Thursday, June 17, 2010

Labor and labor power

Marx divided labor economics into labor and labor power. Labor is the actual amount of work a person performs: If you work 8 hours, you are performing 8 hours of labor. Labor power is the ability to perform 8 hours. Labor power has a cost: how many hours of labor (usually other people's) is required to feed, clothe, house, entertain the worker (and possibly allow the worker to raise children and maintain the next generation of the labor force). The difference between the cost of labor power and and labor actually generated is the surplus value of labor.

Suppose it requires 6 hours per day to grow the food, manufacture the clothes, build the houses, etc. to allow a worker to use 8 hours of labor. The cost of labor power, then, is 6 hours, and a day's work generates 2 hours of surplus value.

The federal minimum wage — $7.25 — gives us a rough idea as to the cost of labor power. It's not quite correct, though. First, you can't actually live on 8 hours per day at the minimum wage; you have to work about about 60 hours per week at the minimum wage to survive. On the other hand, even a minimum wage worker contributes a surplus to the capitalist class; if he did not, the capitalist class would not employ him. Splitting the difference gives us $7.25 * 10 +/- $7.25 * 2 = $72.50 +/- $14.50 as the cost of one day's labor power. We'll call it $50/day, 7 days a week.

The Gross Domestic Product is $14.2 trillion. This number actually is generated using (more or less) a 5 day x 8 hour week. The working age population of the US is a little over 200,000,000, but about 10% are unemployed and another 10% under-employed; we'll split the difference and call it ~15% unemployed. So the GDP represents the value of 200,000,000 * 0.85 * 52 * 5 = 44,200,000,000 days of actual labor, for an average value of $316.74 for a day's labor.

Therefore, the average surplus value of labor is $316.74 - $72.50 = $244.24 per day. In terms of hours, the cost of a day's labor is 1.83 hours, and an average worker generates 8 - 1.83 = 6.17 hours of surplus value per day; the average worker's economic efficiency is 77%: she must consume at least 23% of each hour worked to survive.

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