Recently the government has agreed to increase pay for train drivers by 4.75%. This is aimed to stop the strikes which have recently plagued commuters. Yet, already ASLEF has announced its railway staff members will strike on weekends up to November to secure the same deal. GPs have followed suit and demanded an 11% pay rise, along with Border Force who want a fair rota system. This follows independent pay boards agreeing NHS staff and teachers should get a pay rise of 5.5%. Almost all of the unions who have backed these pay rises have argued for them on the grounds they deserve “fair pay”. 

Pay is properly set by supply and demand in a free market of free people

Contrary to the arguments behind these demands, the very idea of fair pay is a fiction. The rightful level of pay for workers is whatever is set by the free market, however high or low,  indeed, the price of labour should be treated no differently to any other set of prices in civil society. The principle of human respect requires people be free of the violence of the state attempting to impose its own phoney notion of fair pay on them. Denying this freedom across the board, as the argument for fair pay requires, would inevitably result in the disharmony of society and the destruction of prosperity. 

I suspect many readers will still strongly believe it is simply not fair that teachers are being paid 9% less in real terms for the same work compared to 2010 though. If you work harder or to the same extent, surely  you should get a pay increase or have your pay kept the same in real terms respectively. Surely social justice dictates teachers should have their pay restored to 2010 levels at minimum?

For the sake of argument, let us grant the idea that 2010 real wages are the wages union workers actually truly deserve. The National Education Union gestures toward the amount of effort put into a job being the dictator of pay when it argues an ‘excessive workload’ warrants higher pay for them. Again, generally, people think the amount of hard work they do should dictate their pay too; it is for this reason well paid people say ‘I’ve worked very hard for this money’. Yet, the moral idea that we should be paid for the extent of our hard work is implausible.

Take, for example, an incompetent civil servant who, despite putting in twice the amount of effort as his colleague, produces half as much. According to the idea that fair pay should reflect the effort expended, the incompetent civil servant should be paid double his competent colleagues. This is implausible; thus, fair pay aligning with effort alone is too. 

Perhaps fair pay is determined by a combination of hard work along with competence? Provided people are competent and work hard, they warrant a fixed amount of pay. A big problem remains with this thinking.

As F.A. Hayek has shown, a free society cannot have social justice determining the pay people receive. If we accept a certain amount of effort, training, time, or, whatever, determines pay we find a serious issue arises whenever the supply or demand for labour changes. Imagine a lot of men suddenly want to become bricklayers. This expands the supply to the trade and reduces the price of the labour, i.e., the wage, enabling a greater number of brickies into the trade. Although the marginal revenue value of the brickies is lower, their effort, training and time spent on the job remains the same. 

Social justice tying pay to any of these three factors would mean the pay of bricklayers could not fall because the three factors would remain static, meaning, new people who wanted to become bricklayers would find it very difficult to enter the trade due to them being too expensive to employ (their pay would exceed their marginal revenue product). Indeed, employers would have to be legally barred from reducing pay to allow new brickies into the trade to ensure social justice. Across the economy, where more people wanted to become actors, chefs or accountants they would have to be barred from doing so because it would require reducing wages to below the fair level.

And where demand for doctors, lawyers and binmen goes up, social justice would have to stop pay from increasing because most of them will not have put in any greater effort, training or time to warrant it. Social justice would result in huge shortages in labour markets with increased demand and huge surpluses in labour markets with increased supply — an economic disaster. Government would have to plan the labour supply to avoid this. People would have to be forced to be binmen because pay could not be increased to attract more of them.

Ensuring social justice eliminates the freedom of individuals to sell their labour as they choose, destroying their prosperity in the process. The true immorality is deeper though. As the state imposing a covenant on your home restricting its sales price diminishes your ownership of it, analogously, the state restricting the sale price of your own labour diminishes your ownership of it too. As Robert Nozick has argued, this control over your labour the state gains by implementing social justice ‘makes them a part-owner of you; it gives them a property right in you.’ Social justice clearly undermines the true justice of each man fully owning himself outright.

Fair pay is a fiction. Hence, the claims of public sector workers on its moral basis can be rejected. Pay is properly set by supply and demand in a free market of free people. The state with its £2.5tn debt should be prudent and use its close to monopoly purchasing power of labour in healthcare, education and border services to drive down public sector wages, just as a private firm would in the real world. Certainly, public sector workers should not receive a pay increase.