Adam Smith and Wages

I am choosing to focus on a simple page from the very beginning of "Economix" , page 27 features Adam Smith speaking about wages and how high wages are a benefit to all of society.

This discussion about wages is still very relevant today and probably will be for the duration of civilization. It was not long ago when many low wage workers across the country were pushing for a minimum wage increase to $15/hour. This was seen as a mostly left sided movement and was met by the right with responses such as "McDonald's workers don't deserve $15/ hour", "Learn a skill", "Our troops only get paid so and so and they fight for this country". Is Adam Smith wrong that high wages benefit society or can we just not see how they do so?

Now I am by know means an economist and I have taken no economics courses since AP econ is high school (so anyone with more knowledge feel free to correct me if my intuitions are off base), but the argument for high wages appears to focus on that it raises worker motivation and puts more money in workers' pockets that they can then put back into the economy. Now I have held many jobs through my 3.5 years of college many which have been focused around the medical field as that is where my aspirations lie. All of these jobs have paid fairly low hourly wages either at the minimum wage at that time or just above. This was a problem for me as it meant I had to put it more hours to pay for food, rent, tuition etc and had little to no money left for anything else. This left me stressed out a lot and I can say when I went into work with these stresses it felt more like just punching a clock versus what it should feel like, me gaining knowledge and experience to pursue my future goals. Up until very recently I was getting paid the minimum at my job as a scribe at a hospital up in Coon Rapids then one day out of the blue I received a company wide email that basically said he you guys are very beneficial to the hospital and we are going to bump your pay up $2/ hour. Now to some people this may not seem like a lot, but $2/hour increase is very noticeable paycheck to paycheck and after receiving  these higher paychecks I can say I started stressing out less and was able to enjoy my job more. This in turn increased my motivation and (although I can't quantify this) improved my job performance. Personally these positives of increased wages seemed to hold up for me.

So why are some people so against higher wages, because it seems like Adam Smith has a point. Many people state that raising wages makes businesses compensate by doing two things: cutting hours and raising prices in order to maintain their profits. I intuitively have a problem with this as it applies to large companies (I am making this distinction because minimum wage laws also distinguish between large and small businesses). Anyone can seen that prices of common goods have risen greatly over the past decades. If you look at data it appears that the wages have not kept up with this despite productivity increasing greatly. So wages lag behind price increases yet the worker of today is more productive. Is this as Smith says a result of capitalists following their own self interest or something else?

Throughout this book Goodwin has painted corporations as the bad guys over and over again so I take his presentation of pure self interest with a grain of salt, but I do have cynically low faith in people when there is great psychological distance between them as there is in larger companies. Due to this I believe that a mentality of profits > people can take affect leading to events such as wage stagnation despite the financial ability to increase them. Yes a company needs to make money, but the ability of a company to run efficiently should not come at great expense to its employees. On page 27 this battle between wages and profit is depicted as a tug of war and I have a hard time believing that corporations will crumble to the ground if they let the workers take a little bit more of that rope.