The Modern Myth of “Wage Slavery” | SchiffGold

Unless you work for a bank or the government, you may not have noticed that yesterday was a federal holiday—Juneteenth—commemorating the end of slavery in the United States. This is a perfectly good thing to celebrate, of course, but alas, as Connor O’Keeffe has recently noted, since the day was declared a federal holiday in 2021, it has largely been used by leftwing groups to push ever larger amounts of government intervention in favor of the Left’s favorite interest groups.

For example, among the “property is theft” crowd, the end of chattel slavery is framed as merely a small part of the larger “ongoing struggle“ to abolish so-called “wage slavery.”

The Origins of “Wage Slavery”

The idea that wage earners are “slaves” of one sort or another is certainly not new. Consider, for example, this paragraph from communist Mikhail Bakunin, writing in the late 1860s:

Slavery can change its form and its name—its basis remains the same. This basis is expressed by the words: being a slave is being forced to work for other people—as being a master is to live on the labour of other people. In ancient times, as to-day in Asia and Africa, slaves were simply called slaves. … to-day they are called “wage-earners”. The position of these latter is much more honourable and less hard than that of slaves, but they are none the less forced by hunger as well as by the political and social institutions, to maintain by very hard work the absolute or relative idleness of others. Consequently, they are slaves.

When Bakunin wrote these words, however, the concept of the “wage slave” was already decades old. It is likely that the first anti-capitalists to use the term were conservatives, and not socialists like Bakunin.

This was true in both Britain and in the United States.

When it came to wage labor, many British conservatives aggressively opposed the rise of the industrial workforce, condemning factory work as a form of slavery and tying the industrialists to the supporters of chattel slavery in the West Indies and the American South where slavery remained legal. In efforts to make these comparisons stick, conservative critics of industrialization invented new terms like “wage slavery,” “factory slaves,” and “white slavery.” Much of the conservatives’ terminology and their arguments would later be adopted by socialists. These terms were valuable in that time period because at the time opposition to chattel slavery within the British public had enjoyed considerable success, culminating with the 1834 Slavery Abolition Act.

In the antebellum United States, slave-owning conservatives used similar tactics in an effort to portray chattel slavery as a system that was more moral than free labor. Although advocates for slavery often fancied themselves the defenders of civilization against “socialists, communists, red republicans, [and] Jacobins“ they often agreed with Marxists and other socialists when it came to critiquing the capitalist wage system. While slavery advocates naturally rejected the supposed egalitarian aspects of various groups of socialists and communists, all could agree that capitalist employers exploited their workers and reduced them to a pitiable state of scratching out a subsistence while the employer pocketed all the surplus.

On both sides of the Atlantic, conservatives argued—without any factual basis—that wages are repeatedly pushed down to subsistence levels by conspiracies among employers. The conservatives also often repeated the old canard that workers are never really free to leave their jobs because the choice workers face is between doing anything and everything employers demand on the one hand, and starvation on the other hand.

Why Wage Slaves Don’t Exist

The conservative ideologies of old, of course, are now politically irrelevant, and the modern threat to markets comes from the Left. In terms of theory, however, remarkably little has changed since the days of Bakunin, even if the standard of living of workers has obviously grown far beyond what nineteenth-century critics could possibly comprehend.

At the core of the claim, whether made by slavedrivers or communists, is the idea that workers are “forced by hunger” to work ceaselessly without an opportunity to bid up wages.

Or, as Mises summarizes the argument in Human Action:

It has been asserted that a job-seeker must sell his labor at any price, however low, as he depends exclusively on his capacity to work and has no other source of income. He cannot wait [because he faces starvation if there is any delay in employment] and is forced to content himself with any reward the employers are kind enough to offer him. This inherent weakness makes it easy for the concerted action of the masters to lower wage rates. They can, if need be, wait longer, as their demand for labor is not so urgent as the worker’s demand for subsistence.

Mises goes on to explain a variety of problems with this claim, including this:

It has been shown that it is not true that the job-seekers cannot wait and are therefore under the necessity of accepting any wage rates, however low, offered to them by the employers. It is not true that every unemployed worker is faced with starvation; the workers too have reserves and can wait; the proof is that they really do wait. On the other hand waiting can be financially ruinous to the entrepreneurs and capitalists too. If they cannot employ their capital, they suffer losses. Thus all the disquisitions about an alleged “employers’ advantage” and “workers’ disadvantage” in bargaining are without substance.

That latter point is certainly key. It is not the case that employers are able to casually “outwait” workers. Rather, there is great pressure on employers to employ their capital—which requires workers—quickly.

When Mises notes that “it has not been shown” that workers will always take whatever wages are offered—this is not wishful thinking on Mises’s part. Were it true that employers could constantly force down wages, then we would not find that workers’ real wages have increased immensely since the eighteenth century. Economic historians have shown this again and again. The “immiseration of the workers” thesis is simply wrong.

We can further demonstrate Mises’s claim with the fact that so many American workers choose to simply not work at all. Recent research estimates that as many as seven million men of prime age (i.e, 25-54 years old) have left the workforce altogether. How can they afford to live? While it’s true that some are on government benefits, the vast majority do not collect benefits in amounts that could even come close to rivaling the income that could be had from ordinary employment. Nor are such amounts sufficient to maintain even a lower-middle-class lifestyle. The fact is these potential workers chose to not work at all and instead primarily live off the incomes of parents, spouses and girlfriends. Yet, if all workers were on the edge of starvation and subsistence living, it would not be possible for them to also support do-nothing male housemates. The workers themselves would barely be making enough to feed themselves, and these male non-workers would be living in a constant state of near-starvation. This clearly is not the case.

If it were impossible for workers to miss even a few days of employment, lest they face starvation, there would be virtually zero openings in minimum-wage jobs. Even casual observation, however, shows that the local burger joint often has open positions.

Another reason the wage-slave argument fails is the fact that—assuming there is even a moderate amount of market competition among firms—employers are motivated to expand production so as to increase market share. Employers are thus incentivized to increase worker productivity. To increase productivity, workers then seek the best workers and “poach” them from other businesses. This process bids up wages.

Historical experience points to many examples. In The Rise and Fall of American Growth, historian Robert Gordon writes:

By 1914 [compared to 1906] the average nominal manufacturing wage had increased by 30 percent from seventeen cents per hour to twenty-two cents per hour, which translated to $2.04 per day. Consider the sensation created when Henry Ford announced early in 1914 that henceforth the base wage in his Highland Park factory would be $5 per day. His ulterior motive was to reduce labor turnover combined with a bit of altruism. Labor turnover was an endemic problem at the time, due in part to the reliance of manufacturing plants on immigration workers who were not yet married and planned to move on to another town whenever news came of better wages of working conditions. For instance, the superintendent of a mine in western Pennsylvania alleged that he had hired 5,000 workers in a single year to sustain his desired work force of 1,000. The fact that unskilled work in manufacturing plants required little or no training made it easy for immigrant workers who were dissatisfied with one type of work to quit and move to another town and try something different.

Clearly, workers are not “forced” to remain with any particular employer or face starvation. Wage workers have options. Free labor—unlike slaves—is free to employ their freedom-to-leave in ways designed to reduce their reliance on any single source of income. Workers are free to start their own businesses—and many do. Although many point to the decline of “mom and pop” retail outlets as evidence of a lack of entrepreneurial activities, the fact is that self-employment in the service economy is very robust. There is no lack of small-time service-oriented businesses in industries ranging from accounting to auto repair to construction, and beyond.

Moreover, workers are free to pool their resources to cope with rising costs of living. Workers are free to create communes or simply live in multi-generation households—thus reducing per-capita rent costs—as many of our ancestors did before the twentieth century. Actual slaves are not free to do any of these things.

Another key point is an obvious moral distinction. The true reality of actual slavery is suggested by the fact that it has always been morally permissible for a chattel slave to kill his own master at any time. Given that chattel slavery is a form of kidnapping and false imprisonment, it is simply an act of self-defense when a slave responds with deadly force against his kidnappers. (Whether or not it is prudent to kill one’s master in a place where slavery is protected by law is another matter.)

It should strike us as absurd, on the other hand, to claim that the owner of the local Taco Bell has “kidnapped” the workers who staff the drive-thru. Moreover, it is clear that countless workers who have worked in these minimum wage jobs at one time or another have moved on to other jobs with much, much higher wages. Are these former fast-food workers runaway slaves? Clearly not.

Now, one might point out that we everywhere find a variety of laws and regulations that hamper the ability of workers to start their own businesses, reduce their cost of living, and otherwise assert independence from existing employers. In such cases, however, one cannot say that it is the market that has produced such handicaps for workers. Rather, it is the state that imposed these limitations on workers. If the realities of wage work under this interventionist system produce some sort of “slavery” at all, then we can only accurately describe the victims as something akin to “regime slaves” quite separate from any concept of wage slavery.

And yet, the idea of the “wage slave” persists as the perennial refrain of the anti-capitalist.