What’s a fair wage?

Most chief executives in the National Health Service (NHS) have recently been receiving high pay rises from their NHS Regional Trusts.  Some had been as high £35,000.($50,000) making their annual earnings greater than £340,000 ($500,000).  Despite pledges from the government some months ago that salaries would be kept to inflation, the Trusts have gone ahead and given generous rises anyway.

Nurses, in particular, are complaining bitterly because the rise is greater than the total annual salary of many of them.  But it’s the Hollywood Effect unfortunately.  Rarity.  NHS chief executives are paid nowhere near as much as soccer stars, for example. But no soccer fan complains — or even a lower league player — because it is clear that there are differences in skills as one goes up the pay scale.  At the higher levels the skill margins may be very fine but their possessors are increasingly rare in the population.

In nursing, as in many other sectors, those at the bottom have very little idea of the subtleties of skills that may be required at the top.  But then there’s another factor operating these days.  This is that we are becoming increasingly specialised, and the groups at the top of any well-paid profession protect themselves as much as much possible against uncontrolled numbers of new entrants in order that their incomes are not diluted. The ratio of top to bottom salaries in some of these cases may be far greater than in nursing — or even in football.

The Hollywood Effect is an enhanced version of the part played by differential skills in a group and the resultant pecking. There’s not a lot can be done about that.  Besides, it’s beneficial for the sake of the group as a whole.  The same cannot be said for the ‘specialisation effect’.  Specialisations, of themselves. add to overall economic efficiency.  They are pernicious, however,  when each one connives together and makes its skills and connections difficult to acquire.  Each one, in effect, becomes a business within an organisation or another   business  and, like any parasite, weaken the lager business or overall economy.  We’re still only about 200 years into increasing specialisation, so we don’t yet know how to deal with it — that is, so that there’s parity of earnings at similar grades across all the specialisation specializations of similar skills.

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