“Employees Often Lack Reserves and Are Subject to ‘Exploitation’ by Capitalist Employers”

By Paul L. Poirot

It is frequently argued that an employee is at a bargaining disadvantage when he seeks a favorable employment contract because he has less of a reserve to draw upon than does an employer. It is said that the employee needs bread for his family’s supper, whereas the employer needs nothing more urgent than a new yacht. The effect of such dramatization is to draw attention from the subject of the employer-employee relationship. The employee wants the use of tools and managerial services, and the employer wants the workman’s services so that together they may create something useful in exchange for bread, yachts, or whatever else either of them may choose to buy with his part of the product.

It is true that some employees have little except their weekly wages as a buffer against bill collectors. And if the loss of a week’s wages is that serious to a man, it may be a sign that he isn’t a good enough manager or, for some other reason, prefers not to try to make a living by working at a business of his own. Thus, he is in this sense dependent upon job opportunities created by others. But in a competitive society, a person is not bound to continue working for others, nor is he bound to depend upon any one employer for an opportunity to work. Some employees, of course, prefer not to change jobs; free men have that choice. Unless competition has been strangled by coercive intervention, employers will be competing against one another for the productive services of employees. This competition between employers for an employee’s productive capacity is the thing that constitutes the employee’s reserve, just as the reserve value of capital depends upon the competition for the use of that capital.

In this connection, it may be interesting to speculate for a moment as to just how an employee’s reserve compares in dollar value with a reserve fund of capital. For instance, let us assume that a young man might reasonably expect to find regular employment for a period of forty years at an average weekly wage of $100. For a non- working person to draw a comparable income from a trust fund— assuming that it earns interest at the rate of 3 per cent and that the principal also is to be used up over the period of forty years— an original capital investment of $120,000 would be required. The fact is that a man who is willing and able to work does have a kind of reserve — in a sense, a better reserve than is available to the man who has nothing except money or capital. Robinson Crusoe could have salvaged the ship’s silver, but as a non-working capitalist, he would have starved. According to the story, he saved his life by digging into his reserve capacity to work.

This same principle applies in our own kind of a complex society where each of us depends more or less upon exchange for his livelihood. If a man owns a million dollars, yet refuses to offer it in trade, he may go hungry, just as an employee may be faced with hunger if he refuses to turn his services to productive use. The market does not automatically guarantee subsistence to those who stop producing and trading while waiting for a better opportunity to present itself. An employee who chooses not to work may properly complain that he has no other means of support, but he ought to confine his complaint to the person who is solely responsible for his sad plight — himself. No one else has any right to make him work, nor any moral obligation to support him in his voluntary idleness.

The employee who wants to sit until an employer comes forth with a more attractive job offer may say that he doesn’t have the reserve to enforce his demand, but what he means is that he doesn’t have control over other employees who are willing to accept the jobs which are offered.

The true nature of the employer-employee relationship may be understood by those who see that individuals are involved — two individuals — each of whom owns and controls something of value.

The employee is an individual who has a right to offer his services for exchange — a right which is or ought to be recognized by the employer. Labor, thus voluntarily offered by any person, is a form of property — his property — and he may offer it as a marketable commodity. If a man voluntarily offers his services for sale, that doesn’t make him a slave. It is simply an expression of his right to his own life.

The employer also is a worker who has a right to offer his services for exchange. In some instances, it may happen that the employer is also the owner of capital goods —land, plant facilities, raw materials, and tools. A man has a right to own private property— as much of a right as any man can claim to the product of his services. But whether or not the employer also is the owner of productive tools and facilities, he doesn’t create job opportunities for others except as he offers his own managerial services in the competitive effort to please customers. The manager offers his services, just as any other employee offers services, and the object of their bargaining is to determine a satisfactory exchange rate for what each has voluntarily offered.