what determines cost of labor?
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A lot of it boils down to an internal assessment that individuals make around “How much BS am I willing to put up with to be able to do that job?” One of the big factors there is based around how limited the workers options are. People with no options tend not to demand a lot of money and put up with a lot more BS, but if there are 10,000 other open jobs in town and this one sucks I’m going to go try something else out.
For example people who need to get advanced degrees like doctors and lawyers generally aren’t willing to put up with the long years of study and training unless they have a belief that at the end of the rainbow they won’t have to worry about money and they can have nice things. Helping people is nice, but exceptionally few people would stick that out if they were just making $15 an hour at the end of that effort.
At the other end of the spectrum you have the bare minimum, which is “How much does it cost and what kind of conditions do we need to provide at the absolutely minimum to keep a steady supply of minimally skilled workers to do this job?” If a person can’t afford to live while doing a job, sooner or later they will stop doing it. Someone else mentioned government as a factor, one example being when Walmart famously realized that their workers couldn’t really get by on the wages they paid, but if they took it on themselves to teach their staff how to apply for gov assistance programs then they could keep their wages lower by getting the government to fill in the gap to ensure their workers had enough to get by. It was cheaper for them to run seminars and distribute pamphlets on assistance programs than to actually pay their tens of thousands of employees enough to support themselves. Depending how you want to shuffle the numbers you could make a case to say that the cost of that labor should have been higher than minimum wage at that time, but the individual company had figured out a trick to offload some portion of that cost to the rest of the tax payers.
Most of my life I have kept a mental model when it comes to jobs and the balance of a few factors determined how low of a wage I willing to accept to do a job. How interesting do I find the work to be? How stressful do I find the work to be? And how much does it interfere with the ways I’d rather be spending my time. So for me if a job is super interesting, easy to do in a comfortable environment around people who I like, and offers a really convenient/flexible schedule close to home then I’d be willing to accept a pretty low wage. If it’s boring, stressful, and the schedule conflicts with my other stuff then I’d expect a pretty big bag of money to bother showing up.
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