https://en.wikipedia.org/wiki/Opportunity_cost
Supply & demand forces will always be pushing things toward this value.
Women's wages, for example, are very easily suppressed by a cultural racket that tells us the kinds of jobs they do (teacher, nurse, etc) are not very valuable.
Whether that's true doesn't really matter because as long as people believe it, there is money to be made acting as if it's true.
There's no real money to be made in breaking the racket, because by breaking it you'd just be paying more for the same thing your competitors are paying less for.
The moneymaking scenario is if you can make more money with fewer people by paying top dollar for the best people in an otherwise underpaid class.
But that will typically just result in a bifurcation of the market, with some higher paid positions, and many lower paid positions, not a global rise in salaries. Then the best gamespeople will be drawn to those higher paying gigs, and they will push out the most talented professionals from those positions, erasing the desired productivity gain, and eventually causing the salaries to revert back to the mean.
You really need a very strong leader to break the racket, someone who can create an organization that really cultivates good people maintaining control of their work. And a very good business model that would allow you to grow fast to displace your competitors. That kind of company is extremely unusual. It's just not something the market automatically creates. There are much easier kinds of companies to create that still make money, so that's where the bulk of investment goes.
People underestimate the amount of available high quality business leadership. Without infinite available leadership, the market can only optimize the low hanging fruit. More tricky local maxima just won't optimize out.
Poorly run businesses is why there is always opportunity for someone else to do better, and why there is a constant turnover of businesses.
> There's no real money to be made in breaking the racket, because by breaking it you'd just be paying more for the same thing your competitors are paying less for.
Your scenario means that hiring nurses is a high margin business. High margin means businessmen will be attracted to get into those businesses. (After all, businessmen are in it to make money, not pursue a social agenda.) Lots of businessmen moving in will inevitably erode away those high margins.
This is what always happens in a free market. Greed trumps racism, sexism, etc., every time. If it isn't happening, look for a legal/regulatory framework that prevents it. For example, the original impetus for medical doctor licensing was to drive black and jewish doctors out of business, because the free market had failed to do so.
See "Competition and Monopoly in Health Care" by Frech.
Non market mechanisms dominate the world, and they aren't just government regulation.
People go into teaching and nursing out of altruism, not because it pays well. People preserve historic collections because they love them.
Nepotism is rife in many organisations, connections and 'who you know' is hugely important, half of Russia's GDP is in corruption, and so are most countries in the world.
In most markets consumers don't actually understand the product they are buying, whether that's technology or consultancy, and cannot competently compare two products and tell which one is better.
Efficient market is a dream, and you should not be dogmatic about it.
I heard many claims of that, but haven't seen any evidence. I've often heard people say they teach/nurse in order to pay the bills.
> People preserve historic collections because they love them.
True, but such collections are not remotely dominant in an economy. Often they exist only because the government pays for them, which is not free market.
> Nepotism is rife in many organisations
If that means an incompetent is running the show, that fits under "poorly run businesses" I mentioned.
> half of Russia's GDP is in corruption, and so are most countries in the world
Corruption is not free market.
> In most markets consumers don't actually understand the product they are buying, whether that's technology or consultancy, and cannot competently compare two products and tell which one is better.
They don't have to. They use advisers who do, there's a thriving industry of people doing reviews, and lastly imperfect information is called "risk" and is priced in to most everything. For example, a used car bought from a dealer will fetch a higher price than one bought through Craigslist, because the latter is riskier. There's nothing not-free-market about risk pricing.
What makes you believe that? That seems like a very strong, very broad claim to me. Almost too broad to even conceivably be true.
Aren't nurses making six figures (or close) in the US?
Re: teachers - currently in many countries teaching is organized as a slacker's paradise - everybody makes the same amount of money (barring seniority etc.), there is very little accountability for results of the work, teachers are guaranteed job for life etc. This, at least in my country (Poland), more or less attracts people who are slackers or burnt-out in other jobs. As teachers, they do shit job and get paid ok amounts of money, which is a fair deal for them (as otherwise many of them would leave). Meanwhile, everyone who cares about their child actually learning something (i.e. parents who want to send child to good university with entrance tests) purchases private tutoring - this is where the real learning happens.
Though I don't think it's strong enough in the long run.
See eg https://www.economist.com/business/2010/10/21/profiting-from... (going via Google Search or so might be required to get around the paywall). But the subtitle already gives the gist: "If South Korean firms won’t make use of female talent, foreigners will" South Korean companies are pretty sexist and pay women less and given them fewer opportunities. But foreign multinationals don't share that sentiment, and are happy to hire talented women.
(The article is a few years old. These days the foreign multinational companies might even be extra happy, because it helps them boost their global diversity stats.)
Any difference in information between two parties is exploitable to drive the price in the direction favored by the more-well-informed party.
That's not exactly a 'racket'. Glassdoor lists that kind of information for everyone, including job seekers. And workers' rights to share that kind of information is even enshrined in lots of countries laws as inalienable (ie they can't sign away such that right; any provisions to such effect are at best unenforceable and at worst make the employer liable to be sued).
> Any difference in information between two parties is exploitable to drive the price in the direction favored by the more-well-informed party.
Not in a liquid market with competition. Eg I have no clue what Google stock should be trading at, but if I send a market order to buy a few stocks, I'll get a pretty good price because there are several market makers competing.
There are sometimes attempts by employers at cartels. These days mostly informal or even only implicit, eg via the kind of third party information sharing you allude to you in comment.
But as with any cartel, each member has an incentive to free ride and non-members even more so. And while your local Burger King and McDonalds franchisees might be able to collude, they'll have a hard time keeping people from switching to driving to Uber or Lyft if fast food wages drop too low. There's also the safety valve of self-employment.
The best thing government can do for the workers is to lower barriers to entry for would-be entrepreneurs: make employers compete with each other, and also pre-emptively compete with potential new market entrants (imagined or real).
(Closing markets by eg taxi medallions is exactly the opposite of what's good for workers.)
Because that's what you can get by passively investing in other businesses and letting them do the work. For example, if hiring Bob generates a 10% ROI (Return On Investment) it makes no financial sense to hire him. If Bob generates a 20% ROI, it makes sense to hire him.
The ROI calculation is why many businesses (like Apple) build up massive cash "hoards" (they aren't really hoards, as the money is invested). They can't find a better investment within the company.
This suggests a wide availability of alternative, reasonable-risk passive investments with 15% yield, which seems unusually high. What is this investment, usually? Stock buybacks?
If you were considering starting a business, would you consider a business with a projected ROI of 15% and you had to work 24/7 on it, compared with 10% ROI investing in the S&P 500 passively?
I.e. don't look at what you'd make running the business. Look at what you'd make relative to passively investing the money instead. That's "opportunity cost".