Wages compensation

In countries highly reliant on private-sector financing such as the United States, even if employees ultimately pay for most or even all of the cost of employer-provided health benefits (Pauly 1998), adjustments in wage compensation to rapid increases in outlays for health benefits may take years to achieve, with disemployment being the predominant response in the... 

Bentham. Without any conception of the way the coercive nature of the labor process impinges on Smithian markets, Marx had painted himself into a corner. Accepting the assumptions of worker rationality and freedom of contract, he was left with no plausible rebuttal to the doctrine of wage compensation. 

Other than the results for fatal risk for unionized workers, the overall pattern strongly supports the hypothesis that the measurement of wage compensation depends strongly on whether industry-level data are incorporated in the study. In all specifications, fatal risk for nonunion-ized workers and nonfatal risk for unionized workers decline in significance as more industry-level variables are added, with measured compensation failing by 22-37 percent. Compensation to nonunion... 

Even if job evaluation were a widespread source of wage compensation, this fact would not rescue economic theories of market performance, nor the doubtful foundations of hedonic wage analysis. But despite the best efforts of professional evaluators, compensation is as scarce within firms as it is between them. 

It is not necessary for the theory of wage compensation that workers be aware of its existence, yet it would help. After all, if risk and pay are tradeoffs in the labor market, and if workers express their preferences by choosing among different types of jobs, it would stand to reason that many workers on many occasions would have a glimmer of this. Yet the historical and sociological literature that describes workers response to risk fails to disclose this. The most detailed treatment of workers attitudes on these matters is Workers at Risk by Dorothy Nelkin and Michael S. Brown (1984). They interviewed in great detail 75 workers... 

Of course, if firms had to pay higher wages in lieu of cleaning up the workplace, these claims would be false. In one instance, a worker openly considered the possibility of wage compensation and then rejected it ... 

By themselves, these books provide disquieting evidence against the existence of wage compensation for risk. Still, they might be understood as products of a period in which the classical, Smithian theory was in eclipse. Recall that, by the turn of the twentieth century, intellectual currents had drifted away from the view that markets automatically compensate workers for risk on the job, and this was even true for the economic giants of that period, such as Marshall and Jevons. There is little positive mention of Smith s theory in the economic literature... 

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