When was the last time you were exploited?
Was it at a baseball game, when you were forced to pay $20 for parking and $10 for nachos? At work, when you were forced to accept less pay than you know you’re really worth? When you wrote a check to your landlord for $200 more than you think the price of your monthly rent should be?
You might not like me after I tell you this, but you weren’t being exploited in any of those situations.
You voluntarily paid for that parking space and those nachos, showed up for work every day to earn that paycheck, and signed a lease for your apartment. I’m assuming, and hoping, that when you showed up to tour your apartment, the property manager didn’t club you over the head to knock you out, forge your signature on a lease, then rent a moving truck and transport your belongings from your old place to your new one so you’d be forced to pay rent there for the next year.
So why do so many of us complain about being taken advantage of in these situations?
Because companies charge exorbitant prices and issue skimpy paychecks—right?
When people complain about businesses charging “exorbitant” or “excessively high” prices, they are acting as if it is their right to receive the product or service. Likewise, when they complain about their employer underpaying them, they are acting as if they have a right to a larger paycheck. It’s as if they believe they are owed a good or service or a certain level of income. I label these complainers “entitled-ists.”
The truth is, prices and wages are a function of supply and demand, and nobody is entitled to the property of another.
Businesses and CEOs are often portrayed as evil and greedy, while consumers are often portrayed as innocent victims held hostage by a business’s actions — forced to pay any price the business charges for its goods or services.
If businesses are evil and greedy for wanting to charge more for their products or pay their employees less, then isn’t it only fair to say that consumers and employees are also evil and greedy when they want to pay less or receive a larger paycheck?
To get my economics students to think critically and fairly, I ask them to think about a few questions and situations.
Should you feel guilty for underpaying?
When you go to Starbucks and pay $4 for an iced caramel macchiato even though you would have been willing to pay $5, you walk out with $1 of what economists call consumer surplus. Do you leave Starbucks feeling greedy or guilty for underpaying? Do you feel like you ripped Starbucks off or took advantage of the company? Do you go back and offer the extra $1?
No, you do not, and neither would anyone else. But when Starbucks raises prices, it’s a different story. Starbucks is taking advantage of us and our coffee-drinking habits!
Here’s another scenario. Rent control is a big issue in expensive places like the Bay Area, where I live. In San Francisco, for example, most tenants are covered by rent control. Renters think it’s great; landlords hate it.
Most economics textbooks focus on the positive economics — the objective, sometimes unintended consequences of business decisions and public policies. However, I like to push the normative issues — the value judgments and conceptions of fairness surrounding an issue. Of course, tenants would love to pay lower rents for their apartments while landlords would love to charge more each month. Most individuals would view the latter as unfair while seeing no problem with the former.
Why is the tenant moral for wanting to pay less, but the landlord is evil if he or she wants to charge more? Do landlords owe people a place to live? Do tenants have a right to live in someone else’s private property? A free market, property rights perspective would say that it is arrogant to believe that private property owners owe their property to others or that one is owed someone else’s property.
What do professors and NFL cheerleaders have in common?
Here’s another example I share with my students: I tell them that if they saw my paycheck, they would see that I am being exploited. Many agree with me and stand behind me in solidarity, probably because they have heard the same complaint from their high school teachers or other college professors.
Yes, I would love to earn more and I think I am worth it. Moreover, I will never turn down a pay raise. In fact, several years ago when California was going through a budget crisis, my salary was cut — but I still chose to work.
After letting students think about my complaint for a while, I ask them how they know that I am actually not being exploited. Eventually, a student will respond correctly by saying, “Because you are here.”
And they’re right. What’s more, when I accepted that pay cut, it meant that I was willing to work all along for that lower pay. Was I “ripping off” or exploiting my university? Should I have returned all that “extra pay” I received prior to the pay cut? Do you think my colleagues felt immoral for taking more money than the minimum that was required for them to offer their teaching services? I don’t think so.
My action of voluntarily going to work speaks louder than my words of complaint. Now, do I feel guilty for wanting to get paid more? Do my colleagues feel guilty or call themselves greedy when advocating for higher pay? Not at all.
Similarly, NFL cheerleaders complain about their own exploitation. These women get paid the minimum wage — less than some concession stand employees. The cheerleaders argue that they generate a significant amount of revenue for their respective teams and for the NFL through calendars, other merchandise, and guest appearances, and that because of this, they should get a larger piece of the pie.
But are these women forced to be cheerleaders and perform? The fact that they go to tryouts to make the team (there’s even a reality show, Dallas Cowboys Cheerleaders: Making the Team, on CMT) and choose to spend a significant amount of time practicing their routines makes it clear that it must be worth it to them to say, “I’m an NFL cheerleader,” and that they must want the job enough to accept its terms and conditions.
Can the teams afford to pay more? Yes. However, I can afford to pay more for most of the things I purchase. Am I being immoral for not voluntarily paying that extra amount? No. Then why are NFL owners viewed as immoral when they don’t pay as much as they can? The benefits of the job — both monetary and other — must outweigh the costs for these women because if this was not the case, then women either wouldn’t bother to try to make the team or they would be ex-cheerleaders, not current ones complaining about being exploited.
Who’s making us buy sports tickets?
A final example I bring up in the classroom is the number of people I have heard over the years complain about sporting event ticket and concession stand prices. I have been to several San Francisco Giants and San Jose Sharks games. Maybe my experience is unusual, but I have always voluntarily gone to the ticket window or website, pulled out my wallet with my own hand, and ordered the tickets for the game.
I have never been hit over the head and woken up in a stadium with money missing from my wallet. I have never had a concession stand employee jump over the counter, knock me down, take my money, and force a hot dog into my hand. I have always willingly bought the food and drinks and, because I am polite, I even say thank you. Would I thank someone for ripping me off or exploiting me?
Of course, I wish I could get sporting event tickets, a place to live, and gourmet coffee at a minimal or zero price, but that’s not how it works. At a minimal price, those things wouldn’t even be available because there would be too little incentive to produce them.
So the next time you think you’ve been ripped off, ask yourself if you decided to show up at work or buy that “overpriced” item by choice. If you did, the market is functioning as it should.