Flat File

I was listening to some or another talking head go on about income inequality in the United States when a question came to me: How much would a day-care worker have to make in order to be able to afford day care for their own child?

I understand that it's something of a silly question, so bear with me. Most jobs that pay well in the United States have large customer bases, such that each beneficiary of a good and/or service need only put in a fairly small amount towards the worker's wages. Think about someone who makes automobiles. They put in a little work on a large number of vehicles in a year. If all of those vehicles are sold over the course of the year, they can get by on a relatively small amount from each sale. Of course, in reality the economics are more complicated, and there isn't a direct connection between how much automotive manufacturing workers' salaries and the number of vehicles sold. But consider a day-care worker. They interact with only a relatively small number of children over the course of a year. And so each family represents a bigger slice of their final wage. And so for them to make a relatively high salary, each of those families would have to pay a fairly large amount.

Of course, there are some exceptions to this, as there always are. Individual craftsmen who produce goods and services primarily or exclusively for the very wealthy can live well from the patronage of a small handful, or even one, customer, and certain low-wage jobs pull in so little from each individual customer that there simply isn't time to provide services to enough people to make a good living. In the end, however, if a business can create an economy of scale, it needn't charge customers as much money as a business that's unable to reach very far.

And this creates the catch-22 that many people who have low-wage, labor-intensive service jobs find themselves in. Unless the people they're working for are wealthy themselves, those employers aren't going to feel that they have money to be insensitive to prices. And as long as they're employed by people who are watching their budgets, they're unlikely to be able to make enough money to take advantage of services similar to the ones they offer.

The only real way out of this would be for a third party to subsidize the whole affair. Which, in effect, broadens the pool of paying clients without adding as much to the workload. Otherwise, the inequality between the parties is baked into the system.