What Is a Paycheck For?

No question, how and what we get paid is something we take personally. So, understanding compensation is difficult from philosophical and emotional standpoints. The issue comes with layers of complexity -- the stories we tell ourselves about self-worth and a host of other conditioned assumptions about our value, the marketplace, and the organizations in which we work.

This should come as no surprise, because the experiences and associations we carry are often framed in a materialist paradigm constantly reiterated in the mainstream business world and through the media. As a typical example, an advertisement in a recent New York Times read: "Earn what you're really worth." This is the kind of reductive message that reinforces the notion that "I am what I earn" and nothing more.

For organizations, compensation is a conscious or unconscious, and often inconsistent expression of an organization's behaviors, its culture, the predilections of its decision makers, its history and habits, and its practiced values. One could say that each paycheck marks the intersection of two systems, personal and organizational. And since organizations are also social in nature, there are additional layers of assumptions, judgments, appreciations, and aspirations about compensation permeating the social system that remain unaddressed.

If we are striving to build organizations of people working to lead a regenerative economy, however, it is hard to imagine how any organizational coherence, transparency, and mutual understanding of compensation could be achieved without a philosophical covenant based on organizational purpose, values, and principles. And further that this covenant is cultivated and shared by the people working together in that organization. Included in this transformative imagination is first a reconsideration of the nature of work and second the relationship of compensation to it -- in essence, our livelihood.

Is labor a commodity?

We can readily grasp how compensation is tied to labor if we assume it is a commodity. Most of us have been raised with this assumption embedded in our psyche, our payroll systems, and in law. I get paid an amount for an hour's work. If an organization or individual is willing to pay, I can charge more for it. Its perceived value goes up, even though I am the same person regardless of the price. The fact is that whatever I can charge has nothing to do with me as a human being. Rather, this is how market forces work in the world of commodities. In the capital system, producers are constantly trying to reduce the cost of labor in search of higher profit margins. Labor in this sense is a disposable commodity to be replaced with a cheaper version, as profit matters more than the quality of life of the person who is producing that profit. In this system, individuality is sacrificed for the sake of efficient markets--that is to say, profitability and return on investment.

The laws of commodities are different than the laws of being human. Things, commodities, the products of human labor, are naturally part of the circulation of goods and services, and are subject to economic forces that have no rightful relationship to the real value of a human being. The market operates on the assumption that an employee is nothing more than his or her labor, and any two or a thousand people are all equal in this regard.

We are unlikely to make any progress through our current state of extreme resource inequality, or achieve any level of economic sufficiency, until we realize that labor is not a commodity. The drive to reduce the cost of labor, and to treat it as a commodity to be bought and sold, displaced and replaced, is derived from the competition to maximize profit. This extractive approach has left much human and environmental degradation behind.

In 1914, the Congress of the United States declared in its Clayton Act: "The labor of a human being is not a commodity or article of commerce." Thirty years later the same notion was reiterated as part of the International Labor Organization's Declaration of Philadelphia. In a way, both statements settle the labor as commodity question by saying what it is not. Yet neither offers an affirmative insight into labor in such a way that the sense and purpose of compensation are on clear ground.

Toward a participatory economy

If labor is not a commodity, then what is it? And what then is the purpose of compensation? Labor is a resource in the same way that nature is a resource. Each human being has the capacity to tap that resource to work in the physical world and further to turn that capacity in service to the interdependent realm of economic activity. One could say that labor is pre-economic. In the sense that buying and selling are economic, it makes sense to say that you cannot buy labor, but rather the product of that labor.

Compensation serves to support and free an individual to bring her or his gifts and capacities in service to others through production, and to enable that individual to participate in the rest of economic life through expending the money. There is a kind reciprocal poetic to this process if one imagines that an individual receives a gift of labor as resource, puts that gift in service to an organization (or to one's own enterprise) with the result that compensation flows back as a result of the organization's collective activity, and then again disperses and disappears back into the economy as each individual uses their respective compensation to meet material needs.

I hope I have painted a picture of a participatory economy, one that recognizes the value of each human being, not as a commodity but as a necessary resource and co-creator. Further, compensation has a very particular role to play in this broader context. If you accept the assumptions and implications of the advertisement mentioned at the beginning -- I should earn what I am really worth -- then you have made yourself a commodity. Though one might successfully sell oneself, there is a price to pay: to commoditize oneself, or to commoditize another by putting a price on them, is a measure of dehumanization. This is the very opposite of the direction we need to go in order to create a regenerative economy. I would rather reframe compensation as liberating human capacity in order that each of us may be of service and contribute to an interdependent world.

John Bloom is vice president, organizational culture at RSF Social Finance, a pioneering funder of social enterprises based in San Francisco.

Purpose@Work is a new series of discussions designed to explore how we can infuse a deep sense of purpose into our work - through our organizations, our people, and our impact in society.

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