Stephen
Kershnar
NFL Salaries and the Minimum Wage
Dunkirk-Fredonia Observer
November
11, 2014
A
common view is that people in some types of jobs are paid too much and others
too little. This view explains why debates over executive pay and the minimum
wage take on a moral tone rather than being mere policy judgments. It is as if
politicians are talking about sin.
In 2009, President Obama forced a $500,000 cap on corporate executives
at firms receiving taxpayer bailout money. He said he wanted to stop federal money
to be used to reward failure. He just knew that these corporate fat cats were
making too much. On the other hand, four states recently voted to raise the
minimum wage. Apparently, the crass politicians in those states just knew that
unskilled workers were making too little.
The problem with all this is that these judgments are arbitrary and
indefensible. Simply
looking at people’s salaries tells us little about whether the pay is deserved,
fair, or a good deal for employers. To see this, consider whether you would
want your brother or son to play in the NFL.
On the benefit side, being a NFL player is
well-paid, exciting, prestigious, and can make one famous. Nick Schwartz, writing
in USA Today Sports, points out that
the average NFL salary in 2013 was $1.9 million. The average play over his NFL
career makes roughly $4 million after taxes. It also carries with it validation
of one’s sense of masculinity, access to attractive women, and participation in
a band of brothers. For young men, prestige, excitement, and access to
attractive women are very appealing. Other jobs (for example, factory worker)
don’t offer anything like these benefits.
The costs of trying to make a career in
the NFL are significant. NFL football is a dangerous sport with significant
chance of an injury that can damage one’s ability to think. NFL players suffer
concussions and other types of traumatic brain injury. This can cause memory
loss, depression, and dementia. The NFL has acknowledged that many former
players are suffering from these problems.
Players who commit to football in college
invest a tremendous amount of time and energy and stand very little chance of
getting a return on their investment by making it to the NFL.
NFL careers are short. NFL players’ union claims
the average career is 3.2 years long. The NFL claims that it is 6 years but its
estimate is misleading because it focuses on better-than-average players. On
either estimate, an NFL career is short. The job is also stressful, physically
demanding, and requires travel. Every day, players fear injury, demotion,
termination, and loss of ability to support one’s family.
In 2009, Sports Illustrated reported that
78% of NFL players are bankrupt or facing serious financial stress within two
years of retiring from the league. Compare this to the ironclad job security
had by teachers, soldiers, and postal workers and the generous retirement
benefits had by soldiers and police officers.
When compared to the jobs held by players’
peers (for example, farmer, factory worker or insurance salesman), the basket
of costs and benefits is better for some people and worse for others. Whether
the basket is better depends on an individual’s talents and preferences of the
person in question. This is similar to the different attitudes people have
toward the basket of costs and benefits that accompany specific consumer goods.
Consider, for instance, that some people have a strong desire to buy Porsches.
Others have no interest or don’t see them as worth the money.
There is no way to decide what NFL players
should make. First, the notion that they make too much because they don’t need
so much money is unconvincing. None of us need that much money to live. Even
people making wages below the minimum wage can live dignified lives, albeit
with far less opportunities than the rest of us. A good deal of the third world
is doing so now.
Second, the notion that they don’t deserve
so much money depends on there being a principled way to pick out what a worker
deserves. On one theory, workers deserve money for the effort they make. The
problem is that this is implausible. Musicians who put in a lot of effort, but
still make terrible music don’t intuitively seem to deserve a lot of money
(think of the 80’s big hair bands). The same is true for those teachers who
teach poorly and people’s whose skills are unwanted because they are just not
good enough in a flooded market (consider, for example, violinists).
Perhaps, instead, workers deserve money
for what they contribute to others’ lives. Again, this just isn’t true. Some
movie and pornography stars contribute to a lot of people’s lives as judged by
the number of people who enjoy their work without working especially hard.
Consider Marlon Brando and Linda Lovelace. I don’t see why they deserve a lot
of money.
In any case, NFL players contribute a lot
to others. In 2014, the Associated Press reports that roughly half of Americans
are NFL fans (156 million people). That is a lot of people whom players make happier.
The fact that teams pay so much for NFL talent tells us that they think that the
players who make it would contribute a lot more than the teams’ next best options
(those players who don’t make it).
If we can’t discover what an NFL
player should make, because there is no adequate theory, there is similarly no
reason to think that we can discover what is the minimum that unskilled workers
should make or the maximum that corporate executives should make.
If the case for the minimum wage is
not based on what unskilled workers deserve, then it weakens considerably.
While there is a controversy over the studies, it is likely that raising the
minimum wage results in fewer low-wage workers being employed. If this is so,
then it is likely that the costs to such workers via lost jobs outweighs the
gains to those who retain their jobs.
Also, most minimum-wage workers do
not live in poverty. On one 2007 estimate by economists Richard Burkhauser and
Joseph Sabia found that only 13% of the workers who would be affected by it
live in poverty. Thus, it is not a particularly effective welfare program.
