Review John Miller, “After Horror, Change?” (Real World Micro, chapter 10.5) and

Question

Review John Miller, “After Horror, Change?” (Real World Micro, chapter 10.5) and “We're Not Lovin' It” by Nicole Aschoff (Real World Micro, chapter 7.1). Work pumping septic systems involves many features often seen as unpleasant: working with awful smells and low social status. By contrast, lawyers do high status work in air conditioning and are paid much more. Why might bad jobs have low wages? Does this contradict Smith’s theory of compensating wage differentials? Can you reconcile this finding with his theory?

Explanation / Answer

Why might bad jobs have low wages?

This can happen for several reasons: lack of preparation for other jobs, racial discrimination, not have the necessary documentation to qualify for better jobs.
When workers are less educated, it can be assumed that they are less productive than skilled workers, because educated people are more willing to train and put into practice what they learned. it can also be a reason that people with bad jobs have low wages.

Does this contradict Smith’s theory of compensating wage differentials?

The theory of compensating wage differentials indicates that jobs with low non-wage benefits would have to pay higher wages. In this question, they are compared: the low-skilled jobs (Work pumping septic systems) with those who are in jobs of high qualification (lawyers), where conditions exist that are not comparable. It is important to realize that the theory predicts that: only higher wages will be associated with less desirable conditions if all other things that influence wages remain constant. Therefore, the examples presented do not contradict the theory of compensating wage differentials.

Can you reconcile this finding with his theory?

We can reconcile this finding with his theory, giving the highest workers' wages, poor working conditions, and would be equivalent to giving workers with the lowest wages; better working conditions, but is not it in all cases.
Workers should have full information about conditions and risks to which they are exposed, and they may have access to various employment opportunities, their behavior will force businesses to pay higher wages, for the dirty and dangerous work.
If workers have jobs for alternative jobs, which pay the same salary, but offer better working conditions, they will accept these offers, and reject work places more dangerous or dirty.

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