers. In addition, women are less likely to be unionized, which gives them less power to negotiate higher wages and better benefits. Finally, the “glass ceiling” prevents women from advancing into management roles.(6)
10. Trade unions
Trade unions are organizations that represent workers’ interests and bargain with employers over wages and working conditions.(7) Unions give workers more power to negotiate higher wages and better benefits because they can threaten to go on strike if their demands are not met.(8) Moreover, unions can put pressure on employers through campaigning and publicity.(9)
11. Management jobs: the male gender advantage
Men are more likely than women to work in management roles.(10) This is because of the “glass ceiling” – a barrier that prevents women from advancing into management positions.(6) As a result, men have more power to negotiate higher wages and better benefits than women.
12. Nursing and air hostess jobs: the female gender disadvantage
Nursing and air hostess jobs are typically seen as “female” jobs.(11) As a result, these occupations are often undervalued and underpaid relative to other occupations.(12) This means that women who work in these occupations have less power to negotiate higher wages and better benefits than men.
13. Conclusion
In conclusion, the economic system, occupational segregation, unionization and geography play a great role on wages and benefits in an organisation.