A Philosopher's Blog

NBA and Pay

Posted in Business, Ethics, Philosophy, Politics by Michael LaBossiere on November 28, 2011
Various Federal Reserve Notes, c.1995. Only th...

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While baseball is supposed to be the American sport, we Yankees are also rather fond of basketball. As might be imagined, the ongoing NBA strike has caused dismay to the loyal fans (a group I do not, in fact, belong to).

The strike, like most strikes, is the result of a dispute between the employees (in this case the NBA players) and the owners As the players see it, they are not being fairly compensated for their efforts. The owners disagree. Because of this impasse, basketball fans will not be seeing any NBA games for a while.

On the face of it, this sort of strike might strike most people as rather absurd. After all, the mean average salary in the NBA is $5.15 million and the median average salary is $2.33 million. The low end salary is about $300,000. Given that the average household income in the US is $50,000 it would seem that the players have nothing at all to complain about. After all, the lowest paid player is still vastly better paid than the average American household.

On one hand, it is easy to dismiss the NBA players as being greedy. After all, almost anyone in the world would be very happy to make that sort of money working hard, let alone playing a game. These players are, obviously enough, extremely well paid and it would be rather odd to say that they are suffering an injustice because of their salaries.

On the other hand, the fairness of a salary is not simply a matter of the amount being paid.  To be specific, the fairness of a salary cannot be judged simply by the dollars being paid.  Other factors must be considered as well, such as the value and amount of the work being done. For example, if I said that someone was paid $12,000 a year it might be tempting to say that she is underpaid. However, if you then learn that the person only works one hour each month, then you might change your mind and think that she is actually overpaid. But, if your learn that each hour of work she does generates $5,000 in profit for her employer, then you might change your mind again and think that she is actually being underpaid for what she does.

In the case of the NBA players, it is not simply a matter that they want more money. Rather, they want a larger percentage of the profits (which, of course, means more money). The NBA players are able to command such high salaries because their play generates massive profits and they believe that they deserve a greater share of the profits that they generate. The owners, who generally do not get out on the court to play in the games, believe that they are (as owners) entitled to a significant share of the profits.

While the NBA players are coached and trained, people obviously pay the rather steep ticket prices to go see the players play. They do not go to see the owners count money. As such, the players are the main source of profits and, it could thus be argued, should be paid based on this contribution to the profits. The owners, in turn, should receive compensation based on the value that they contribute (that is, to the degree that their actions generate profit).

Thus, while the NBA players enjoy rather hefty salaries, the dispute is still the classic dispute between the workers and the owners over who is entitled to what percentage of the income.  As noted above, the theoretical solution is easy enough: the workers are entitled to the value they create through their actions and the owners are also entitled to the value they create. Anything else would seem to be theft. As might be imagined, sorting out this division can be rather tricky. In the case of the NBA, people come to see the players. But, of course, the owners also play a role in making the professional games a possibility. After all, if the players just played on a public court and passed the hat for money, they would obviously not make the money they do now.

This same question arises in other cases of employment. For example, FAMU charges $124.01 per credit hour for in state students, and out of state tuition is $552.03 per credit hour. This does not include other fees. I have 193 students taking three credit hours this semester and will have at least 160 in the spring.  As such, my labor does bring in a fair amount of money for the school. This, of course, only includes my teaching and excludes my administrative work (which is 20% of my assigned work-my four classes per semester are only 80% of my assigned work). As you might guess, my salary is way, way less than what the university charges my students to suffer through my classes. Naturally, there are various expenses involved with the students being in my class-the cost of the buildings, administrative costs and so on. As such, perhaps my salary is fair-that is, when all the legitimate costs are subtracted from what I bring in to the school what is left is what I am, in fact, paid.  However, if what I am paid is less than what I generate (minus the other legitimate costs) then my salary would seem to be unfair to the degree I am underpaid for my efforts.

Of course, my university is not aimed at making a profit and hence this almost certainly changes things. When a for-profit business is considered, one rather effective way to make a profit is to pay workers less than the value they actually create through their labors. As many other have argued, a profit tends to require that someone is either being paid less than the value they provide or is paying more than the value they receive (on the customer end). The stock counter is, of course, that the people who get less or pay more value what they get (either the paycheck or the product/service) more than the other party.  To use a made up example, imagine that my workers value the time they put into making one of my widgets at $1, but they actually contribute $2 to the value of the widget. That would enable me to (at least) make $1 profit per widget with no one feeling they have been treated unfairly. Of course, if they knew that their work was worth $2 rather than $1, they would no doubt see me as acting unfairly. Of course, I could also profit from the customer. If it cost me $5 to make and sell a widget and my customers valued it at $6, then I would make $1 profit per widget at the expense of the customer. Of course, if they knew that the widget could be bought for $5, they would probably feel cheated as well. Of course, if I could convince them that I have a right to a profit (that is, money for nothing and perhaps some chicks for free) then they would think that it was fair. The challenge is, of course, justifying that profit-after all, it does seem to be by its very nature money for nothing. If it was money for something, then there would seem to be no profit left over for that money would have to go to something.

But, one might object, my brief discussion is simplistic and naive and fails to properly capture the reality of the financial situation. That is, profit can be generated without anyone being treated unfairly and without concealing any facts.

Going back to the NBA players, it is obvious that they are very well paid. But it is not obvious that they are actually being treated fairly by the owners.

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One Response

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  1. T. J. Babson said, on November 28, 2011 at 8:13 am


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