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@sodiummuffin and greyenlightenment's points below are correct: underpaid "essential workers" only have low wages because there are so many people able and willing to do their jobs at low wages, relative to the "need" for those jobs.
Several years ago I saw a cleaners strike happen at a university. (The cause was dissatisfaction with a middleman temp firm which was taking a large cut of the budget allocated for cleaners' salaries). The hallways and lecture halls were messy after only 2~3 days, and after two weeks they were full of trash. At which point graduate students were paid extra to clean up the hallways and lecture pits. To have graduate students cleaning the hallways was much more expensive than having the cleaners do it, but the labor market was suddenly artificially tight, and the department feared that having trashy lecture halls would result in undergrad enrollment dropping.
In labor markets flush with workers, salaries are completely unrelated to the infrastructure that makes it possible for jobs to be done, as well as completely unrelated to the upper limit of what people would pay for that job to be done (i.e. what would be paid if there were absolutely no workers), despite the net value of their jobs to other people in society being several orders of magnitude larger than the prevailing salary. They cannot negotiate higher salaries because if they do then someone else will come in and replace them, getting the job by undercutting their wage.
The same is true in reverse: if there were only one person able and willing to do plumbing in the entire country, that person would be paid millions of dollars per hour servicing nuclear reactors. If there were only one person able to clean in the entire country, they would be paid handsomely to work in a semiconductor fab.
It's called paradox of value, or water-diamond paradox (water is a lot more useful than diamonds, but the price of diamonds is higher).
https://en.wikipedia.org/wiki/Paradox_of_value
I don’t think it’s a paradox of value. Realistically everything in every market has a consumer surplus. But prices settle where the marginal costs equals the marginal value.
If t-shirts were $10k I’d probably own one shirt and take really good care of it but since I can buy shirts for $20 I end up buying shirts until the very last one meets my utility.
Paradox of value though is an extreme example of a supply and demand curve. The diamond/water example is just the extreme where one product has very tight supply and one has very abundant supply. Cleaning services is really just more of a normal supply/demand curve where supply is available and adjustable. While the diamond supply has been relatively fixed in the short/long term (until recently since lab diamonds are taking over the market).
The paradox of value is that things that are more useful than others as a whole, like water, have a lower price than other scarcer things like diamonds.
Replace water with cleaning ladies and diamonds with software engineers and you get exactly the same situation as above
My point was both of these are just cases of normal supply and demand curves intersecting. Which also occur in every single market of which a cleaning lady isn’t in any way special compared to every other market. Nobody says the market for jeans is special and cleaning lady’s are similar to that market.
We don’t go around calling every market a paradox of value but ya clothes are valuable or I’d freeze. Oxygen is interesting because it causes death quickly when you don’t have it but the supply curve for the earth is unlimited quanitity at zero costs on earth.
Paradox of value is not a market, it's a phenomenon that can appear in any market: some things have a higher price than others that seem more necessary. It's something that must be explaned by the theory, and every economical theory (eg theory of labour value) has tried to explain it.
Supply and demand cruve intersecting is just a possible explanation of this phenomenon in marginal utility theory. Perhaps someone one day will come with a better theory and a better explanation, but as long as it is an economical theory it will have to provide an explanation for the paradox of value.
Seems like you are debating the entirety of Econ theory the stuff everyone agrees with that’s taught in intro to micro.
No I'm just explaining you the difference between the facts (the explicanda of the theory), like the price of diamonds and water, and the explanation of those facts (the theory itself), like supply and demand. It is true, however, that the theory is always more precarious than the facts
As someone whose read probably about a 1000 Econ textbooks I have no idea what you are talking about.
Supply and demand curves aren’t some theory. You can actually derive them thru studies and experiment on them.
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