Which is why Denmark is also much less free market than the US. Businesses operate under strong social constraints, and power structures aren't one-sidedly pro-business/pro-corporate.
Why is this not free market? Employees are part of the market as well. At some point you may argue that the unions form a cartel maybe. But that is another sign of a free (from state) market
Who cares if it's free market or not? A strong union presence is significantly more effective than a minimum wage. One amounts to a voice and the other amounts to table scraps. We typically associate unions as anti-free market, because the Right is pro free market and anti union, and the Left is pro regulation and pro union. I'm not talking Republicans and Democrats but Right and Left, to be clear.
I have some hope that people are tired of boxing themselves in, that they're realizing we need real solutions to real problems. It doesn't help when we gotcha each other with different political ideologies when they step outside of their boxes. If someone on the Right wants to argue that unions are Free Market, and that makes it palatable to them, high fives all around.
In other words, until and unless we provide everyone with a basic income sufficient to support a modest living.
As it stands, and as you observed, pay for work is based primarily on some very old-fashioned notions of the value of the people who do the work—which is to say, anyone doing menial jobs is obviously a lesser being than those who tell them what to do. Then anyone telling them what to do is a better human being than their subordinates, and so on, until we reach the logical conclusion that CEOs are like unto gods (or at least kings), and must be treated as such.
This is not an indefinitely sustainable model, particularly in the face of increasing automation and increasing income/wealth inequality.
A basic income would result in people only doing the terrible jobs when there's actually sufficient incentive for them to do them, since they're no longer driven by desperation. Thus, assuming other external pressures haven't come into play, the wages for such jobs would rise until they actually compensated for the extra (sometimes literal) crap people have to deal with to do them.
The traditional answer to unfair power structures is revolution and replacement of the power structures by something else. However, revolutionaries always seem to end up building similar power structures in one form or another. The abuses of Marxism against the general population were obvious, although it can be claimed that the Marxists did little more than establish a form of state capitalism, with a single "company" running a country (and preferably the world). Only the anarchist tradition is in favour of abandoning power structures completely, using direct democracy in each community to make decisions. Each person is supposed to have equal power but be subservient to the community (although anarchists vary in the details).
Basic income, like social democracy, is basically a way to alleviate some of the worst aspects of capitalism (for the poor) so that the system can continue with less chance of revolution. Social democracy lost influence as the Soviet threat diminished, so that capitalists felt less threatened by revolution and were able to impose a harsher form of capitalism. Capitalism has had the advantage that basically everybody with a decent income ends up supporting this idea of personal wealth and lower taxes. However, the harsher (purer) forms of capitalism are more likely to concentrate wealth (power) in the hands of a few over time, bringing back to the threat of revolution.
I think the extent to which I believe "capitalism" is a viable system for the long run depends on just how you define "capitalism," since I've seen several different definitions that describe rather widely varying levels of inherent inequality and oppression. At the very basic level of "creating some form of market in which currency can be exchanged for goods and services", I believe it is absolutely a valuable part of any healthy socioeconomic system (and, indeed, a fairly natural and inevitable emergent behaviour).
I think that to a significant extent, the introduction of basic income could be accurately described as a revolution, even though it would (hopefully) not be one in the more literal, bloody, sense. Personally, I care deeply about the value of human life, so I believe that if there is a way to achieve whatever utopian ends we seek without having to resort to violent conflict, they should at least be explored thoroughly. I believe that, given time and protected from reactionaries and from serious corruption, a basic income would lead to radical changes in our society that benefit the many and reduce the ability of the few to control or otherwise oppress them.
As far as "Marxism" goes, while I admit that I haven't done any in-depth research on the topic myself, my understanding is that the countries that have declared themselves Communist and attempted to follow through, to whatever extent, on his manifesto, have never gone all the way through the process, and have by and large not been at all the type of economy he described as being viable candidates for a shift to Communism (largely agrarian economies, where Marx described primarily industrial ones). I don't know if Marxism can work at scale (though I have my doubts, related to my first point in this post), but I firmly believe that it has never been tried with any meaningful degree of faithfulness to his methods. In short, I think one should treat any self-proclaimed "Communist" country with at least the same degree of skepticism that one applies to self-applied system names such as the Democratic People's Republic of Korea, and actually analyze the practices there to determine their form of government and economy.
Part of the intent behind an employment contract is that the employee will mostly not have to bear risk in the business itself, or in market conditions. That's a legitimate demand, but it does imply that you'll be paid quite a bit less for your effort than if you really were bearing that risk of having your earnings fall due to no fault of your own - let alone being outright sacked because someone else has volunteered to do the same job for cheaper.
I think leaving these broad social insurance considerations to wholly private contracting between employees and businesses is a very bad deal for workers, and also explains why e.g. the least pleasant jobs can pay so little. A UBI-like arrangement would allow us to get a lot closer to the "truly" free market in labor you posit here.
You also neglect that it generally takes about a year to get adjusted to a new business before you can do much more than follow process that someone gives you (you just don't understand the system level implications yet). If you want employees who can drive innovation and process improvement, they have to have some longevity with the company. You do see many companies moving towards what you suggest where they have core technical teams of employees who oversee/work alongside contractors who do the grunt work.
It would be a market where if you were unemployed,
but qualified, you could approach a company and
offer to do a job a bit cheaper than an existing
employee, and expect that the employer would sack
that employee and take you on instead.
Depending on the job, there will be potentially-large costs with swapping out employees like you say.
- Even if 100% qualified for the position in general, the new hire is likely to be lacking in knowledge specific to that company/role. It will take them a while to learn how things work at that particular company. On something like a large software codebase, it might be quite a few months before their productivity matches that of the engineer they replaced.
- There is a "morale cost" there. When companies visibly treat their employees in this way (like instantly replaceable cogs) surely it has a negative effect on effort and loyalty among the remaining employees, who have been indirectly told that they are instantly replaceable cogs as well. There are any number of hidden costs here: reduced effort/productivity, the cost of replacing them if they leave due to reduced loyalty, etc. I don't have figures to back this up, but I think the burden of proof would fall upon anybody claiming otherwise...
Further, why do the most unpleasant, and not necessarily easy, jobs
often pay the worst wages?
In general though, it's a function of how many people can do the job. Working retail is NOT easy, and is soul-crushing, but probably 98% of the workforce is capable of doing it, and the cost of replacing employees is small, so there's unfortunately little incentive to treat or pay those workers well.
Citation, please? I'm not saying you're wrong, I'm begging you, with tears in my eyes, for a citation.
Denmark, where fast-food workers make something like $20 per hour, doesn't have a minimum wage (as other posters have noted). I'll see if I can circle back to this later, but I'd guess that countries with strong union presences have higher rates of people who make more than whatever the minimum wage is for that country. Rather than a race to the bottom, and a constant need to redefine the bottom as it gets too low, you (collectively) have a seat at the table, where you can voice your wants, demands, and concerns.
Setting a minimum wage, especially in a country as large and diverse as the United States, is a pretty convoluted process. I know HN has some pretty large threads discussing the $15 min wage proposal from a few years back. A living wage is different in Seattle than it is in Boise, etc., etc..
It's convoluted, and it relies on legislation. A union says, "We're not doing shit unless we get X, Y, and Z." People hoping for a minimum wage increase beg people to consider the poor. So, setting aside the fact that one is arguing for middle-class (or upper-class) accommodations while the other is arguing for lower-class accommodations, one is arguing from a position of power while the other is asking for pity. One is saying, Your operation will grind to a halt if the compensation isn't adequate, and the other is saying, Please do the right thing, and give me enough money to live.
https://academic.oup.com/sf/article-abstract/97/2/495/502559...
Look up the Davis-Bacon wages. These essentially act as union bargaining for non-skilled trades (as well as skilled trades). The evidence would be the rates for general labor are much higher than minimum wage. These same workers often get minimum wage in jobs that do not adhere to this.
Why? To me it seems that governments have far stronger means to enforce a minimum wage than unions have.
1) It's very hard to set it at a correct level. Too low and it does nothing; too high and it causes rampant unemployment. Set it at the right level and you can get some real benefits, but good luck figuring it out, considering that the right level changes from year to year, city to city, and industry to industry.
2) No matter how well you set it, it only impacts the bottom of the labour market.
A health labour market (including Northern European style unions) can help set wages intelligently, flexibly, and across all levels of the economy. The fact that unions (unlike the government) cannot just pick a number out of the air and enforce it by fiat is a key element of what makes it work.
I’ve seen effects of both good and bad unions, but struggle to define clear distinctions other than one appears much more corrupt
The other thing I forgot to mention in my previous post - minimum wage doesn't address benefits and working conditions; though, it could affect those things if high enough (if the wages are high enough everywhere, the other things would have greater impact on where people choose to work). But, unions get to specially argue for things like breaks and better/safer equipment. Certain standards cross industries, and it makes sense to legislate those, but it makes sense for workers within their respective industries to have the ability to ask for accommodations specific to the industry/its conditions.
If I were the one paying the workers, I'd rather address their specific wants and concerns than I would the wants and needs of the working population. Of course, they (in general) would rather address neither, and it's easier for them to defeat legislation than collective bargaining.
The Nordic countries aren't "free market" by any American definition of the term. They're corporatist/tripartite economies. This has just become a fashionable talking point among the mentioned 'liberaltarians', like the Niskanen Center, who invented the term to my knowledge.
I think it's mostly a PR campaign because if you frame social democracy as being free-market it just sounds nicer to the center of the American political spectrum.
A lot of of labour protection that you don't find in the US nonetheless exists, like 1 year+ of paid maternity leave, usually at least 5 weeks of paid vacation per year, ~35-40 hour work weeks and so on. When people talk about free market aspects they usually mention school vouchers and such and selectively pick a few things where the government is more hands off.
As the article mentions Uber/ridesharing as a yardstick, take note that Uber withdrew from the Danish market in 2017 after facing regulation, in Norway only Uber Lux is still active after facing fines, and the same happened in Finland. In Sweden Uber still operates in three cities but all drivers require taxi licenses.
To me, this sound like a guarantee of greater worker freedom than anything else. Somehow economic “freedom” in the US seems to equate to corporate structures where CEOs and other managers have immense power over the lives of hundreds or thousands of workers (including their ability to get healthcare), with almost no counterbalancing force.
Implementing this kind of rule seems a pretty sane check on that level of authoritarianism, no? Beyond a certain level, the workers actually have to be given a say themselves?