What's in A Wage? A New Approach To The Justification of Pay

What’s in a Wage?
A New Approach
to the Justification of Pay
Group 14
Waleed Javed – 23110067

Ali Kumayl – 23110158
Muhammad Huzaifa Ali – 23110132
Tayyaba Ansari – 23110237
119
114
106
110
120 107
121
MAIN CONCLUSION
The main conclusion is as follows;
107-Different conceptions of wages will appeal to different people
120-People disagree about wages in part because they understand wages differently (from 110, 114, 119)
So, 121- I suggest that the fact that wages can be understood in different ways helps to explain
some of the debate about them
MAIN PREMISES 105
106
105
111 112
109 113
108
115
114
110
119
116
117
120 118
Claims:
1. A wage, I will argue, is many things

2. It is a reward … information about relative scarcity.
3. I show that each has its own normative logic, or appropriate justification, and these logics can
come apart.
4. This explains some of the debate about wages and makes the project of justifying a wage
simpliciter difficult
5. I will say that wages are justified, unjustified, or not justified (i.e., neither justified not
unjustified)
6. To say that something—e.g., an action or outcome—is justified is to say that there is good reason
for it.
7. There are different kinds … those actions and outcomes.
8. To show that a wage is just, or fair is to say that there are good moral reasons for it. Moral
reasons are important, but other kinds of reasons are important, too.
9. People object to CEO pay when it is very high compared to other CEOs’ pay, when the ratio of
CEO pay to worker pay within a firm is unusually high, or when CEOs are paid a lot and their
firms perform poorly.
10. Arguably none of these is true in Jelinek’s case
11. My point is not that Jelinek’s pay is beyond question; my goal is simply to forestall knee-jerk
objections to it
12. One way to think of a wage is as a reward
13. A reward is a valuable thing or treatment that a person receives for something valuable that he or
she has done.
14. The valuable thing is given in recognition of the valuable action.
15. If we think of wages as rewards, then we are thinking of them as deserved, for desert is bound up
with the recognition of value.
16. Thus the normative logic of reward, I suggest, is desert. To say that someone deserves a certain
thing is to say that, because of what she has done, it is “fitting” that she gets it.
17. Desert is connected to evaluative attitudes, such as praise and blame.
18. Certain evaluate attitudes are appropriate for, or fit, certain valuable performances
19. We have arrived at a substantive conclusion: if wages are understood as rewards for work, then
they are appropriately distributed on the basis of desert.
20. But while this principle provides some direction, it leaves other questions unanswered.
21. This (what is being asked) is not a straightforward task. Jelinek did many things, many of which
were valuable.
22. The desert-base is effort understood as the physical and mental exertion required for the worker
to perform his job.
23. Neither contribution that requires no effort nor effort that yields no contribution is a basis of
desert.
24. Disagreement does not end once we specify the desert-base. (The following three statements
support this).
25. The desert-base needs to be measured and mapped to a deserved treatment.
26. For a person to receive what he deserves, the value of what he has done must match or fit the
value of what he receives.
27. This may be hard to do; people will disagree about how to quantify effort. Contribution might
seem easier to measure and map to a wage.
28. But there are challenges here, too. Jelinek is part of an executive team, which is itself part of a
large organization, and it is difficult or impossible to tell which part of Costco’s revenue is due to
any one individual
29. To justify a person’s wage considered as a reward, we will be assessing the value of what he has
done; we will be trying to measure it; and we will be mapping that value to a wage.
30. Comparisons matter when we think of wages as rewards.
31. There are two reasons for this. The first is that desert is noncomparative as well as comparative.
32. The second is that claims of comparative desert are easier to justify than claims of
noncomparative desert.
33. To justify a wage on this conception, we must assess the value of what the worker has done
34. An incentive is a benefit that is offered to someone for achieving a certain goal, or more
generally, for acting in a certain way
35. The receipt of a benefit offered as an incentive is contingent upon the person’s acting in a certain
way.
36. Incentives are forward-looking
37. Rewards are backward-looking.
38. Rewards can have an incentive effect.
39. Incentives can feel like rewards when they are received, since they can feel like recognition of
what one did.
40. Wages have an incentive effect.
41. Employers offer employees pay in order to get them to show up for work, work hard, and work in
the right way (i.e., take actions that benefit the firm as opposed to themselves).
42. When justifying pay in public statements, especially of top executives, firms often speak about
the need to “attract, retain, and motivate” their employees.
43. When firms speak this way, they are speaking the language of incentives.
44. The normative logic of incentive is effectiveness.
45. The point of incentives is to get people to do certain things.
46. An incentive is justified insofar as it gets people to do those things.
47. If we see pay as an incentive, we will naturally tend to ask not only whether it achieves the
desired result, but whether it achieves this result at the lowest cost.
48. Pay is a cost, so the more the firm pays its employees, the less there is left over for others. If this
is correct, then the complete normative logic of incentive is cost-effectiveness.
49. In addition to rewards and incentives, wages can also be understood as prices.
50. A wage can be understood as a price, or the amount of money that is paid by the buyer to the
seller to acquire or use what the seller has.
51. Understanding wages as prices—is seeing labor as just one of many things for sale in a market.
52. They have a signaling function, telling us about shortages and surpluses. When prices rise, this
tells us that more of the good is wanted. When prices fall, this tells us that less of it is wanted.
53. In this way, prices tell producers to make more of what people want and less of what they do not
want.
54. In doing so, they direct society’s limited resources to their most productive uses.
55. Prices only serve this function if they are set through the informed and voluntary choices of
buyers and sellers
56. When prices are determined … signaling function well, or at all.
57. I stress that this is the role that prices actually play in the economy.
58. Prices need not have played this role in a planned economy.
59. If wages are understood as prices, then Jelinek’s pay is justified insofar as it is the result of an
informed and voluntary agreement between Jelinek and Costco
60. Different conceptions justify different wages.
61. It is difficult to measure the value of a person’s work. It is equally hard to assess whether a
certain compensation package is an optimal incentive.
62. If a worker’s … incentive, and price always coincide.
63. This story may accurately characterize the pay of all workers in the simplest model of the labor
market. It may also accurately characterize the pay of some actual workers. But it is unlikely to
characterize the pay of most, or even many, actual workers.
64. There are a variety of reasons why the wages that are appropriate as rewards, incentives, and
prices may all differ.
65. One is lack of knowledge
66. Another reason that the three conceptions may justify different wages is that people are different.
67. Additional evidence comes from organizations’ pay practices. Some firms choose unusually
“steep” or unequal compensation structures. These structures pay people at the top more than
their work is worth and those at the bottom less than their work is worth.
68. By contrast, … bottom more than their work is worth.
69. Firms that adopt unusually … the reward conception of wages.
70. There is good … two conceptions.
71. The result is that, in the usual case, there is no single wage for a worker that is subject to multiple
justifications. Instead, it will be possible to justify, using different logics, multiple wages for a
single worker.
72. These suggestions are not meant to resolve tensions or bring debates to a close. No grand
Hegelian synthesis is in the offing. Rather, my goal is to help us make sense of the jumble of
intuitions we have about wages. It is only by clarifying what is at issue in debates about wages
that we can hope to resolve them.
73. My first suggestion is that different conceptions of wages will appeal to different people.
74. Depending on what role you are in, you will naturally think about wages in a certain way, though
of course it will be possible for you to think about wages in other ways.
75. I am not saying that it is only possible for certain people to think about wages in certain ways.
76. My claims should be taken as hypotheses. They strike me as intuitively plausible, but they are
empirical claims that stand in need of empirical support.
77. If you are an employee, I suggest, then you will think about wages primarily as rewards.
78. if you are an employer, then you will think about wages primarily as incentives.
79. Third parties, or observers to the employer-employee relationship (will think of pay as a price).
80. My second suggestion builds off of the first… people disagree about wages in part because they
understand wages differently.
81. We should expect that disagreement about whether a wage is justified insofar as it is based on
different conceptions of wages will also be disagreement between people in different roles.
Employees may think that high pay for CEOs is unjustified, citing considerations of desert in
support of their view.
82. Investors may focus their attention on whether CEOs are properly incentivized by their
compensation packages.
83. They may embrace the influential Jensen and Murphy argument that CEOs should receive most
of their pay in the form of grants of stock and stock options, so that they have “the right monetary
incentives . . . to maximize the value of their companies” (1990: 139).
84. Observers, including academics who study compensation, may focus on the character of the
agreements between employers and employees.
85. One reason why employees may object to high pay for CEOs, and investors may not, is that they
have different conceptions of wages.
86. Another reason may be that they have different interests, and this colors their sense of what is
justified.
87. Employees may object to …. some extent by what role they occupy.
88. I agree that it would simplify our inquiry if there were a single correct conception of wages.
89. I deny that there is.
90. It is legitimate to conceive of wages in each of the ways we have specified, viz., as rewards,
incentives, and prices.
91. They (wages) must be distributed … buyers and sellers of labor.
92. When prices are set through people’s informed and voluntary choices, scarce resources flow to
their most productive uses, as determined by people’s wants.
93. We could try … hence on social welfare.
94. There are good reasons for wages to be determined according to the normative logic of the price
conception of wages.
95. My conclusion is not that wages ought to be conceived of as prices exclusively.
96. Wages remain rewards and incentives as well.
97. There are reasons to distribute them according to the normative logics appropriate to these
conceptions of wages.
98. These reasons are usually less weighty than the reasons given by the price conception of wages
and are usually overridden by price-based reasons.
99. There will be some occasions in which the reasons provided by the reward and incentive logics
are strong enough to override the reasons given by the price logic.
100. The reasons given by the reward and incentive conceptions do not vanish, even when
they are overridden.
101. Even when we have a stronger reason to allow wages to be determined by people’s
informed and voluntary choices, we may still have some reason to distribute wages in other ways.
102. Thus, we may have legitimate complaints about a person’s wage, even if it is determined
in the way that we think is best on balance.
103. We might agree that, e.g., Jelinek’s pay is justified on balance but think there is some
reason for it to be decreased (because he does not deserve it) or increased (because it does not
provide an adequate incentive).
104. We should not dismiss these complaints as confused. They are based on legitimate ways
to think about wages.
Non-claims
1. When is a wage justified? (Question)

2. I propose to make progress on this question by answering another (Explanation)
3. What is a wage? (Question)
4. In this address, I explore these conceptions of wages.
5. I identify which logic we should choose, since we must choose, and say what this means for how
we should think about the justification of pay (Explanation)
6. I begin with a few preliminaries.
7. To be sure, moral principles, or reasons for paying people certain wages, are present in my
address. But the principles and reasons follow from the ontology.
8. Why do I ask whether wages are justified, as opposed to whether—as is often the case—they are
just or fair? (Question)
9. It is natural to think of wages as rewards, incentives, and prices, and these conceptions, as we will
see, connect easily to moral considerations at play in familiar debates about wages.
10. Yet it is possible that alternative conceptions of wages will be identified. This would not
undermine my argument. Instead, it would show that, when it comes to the justification of wages,
things are even more complicated than I have suggested. (Discount)
11. Jelinek was paid $6.6 million in 2017, including salary, bonus, stock grants, and other forms of
compensation. (Report)
12. A person might receive some money for finding a lost dog or providing information about a
crime to the police. (Illustration)
13. A person might deserve a medal for an act of bravery or punishment for a criminal offense.
(Illustration)
14. (e.g., heroism or law-breaking) (Illustration)
15. (e.g., medals or punishment) (Illustration)
16. But while this principle provides some direction, it leaves other questions unanswered. (Discount)
17. Consider Jelinek’s pay. (Instruction)
18. Did he deserve $6.6 million in 2017? (Question)
19. He attended meetings, visited stores, developed ideas, scrutinized plans, approved budgets, hired
subordinates, communicated messages, and more. (Illustration)
20. Which of these things matter for desert? (Question)
21. According to one, the desert-base is effort (Sadurski, 1985), … contribution is a basis of desert.
(Report)
22. There is a lively debate about which of these views is correct.
23. So we need to be able to say, e.g., how much effort Jelinek has put forth, and how much pay he
deserves because of that effort. (Illustration/Explanation)
24. But there are challenges here, too.
25. Someone else at Costco—e.g., its chief financial officer. (Illustration)
26. Many people will immediately recognize the salience of the reward conception of wages—
especially in connection with comparative desert—in their own lives.
27. We have arrived at a substantive conclusion: if wages are understood as rewards for work, then
they are appropriately distributed on the basis of desert. (Conditional statement)
28. Perhaps you think that your own pay is too … relevant to wage determination (Moriarty, 2016).
(Explanation/Illustration and conditional statement)
29. To sum up … than what they deserve in an absolute sense.(Repetition)
30. Finally, comparisons will be important, because it is often easier to say what people deserve
compared to each other than what they deserve in an absolute sense.(Explanation)
31. An incentive is a … clean their rooms. (Explanation using illustrations and conditional
statements)
32. Their function is to get someone to do something in the future. (Clarifying what is meant by
forward looking)
33. Their function is to recognize the value of what someone did in the past (Clarifying backwards
looking)
34. If the child is given screen time when he cleans his room, he may clean his room on a future
occasion, in anticipation of receiving more screen time. (Explanation using illustrations and
conditional statements)
35. To see whether Jelinek’s pay is justified on the incentive view, we must first consider what
Jelinek’s pay is supposed to get him to do. (Instruction)
36. So the question is whether paying Jelinek $6.6 million accomplishes this, all other things being
equal.(Question)
37. Salary may be what attracts Jelinek to the job. Bonuses and stock grants might be what keeps him
motivated to work hard and in a way that benefits shareholders. (Hedge)
38. If we see pay as an incentive … achieved with less money. (Excess Verbiage, Repetition)
39. I do not think that adopting the incentive view requires us to think that people should be paid as
little as possible. (Hedge)
40. To sum up … what the worker will do. (Repetition)
41. Indeed, we may need to look beyond the worker who receives the wage, since one person’s wage
may have effects on other people. (Hedge)
42. You can buy all kinds of things in markets: houses, cars, dental services, education, admission to
academic conferences, and more. (Illustration)·
43. What is the normative logic of price? (Question)
44. I don’t think that we can infer from the concept of a price how the price of a certain good or
service should be determined. (Hedge)
45. You can make pencils if you want, as many as you can, and sell them wherever you want.
(Illustration)
46. How will you make these decisions? (Question)
47. People cannot be ignorant of what they are buying and selling and what options are available to
them, and they cannot be forced to exchange. (Repetition)
48. There is a crucial qualification to this story. If the price for finance professors is high and the
price for philosophy professors is low, this is a signal that society wants more finance professors
than philosophy professors, relative to their supply. (Illustration)
49. You may still decide to … more of what it wants. (Illustration and Explanation)
50. I stress that this is the role that prices actually play in the economy. Prices need not have played
this role. (Discount)
51. We could have had a planned economy, and in that economy, prices would have played a
different role. (Opinion)
52. What role do prices play in this system? (Question)
53. Let us apply these observations to Jelinek and his pay.
54. Did Costco voluntarily make him the offer of $6.6 million? Did Jelinek voluntarily accept that
offer? (Questions)
55. To sum up… prices play in a market economy. (Repetition)
56. I have … between employers and employees. (Repetition)
57. The way I will do this is by considering an argument where this is not the case.
58. Here’s why you might think … and optimally motivate him. (Repetition, conditional statement,
question)
59. But what is so important about Jelinek’s labor? Why did Costco extend an employment offer to
him? (Question)
60. People are different. Suppose that employee … less pay than B. (Explanation)
61. The evidence provided so far for why the different normative logics do not coincide derives from
familiar facts about people. (Explanation)
62. Steep pay structures… organizational ladder. (Explanation)
63. Flat pay structures: … among employees. (Explanation)
64. The skeptic will have … have since uncovered. (Discount)
65. I described three … based on alternative logics. (Repetition, Question)
66. Below, I explain what it means to “think like” an employee, an employer, or an observer about
wages. They strike me as intuitively plausible, but they are empirical claims that stand in need of
empirical support. (Explanation)
67. To run your business … is cost-effective for the firm. (Question, Explanation using Illustration)
68. Who will think about pay as a price? (Question)
69. Again, in saying … “thinking like” employees. And so on. (Repetition)
70. Critics and defenders … conceived of in different ways. (Explanation)
71. We should …have been happy to accept that offer. (Explanation using illustration)
72. To be clear, my suggestion provides at best part of the picture.
73. It may now seem … questions we need to answer. (Repetition, explanation)
74. I do not have much else to add by way of proof of this claim. My hope is that, based on our
discussion so far, it seems intuitively correct. It accurately characterizes, I submit, the
phenomenology of wages. (Discount)
75. What I want to do now is suggest what we should do with this conclusion. We can’t allow
ourselves to be paralyzed by the fact that wages can be understood in different ways. They must
be distributed according to some normative logic.
76. I do not suppose that I have said enough to establish the truth of this view. Here I just want to
clarify what this view is.
77. If, e.g., a person’s wage is too far out of line with what she deserves, as determined by the value
of her work, then we might find her wage objectionable on balance, even if it was the subject of
an informed and voluntary agreement. (Illustration)
78. This article introduced … conceptions as well. (Repetition)
Argument 1:
1- A wage is a reward, given in recognition of the performance of a valued task.
2- A wage is an incentive: a way to entice workers to take and keep jobs, and to motivate them to work
hard.
3- A wage is a price of labor, and like all prices, conveys valuable information about relative scarcity.
So, 4- A wage is many things.
Analysis:
This argument is deductive because if we consider all premises true, the conclusion necessarily follows
from them. We conclude this after applying the strict necessity test. This argument is also valid, because
it is impossible for the conclusion to be false if the premises are true.
Argument 2:
5- (There are different conceptions of wages)
6- Each conception of wage has its own logic (that justifies wages).
7- These logics can come apart.
So, 8- different conceptions can justify different wages.
Analysis:
it is impossible for the conclusion to be false if the premises are true. Moreover, this is a linked argument.
Argument 3:
9- To say that something is justified is to say that there is good reason for it.
10- There are different kinds of reasons (given to defend wages): moral, legal, prudential, aesthetic, and
so on.
11- Moral reasons can be given for certain actions and outcomes.
12- But there may also be legal or prudential reasons for those actions and outcomes.
13- Moral reasons are important, but other kinds of reasons are important, too.
So, 14- (There are different justifications for wages based on different reasons.)
Analysis:
Argument 4:
15- By market capitalization, Costco is one of the one hundred largest corporations in the United States,
but at least 850 CEOs in the Russell 3000 index were paid more than Jelinek.
16- Relative to its competitors, Costco pays its employees well.
17- Costco had a good year in 2017, as its stock price went up 16 percent.
18- People object to CEO pay when it is very high compared to other CEOs’ pay, when the ratio of CEO
pay to worker pay within a firm is unusually high, or when CEOs are paid a lot and their firms perform
poorly.
So, 19- None of these (conditions that make people object CEO pay) is true in Jelinek’s case.
Analysis:
Argument 5:
So, (W. Craig Jelinek’s pay is not objectionable.) (From 18 and 19)
Analysis:
Argument 6:
1- A wage is a reward, given in recognition of the performance of a valued task.
20- Desert is bound up with the recognition of value.
So, 21- If we think of wages as rewards, then we are thinking of them as deserved.
Analysis:
Argument 7:
22- If we think of wages as rewards, then we are thinking of them as deserved.
23- (We are thinking of wages as rewards)
So, 24- the normative logic of (wages as) rewards is desert.
Analysis:
it is impossible for the conclusion to be false if the premises are true. Moreover, the argument follows a
pattern of affirming the antecedent (If A, therefore B. A, therefore B).
Argument 8:
25- When we think of wages as rewards, we can talk about the wage that a person deserves based on what
she has done simpliciter.
26- When we think of wages as rewards, we can talk about the wage that a person deserves based on what
she has done in comparison to what others have done and the wages they have received.
So, 27- Desert is noncomparative as well as comparative.
Analysis:
Argument 9:
28- It is hard to determine how valuable Jelinek’s contribution is, and how much pay he deserves for that
contribution.
29- It is easier to determine that Jelinek’s contribution is more valuable than the contribution of someone
else at Costco.
So, 30- Claims of comparative desert are easier to justify than claims of noncomparative desert.
Analysis:
This argument is inductive because if we consider all premises true, the conclusion probably follows from
them. We conclude this after applying the strict necessity test. This is a strong inductive argument
because considering the premises true, the conclusion probably follows from them. Moreover, in this
argument, Jelinek’s pay has been used to conclude something about pays in general. Therefore, it is an
inductive argument using generalization.
Argument 10:
27- Desert is noncomparative as well as comparative.
31- Claims of comparative desert are easier to justify than claims of noncomparative desert.
So, 32- Comparisons matter when we think of wages as rewards.
Analysis:
them. We conclude this after applying the strict necessity test. The conclusion that ‘comparisons matter’
follows strongly (but not necessarily) from the premises. Therefore, it is a strong inductive argument.
Argument 11:
33- Wages have an incentive effect (on employees).
34- In justifying executive pay in public statements, firms talk about the incentive effects of pay.
So, 35- Wages can be understood as incentives.

Analysis:
them. We conclude this after applying the strict necessity test. The conclusion that ‘wages can be
understood as incentives’ follows strongly (but not necessarily) from the premises. Therefore, it is a
strong inductive argument.
Argument 12:
35- Wages can be understood as incentives.
36- The point of incentives is to get people to do certain things.
37- (If incentives get people to do certain things, then they are effective).
38- (Incentives get people to do certain things.)
So, 39- The normative logic of (wages as) incentives is effectiveness.
Analysis:
it is impossible for the conclusion to be false if the premises are true. Moreover, the argument is based on
2 implicit premises and follows the hypothetical syllogism pattern of affirming the antecedent.
Argument 13:
40- Employees lower than CEO level may be motivated by the CEO’s pay to work hard
41- Some employees may be disincentivized by CEO’s pay if it gets too high compared to their own.
So, 42- when considering whether pay is justified on the incentive view, we must consider the full range
of its incentive effects.
Analysis:
them. The conclusion that ‘we must consider the full range of incentive effects’ follows strongly (but not
necessarily) from the premises. This is because it is not necessary that we must consider full range of
incentive effects in every situation. Therefore, it is a strong inductive argument.
Argument 14:
43- (Considering the full range of a wage’s incentive effect is difficult)
So, 44- Incentive effects of wages may not be easy to discern. (From 42 and 43)
Analysis:
them. We conclude this after applying the indicator word (“may not”) and strict necessity test. The
conclusion that ‘incentive effects may not be easy to discern’ follows strongly (but not necessarily) from
the premises. Incentive effects of wages may not necessarily be difficult to discern. Therefore, it is a
strong inductive argument.
Argument 15:
45- Employees are being incentivized to promote value for other people.
46- Pay is a cost.
47- The more the firm pays its employees, the less there is left over for others.
So, 48- When we think of pays as incentives, we also consider whether the pay achieves the desired result
at the lowest cost.
Analysis:
Argument 16:
So, 49- the complete normative logic of incentive is cost-effectiveness. (From 48)
Analysis:
Argument 17:
50- Wages as incentives emphasize motivation.
51- Wages as incentives are associated with effectiveness and cost.
52- Wages as prices implies understanding labor as a thing for sale in the market.
53- (Something for sale in the market is different from something that motivates and is based on cost
effectiveness.)
So, 54- the incentive conception of wages differs from the price conception of wages.
Analysis:
Argument 18:
55- our views about how prices in general should be determined will inform our views about how wages
should be determined.
So, 56- understanding wages as prices is important.
Analysis:
This argument is inductive because if we consider its premise true, the conclusion probably follows from
it. The conclusion that ‘understanding wages as prices is important’ follows strongly (but not necessarily)
from the premises. Following from premise 55, it is highly probable (but not necessary) that the
conclusion is true. Therefore, it is a strong inductive argument.
Argument 19:
57- We cannot determine price by understanding the concept of price.
58- We can determine price by understanding the role that price plays in the economy.
So, 59- prices don’t have an essential logic but they do have a functional logic.
Analysis:
Argument 20:
60- When prices rise, this tells us that more of the good is wanted.
61- When prices fall, this tells us that less of it is wanted.
So, 62- prices have a signaling function, telling us about shortages and surpluses.
Analysis:
Argument 21:
So, 63- prices direct society’s limited resources to their most productive uses. (From 62)
Analysis:
them. We conclude this after applying the strict necessity test. The conclusion in this argument is highly
probable, but not guaranteed to be true. So, it is a strong inductive argument.
Argument 22:
64- Prices only serve a signaling function if they are set through the informed and voluntary choices of
buyers and sellers.
65- (In the case of wages, prices are set through informed and voluntary choices of buyers and sellers.)
So, 66- (prices serve a signaling function in the case of wages.)
Analysis:
Argument 23:
67- Prices would have played a different role in a planned economy.
68- Prices would have played any role that the planners want.
So, 69- Prices need not have played this (signaling) role.
Analysis:
Argument 24:
69- Disagreement about what information is required for transactions to be fair can be found in debates
about nondisclosure in sales.
70- Disagreement about the nature of voluntariness can be found in debates about exploitation in
sweatshops.
So, 71- there will be disagreement about what counts as an informed agreement and what factors
undermine its voluntariness.
Analysis:
them. We conclude this after applying the strict necessity test. Examples from two different debates about
wages are taken which lead to our conclusion. However, the conclusion does not necessarily follow from
the premises. So, it is a strong inductive argument
Argument 25:
74- Costco operates in a competitive environment.
75-If they waste money on excessive pay, then they will put themselves at a competitive disadvantage.
76- Jelinek actually works in Costco

So, 77- Jelinek’s pay is sufficient to incentivize him.
Analysis
Argument 26:
78-Costco would only hire Jelinek if it were necessary to incentivize him to take the job and optimally
motivate him.
79- Jelinek’s pay is necessary to incentive him, since this is what market competition requires.
So, 80- Jelinek’s pay is necessary to incentivize him.
Analysis
Argument 27:
77- Jelinek’s pay is sufficient to incentivize him.
80- Jelinek’s pay is necessary to incentivize him.
So, 81-Jelinek’s compensation is justified based on the incentive conception of wages.

Analysis
it is impossible for the conclusion to be false if the premises are true. Its premises are linked with the
conclusion of arguments 25 and 26.
Argument 28:
82-If Jelinek’s labor was not valuable, Costco would not put itself at a competitive disadvantage by
hiring him.
So, 83- Jelinek’s labor is valuable.
Analysis
it is impossible for the conclusion to be false if the premises are true. It is a linked argument because the
second premise is dependent on the first one, and as such the conclusion is also dependent on it.
Argument 29:
83- Jelinek’s labor is valuable.
So, 84- Jelinek’s compensation is justified based on the reward conception of wages.
Analysis
Argument 30:
85- An employee’s labor could be worth X+N but neither the employee nor the employer knows that his
labor is worth that much.
86- The employee would be willing to work just as hard for only X worth of labor.
87- The wage justified by the price conception of wages differs from the wage justified by the reward
conception of wages
88- An employer may also think that, if an employee receives a compensation package worth X, that
employee will be optimally incentivized.
89- Employer may offer X and the employee may accept the offer.
90-The employer’s belief may be false.
91- The employee may enjoy his work and be willing to work just as hard for less
92- *The wage justified by the price conception of wages differs from the wage justified by the incentive
So, 93- there is lack of knowledge,
Analysis
Argument 31:
94-Employee A lovers her coworkers, but Employee B who works for the same job and pay hates his
coworkers.
95-Employee A would be willing to work for less than B.
So, 96- people are different.
Analysis
The argument has linked premises 94 and 95 and is an example of a generalization of two individuals
experience to all people. It is a strong inductive argument however, because it is highly probable that if 94
and 95 are true, the conclusion will follow.
Argument 32:
97- Some firms choose unusually “steep” or unequal compensation structures.
98- By contrast, some firms choose unusually “flat” or equal compensation structures.
99- Firms that adopt unusually steep or flat compensation schemes, however, still find people to work
for them.
100- (The wage an employee is willing to accept in this case would be justified on the price conception of
wages.)
So, 101- this suggests that, in many organizations, people’s wages are justified on the price conception of
wages but not on the reward conception of wages.
Analysis
This is a strong inductive argument because it is highly probable that if the premises are true, the
conclusion will follow. The conclusion in this case follows probably but not necessarily follows from its
premises.
Argument 33:
93- There is a lack of knowledge.
96-People are different.
101- In many organizations, people’s wages are justified on the price conception of
wages but not on the reward conception of wages.
So, 102- Wages that are appropriate as rewards, incentives, and prices may all differ
Analysis
premises, since the three conceptions of wages may differ but not necessarily.
Argument 34:
103-There is good evidence that the three normative logics come apart in the real world
104- A wage that is appropriate based on one conception will be different than a wage that is appropriate
based on the other two conceptions.
So, 105- in the usual case, there is no single wage for a worker that is subject to multiple justifications.
Analysis
premises.
Argument 35:
106- Depending on what role you are in, you will naturally think about wages in a certain way
(from 105)
So, 107- different conceptions of wages will appeal to different people
Analysis
premises. This is also an example of inductive generalization.
Argument 36:
108-Given the logic of reward, one will want to be paid in such a way that the value of one’s pay matches
the value of one’s work.
109- To the extent that you (an employee) can quantify the value of your work in absolute terms, then you
will think that you deserve all or at least some portion of that value in your pay.
So, 110- if one is an employee then one will think about wages primarily as rewards.
Analysis
There are two linked premises (108 and 109) that support the conclusion. This is a strong inductive
argument because it is highly probable that if the premises are true, the conclusion will follow. The
conclusion in this case follows probably but not necessarily follows from its premises.
Argument 37:
111- When an employer thinks about the amount of money that they need to offer for an amount of labor,
they think about the value that they are getting.
112- An employer’s goal will be to pay the employee as little as possible, whilst ensuring that the
employees worth is captured in it.
113- The employee’s pay is cost-effective for the firm.
114- (The complete normative logic of incentive is cost-effectiveness) (from 49)
So, 114- an employer, will think about wages primarily as incentives.
Analysis
premises. It has one suppressed premise that directly supports the conclusion. There are two linked
premises in this as well (111 and 112).
Argument 38:
115- If you are an observer, you will think that a certain employer offered the employee a certain wage,
and the employee accepted that offer.
116-The deal must have been completed, with both sides agreeing to a certain sum.
117- (There is an informed and voluntary agreement between both sides)
118- The sum that is agreed to is the price.
So, 119- third parties or observers to the employer-employee relationship will think about pay as a price.
Analysis
premises. It has one suppressed premise that directly supports the conclusion.
Argument 39:
120-People disagree about wages in part because they understand wages differently (from 110, 114, 119)
So, 121- I suggest that the fact that wages can be understood in different ways helps to explain some of
the debate about them
Analysis
premises. Its premise is linked to several conclusions such as 110, 114, and 119, each of which state how
price can be conceived differently.
Argument 40:
122-Critics of CEO pay are assuming that wages are rewards. (from 107)
123-Defenders of CEO pay are assuming that wages are prices. (from 107)
124- It may be true both that CEO pay construed as a reward is unjustified and that CEO pay construed as
a price is justified.
So, 125- both of them may be right.
Analysis
premises.
Argument 41:
126- Employees may think that high pay for CEOs is unjustified, citing considerations of desert in
support of their view (from 110 and 107).
127- Investors may focus their attention on whether CEOs are properly incentivized by their
compensation packages. (from 107)
128- Observers, including academics who study compensation, may focus on the character of the
agreements between employers and employees. (from 107 and 119)
So, 129- there is a disagreement (about wages) between people in different roles.
Analysis
Argument 42:
131. Different parties have different interests, and this colors their sense of what is justified.
So, 132- this is why employees may object to high pay for CEOs, and investors may not (from 129 and
107).
Analysis
premises. It is also a linked argument since its conclusion is supported by two premises (the conclusion of
argument 41 and 35).
Argument 43:
133- When prices are set through people’s informed and voluntary choices, scarce resources flow to their
most productive uses, as determined by people’s wants.
134- A distribution of wages that sharply differs from the distribution that would be produced through
informed and voluntary agreements would have undesirable effects on the efficiency of markets and
social welfare.
135- Wages must be distributed according to some normative logic
So, 136- for the most part wages should be distributed according to the normative logic of the price
Analysis
premises. The author himself has shown in the next argument how there would be exceptions to his
consideration of wages as prices.
Argument 44:
137- There will be some occasions in which the reasons provided by the reward and incentive logics are
strong enough to override the reasons given by the price logic.
138- Even when they are overridden, the reasons given by the reward and incentive conceptions do not
vanish
So, 139- we may have legitimate complaints about a person’s wage, even if it is determined in the way
that we think is best on balance.
Analysis
conclusion will follow. The conclusion in this case follows probably but not necessarily from its
premises.
Argument 45:
(from 139)
So, 140- Wages, when considered as Rewards and incentives are based on legitimate ways of thinking.
Analysis
it is impossible for the conclusion to be false if the premises are true. Its premise is linked to arguments
44’s conclusion.
Evaluation:
The article laids down the framework via which the justification of wages could be advanced in. It does
so by introducing to us several ways to conceive the concept of wages, i.e the price, reward, and incentive
approach. All three have their own normative logic, and can not all exist simultaneously to justify a given
individual's pay. This is because, as Moriarty has pointed out, these logics come apart, primarily due to
several reasons. After this, the author moves on to explain how different people have different
conceptions about wages, and the fact that wages can be understood in different ways helps to explain
some of the debate about them. This is the main conclusion of the argument, since it provides an outlet
via which one could understand and make the process of wage justification easier. The author has very
cautiously moved throughout the argument, making sure that when he inductively reaches a conclusion,
he states so (such as how different people naturally conceive wages differently, or how in most cases we
should choose the price conception of wages over the others). There is another conclusion (not main) that
affirms that if we were to choose between the normative logic of wages, we would go with the price
conception, since this leads to the least wastage of resources. This might be compared to a principle in
macroeconomics, the price/wage spiral, which is a theoretical concept in which wage increases cause
price increases which in turn cause wage increases, possibly with no answer to which came first. This is
also an inductive conclusion, and by no means negates the validity or legitimacy of the other two
conceptions (Rewards and Incentives). The author has even illustrated the limitation of his argument by
giving certain instances of when complaints by the other two conceptions of wages are legitimate. In
order to reiterate his claims, Moriarty decided to make use of an actual case of an individual working at
Costco as an example to the concepts of the justification of wages. By employing strong cogent
arguments, the author has created the need to understand the different conceptions of wages, and has
clarified the role of some individuals in their criticism towards a certain individual's pay. It can be
observed that there is not a single conclusion here, and that the author has tried to merely explain conflict
about wages to a certain degree. Envisioning wages based off of these conceptions are valid, as such the
conclusions most probably follow.

What's in A Wage? A New Approach To The Justification of Pay

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What's in A Wage? A New Approach To The Justification of Pay

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What’s in a Wage?

Waleed Javed – 23110067

107-Different conceptions of wages will appeal to different people

1. A wage, I will argue, is many things

1. When is a wage justified? (Question)

1- A wage is a reward, given in recognition of the performance of a valued task.

So, 4- A wage is many things.

5- (There are different conceptions of wages)

7- These logics can come apart.

So, 8- different conceptions can justify different wages.

16- Relative to its competitors, Costco pays its employees well.

20- Desert is bound up with the recognition of value.

22- If we think of wages as rewards, then we are thinking of them as deserved.

23- (We are thinking of wages as rewards)

So, 24- the normative logic of (wages as) rewards is desert.

So, 27- Desert is noncomparative as well as comparative.

27- Desert is noncomparative as well as comparative.

So, 32- Comparisons matter when we think of wages as rewards.

33- Wages have an incentive effect (on employees).

So, 35- Wages can be understood as incentives.

35- Wages can be understood as incentives.

36- The point of incentives is to get people to do certain things.

38- (Incentives get people to do certain things.)

So, 39- The normative logic of (wages as) incentives is effectiveness.

43- (Considering the full range of a wage’s incentive effect is difficult)

46- Pay is a cost.

51- Wages as incentives are associated with effectiveness and cost.

So, 56- understanding wages as prices is important.

57- We cannot determine price by understanding the concept of price.

61- When prices fall, this tells us that less of it is wanted.

So, 66- (prices serve a signaling function in the case of wages.)

67- Prices would have played a different role in a planned economy.

74- Costco operates in a competitive environment.

76- Jelinek actually works in Costco

74- Costco operates in a competitive environment.

So, 80- Jelinek’s pay is necessary to incentivize him.

77- Jelinek’s pay is sufficient to incentivize him.

80- Jelinek’s pay is necessary to incentivize him.

So, 81-Jelinek’s compensation is justified based on the incentive conception of wages.

74- Costco operates in a competitive environment.

So, 83- Jelinek’s labor is valuable.

83- Jelinek’s labor is valuable.

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