The pay-equity debate centers on the meaning of labor

Is labor a commodity or does it have and create value?

Minister for Workplace Relations and Safety Brooke van Velden. Photo: RNZ

The pay-equity debate brings to the fore something about the way that many free-market economists think about the world. They see the world in terms of supply and demand for different commodities. Moreover, they view everything as a commodity. Books, shoes, groceries, cars, massages, haircuts–all commodities.

All commodities are exchangeable but nothing has value outside of the price that someone is willing to pay for it. These free-market economists also treat labor as a commodity, exchangeable for wages.

Marxists view labor as the thing that creates value in commodities. The time and effort that someone puts into making something is what makes that thing valuable, not just the price that someone is willing to pay for it. So the pay-equity debate can be viewed as asking what should an employer be willing to pay for work of the same value, even if the work itself is different? This hinges on the ability to be able to assess the value of work across different types of work.

Free-market economists such as Milton Friedman, Brooke van-Velden’s self-professed favorite economist, because they view labor strictly as a commodity, cannot conceive of it as having value outside of what employers are willing to pay for it. The best they can do is say that people of different sexes should be paid the same for the exact same work.¹

Marxists and leftwing economists and policymakers would argue that people should be paid an equivalent amount for labor of the same value, which cannot be directly measured, but a useful proxy is labor that requires the same type of skillset or training. What we’re trying to get at here is a metric of labor that is qualitatively equivalent, which is why the old scheme used a range of comparators to try to gauge the skills necessary across different jobs.

This is where the government loses its mind and we have discussions of social workers being compared to air traffic controllers. This is absurd to them because they can’t conceive of different types of labor having an equivalent value. Labor has no value, it is simply a commodity that should be subject to the same market forces as anything else. If employers want to pay women less, that’s just the market talking, and we don’t argue with the market.

By commodifying labor they abstract out its value from the pay-equity equation, and what you are left with is simply a question of equal pay for equal work. The inherent value of labor deserves to be put back at the center of these debates, not abstracted and commodified.

1. We must note here that the entire capitalist system is underpinned by the reliance on unpaid labor of women and caregivers who drive the social reproduction of the labor force.