If America is Going Fix Its Wage Problem, It Needs to Fix Its Goods Problem.

More on the Share Economy: Quality products equal quality wages.

By Josh Feit August 15, 2013

Since Erica writes our daily "On Other Blogs Today" column, I don't get the same opportunity she does to pontificate about all the stories we link, either heaping praise or derision on them. 

On Monday, she linked a startling New Yorker article by the magazine's excellent economics columnist, James Surowiecki. In the piece, Surowiecki flags a fundamental problem with the current U.S. economy.

He explains that 50 years ago, the country’s biggest employers, manufacturers such as GM, Ford, and Bethlehem Steel, paid good wages. By contrast, he points out, today the country’s biggest employers—retailers and fast-food chains—pay the least. The result is a low-wage nation.

The other difference between today’s big employers and those from the past: 50 years ago, the top employers had healthy profit margins. Today’s biggest employers do not; in addition to low wages, the chief aspect of the fast-food, big box business model is low prices and slim margins. They make their money off sales volume—plus the low pay and skimpy benefits.

Desperate situations, the optimistic philosophy goes, are supposed to be blessings in disguise, that jar people into innovative practices that aren’t just solutions to the crisis at hand, but are broader shifts that improve life in general.

I’m trying to find the blessing in Surowiecki's gloomy conclusion: If you want to increase wages at the country’s largest employers, retail and fast-food chains, he writes: “You have to get consumers to accept significantly higher, and steadily rising prices. After decades in which we’ve grown used to cheap stuff, that won’t be easy.”

Indeed, in order to rebuild the middle class, the country’s biggest employers, such as Walmart, Target, and McDonald’s, would have to increase workers’ salaries dramatically. To preserve their profit margins, they'd also have to raise their prices. This would capsize the dominant American business model.

Selling higher quality products will reverberate through the economy. In a good way. But I think we’re starting to get to the blessing-in-disguise part.

The way the Walmarts and Targets and Mickey Ds of the world can raise their prices is by increasing the actual value of what they sell. Selling higher-quality products will reverberate through the economy, changing the efficiency MO at the back end from something that now means cutting corners into something that means enhancing the production process.

Increasing the value of what we make, sell, and buy will ultimately increase the value of how we live—spreading wealth rather than siphoning it.

I understand (from my journalism wages) that the economy needs lower-priced options—cheaper clothes, bargain household goods, practical cars, and thrifty food options. But that shouldn't be a greenlight to build an economy on junk. Quality is the common denominator between consumers and workers: quality goods = quality wages.

Bonus: Well-made products are built to share, which will get people thinking about collective consumption for big cost drivers such as transportation. Acknowledging that we want higher quality all around will force consumers to come up with smarter ways to pay for it.


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