The ‘Value’ of Work

Here’s an interesting debate that’s cropped up from a report published this week by the New Economics Foundation. Those of you who have looked at the value of labour will be familiar with the concept of marginal revenue product. That’s to say that it’s worth me paying you £100,000 a year if you bring in benefits to my firm that are equal to or greater than that value. The NEF twist is that they subtract from this an estimated amount equivalent of how much damage you do to society. It’s a kind of bizarre (and highly debateable!) version of labour market economics meets negative externalities.

Their conclusion: cleaners are worth more to society than bankers.

Follow the BBC report here.

In a nutshell, the idea suggests hospital cleaners create £10 of value for every £1 they are paid. The report claims bankers are a drain on the country because of the damage they caused to the global economy. They reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to “create stress” and are said to be responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption.

This is certainly a new economics and one worth discussing. It’s neatly summed up by Eilis Lawlor, spokeswoman for the New Economics Foundation who said: “Pay levels often don’t reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment”.