Fair Compensation: Minimum Wage

What is "fair" (or "just?) compensation? How much is your labor worth? Is there some objective method that corporations might utilize in order to compensate their workers fairly? Typically, the morality of compensation falls under the category of distributive justice. The formal principle of justice suggests that it is unfair to pay workers either more than they deserve or less than they deserve. Of course, the obvious question here is which material principle(s) of justice do we employ in determining what those employees actually deserve?" Is it merit, need, equality, or utility? Here are some of the options:

MERIT-BASED COMPENSATION: Based on the material principle of merit it would be unfair to pay the “best workers” the same or less than the “worst workers.” In other words, merit-based compensation is based on compensation. Sometimes “pay” involves salary, sometimes benefits, sometimes it involves other variables (or perks). But how would a corporate leader determine what the "best" means in any given workplace, and would he/she go about “objectively” grading work performance? Stock holder theorists would argue that merit is inseparable from the free market. If you underpay an employee relative to what’s being offered by other corporations for the same or similar work, that employee will most likely resign and take the more lucrative (or attractive) job. If you overpay workers, you’ll have to charge consumers more for your product or service and/or earn less profit and adversely affect stockholders and stock price. Defenders of merit-based compensation argue that compensation also influences employee performance (and employee loyalty). Workers will be more loyal to the company and work longer, harder, and better if they believe that they will be fairly compensated. Do they have merit pay at your place of employment? How is it distributed? Do you think it's fair? Are you overpaid? Are you underpaid?

NEED-BASED COMPENSATION: Based on need, it would be unfair to pay workers less than what they need. Need-based compensation usually incorporates ideas such as a “minimum wage,” or a “living wage.” The problem here is how does one objectively set these standards? How does an employer differentiate between "wants"-(e.g. a new guitar) and "needs" (e.g. a liver transplant)? And unfortunately, the neediest workers are not necessarily the best workers. Sometimes workers are in need because they are sick, incompetent, or just plain lazy. Stockholder theorists argue that need-based compensation ( minimum wage and living wage) are unfair because they involve paying the least valuable workers more than they deserve. Need-based compensation also incentivizes employers to hire fewer low end workers, which leads to unemployment of the least advantaged. Stakeholder theorists argue that corporations have a tendency to exploit their less valuable workers and that exploited workers become alienated from their work, family and themselves. How much salary do you need? If you are ill, do you need more salary or benefits to survive? Do workers have positive right to: home ownership, health care, cell phones, or wide-screen televisions?

EQUALITY-BASED COMPENSATION: Based in equality, it would be unfair to pay any worker more or less than any other worker, regardless of merit, need, or utility. After all, all workers may not, in fact, be of equal value in terms of merit, need, or utility. As a general rule, companies that compensate all workers at the same level, lose the best workers and attract the worst workers. This is called adverse selection. Unions often pursue variants of equality-based compensation, such as basing salary on non-competitive factors such as seniority. Would you want to work for a corporation that equally compensates all workers, regardless of their competence? How long would that corporation stay in business?

UTILITY-BASED COMPENSATION: Based on utility, it would be unfair to pay a less useful employee more than a more useful employee. But how does one determine what "greatest happiness" means in any particular workplace? Low employee wages might make the stockholders and consumers happy. High executive wages might make executives happy, but make everyone else unhappy. Many stockholder theorists argue that corporations compensate executives at a higher level because they have utility; that is, stockholders, employees, consumers, financiers, etc. benefit by retaining these workers. Hence, utility-based compensation is really merit-based compensation.

MARKET-BASED COMPENSATION: Based on market-based reasoning, it would be unfair to pay employees (including CEOs) more than what the market dictates. A corporation’s best overall strategy is always to hire best person for the least cost. The more costly it is to replace a worker, the more you have to pay that worker. If you underpay good workers, they will quit and work for someone that pays them more. Stockholder theorists argue that companies that adopt compensation schemes ignore the free-market tend to go bankrupt over the long run.

In the real corporate world, rationally self-interested corporations simply cannot hire the neediest workers unless doing so provides a favorable cost-benefit ratio (e.g. those individuals are willing to work longer hours for less compensation), unless the government forces them to (Americans with Disabilities Act), or unless government provides economic incentives (Enterprise Zones). Also in the real world, merit and utility usually mean the same thing. The best workers are usually the most useful, in the sense that they contribute more to the company. Therefore, in determining just compensation there are really only two principled alternatives: pay scales based on merit and pay scales based on equality: stockholder theory v. stakeholder theory.

Some small colleges try to pay their professors based, more or less, on equality; that is, they try to pay all professors on essentially the same scale, regardless of merit or utility. Sometimes these compensation policies involve setting up a pay-scale based on seniority, so that long time workers get paid more that recent hires. Of course one might argue that since workers with seniority have more job experience and tend to be the best workers, this is really a merit-based system. I would argue that these schemes are nevertheless equal as long as each worker has an equal opportunity to gain seniority. Many people think that compensation based on equality is fair. But, unfortunately, salaries based on equality often bump heads with economic reality. For example, there are, in fact, more high-paying employment opportunities than engineers. But there are more philosophers than jobs in philosophy. That's why colleges pay their engineering faculty much more than they do their philosophers. When defending these higher wages, college administrators might invoke several different moral principles. Some utilitarians might say that "since there are more engineering majors than philosophy majors, the whole college benefits more from engineering than philosophy, and therefore the higher wages for engineers is justified." Utilitarians might also justify paying football and basketball coaches more than any other employees.

Alternatively, one might argue based on the material principle of equality, that it is unfair to pay engineers more than philosophers if they hold Ph.D.s, write books, and teach excellently. However, if Aristotle were on the philosophy faculty, one might argue, based on the material principle of merit, Aristotle is the most academically accomplished faculty member, and therefore he ought to be paid the most. Then again, even though he may be the most meritorious faculty member, he may not necessarily generate the most utility for the college. Of course, libertarians would probably say that, if the college really wants to have either an engineering program or Aristotle on the faculty, they will, in fact have to pay market value for their labor. Otherwise those rationally self-interested individuals involved will simply exercise their liberty and change their place of employment. The labor market, they say, is not unlike any other market: it is inherently unequal. This fact of inequality means that at least some workers may not be worth very much to the corporation and therefore are compensated at a very low level, perhaps so low that those individuals may not be able to support themselves and/or their families. In the United States, government tries to compensate for the ruthless labor market by instituting minimum wage laws, unemployment insurance, Social Security, Medicare and Medicaid etc.

Minimum wage laws are prime examples of egalitarianism. They are often justified on the basis of Rawl's concept of a social minimum. (Utilitarians sometimes join forces with welfare liberals and argue that minimum wage laws make life better for all of us by reducing poverty, dependency, and crime.) Back in nineteenth-century America, before minimum wage laws were passed, workers were often paid extremely low wages for long hours working under extremely dangerous working conditions. Even children were subjected to working long hours in dangerous factories. Libertarian stockholder theorists argue that "those were the good old days!" when wages and working conditions were set by blind market forces and not by the whims of nosy, "do-good" government officials. In exercising their liberty, factory owners offered wages under certain working conditions and workers, who owned their labor, either accepted or rejected those offers. Once minimum wage laws took effect, stockholder theorists argue, corporations were forced to pay workers more than the market dictates, and as a result corporations couldn't afford to hire as many low wage workers. Hence, stakeholder theorists, by defending a legal minimum wage, inadvertently hastened the advancement of labor-saving technology which led directly to the rise of unemployment and poverty in the United States. Stockholder theorists argue that technology opens up more high-paying jobs for engineers and salesperson; and therefore, if you lose your job to technology, get retrained..

Stockholder theorists conclude that minimum wage laws are fundamentally ill-conceived. They say that the value of one's labor is best left to voluntary choices by buyers and sellers of labor. Hence, if these low wage workers had stayed in school longer and/or chosen more promising career paths, then their labor would be worth more. But when the government protects low wage workers from the consequences of their bad decisions, it encourages future bad decisions, and increases the number of people on welfare. So as a tax payer, I am penalized via the tax code for having made good decisions, while high school drop outs are rewarded by overly generous minimum wage laws, Medicaid, and welfare checks. Hence, government inadvertently discourages workers from staying in school and/or choosing more promising career paths. Why work at all if you can stay at home and collect that welfare check? That’s called “moral hazard.”

Other stockholder theorists argue that low wage jobs provide young workers with the opportunity to learn how to be a worker; and that the lower the wage paid, the more young people can be hired. And that minimum wage laws affect small businesses more than large corporations.  Thus large corporations benefit from bankruptcy of local competitors.

Stakeholder theorists respond by arguing that the fatal flaw of stockholder theory is that it assumes that poverty is usually  caused by irrational or misguided decisions, when in fact, a lot of poverty is the result of natural inequality (the natural lottery) and predatory behavior by more powerful stakeholder groups. Through no fault of their own, many people simply cannot support themselves because they are genetically and/or socially disadvantaged. As Rawls argued, in the state of nature, the distribution of genetic and social advantage is inherently unfair. The fact of inequality, egalitarians argue, does not make it right. That's why our ancestors invented civilization to begin with! So should the government force corporations to pay low wage workers a minimum wage? If so where should that wage be set? What do you think?

 

Business Ethics: Index

The following FP links are my writings on "Business Ethics." They are from the book I've been working on for twenty years.  They save my students a lot of money... I never use textbooks for my ethics courses. All free stuff. The Cincinnati Enquirer has given me permission to use online material for case studies.  

Chapter #1: What is a Corporation?

Chapter #2: Stockholder Theory of Corporate Management and Stakeholder Theory of Corporate Management

Chapter #3: Leadership Theory, Followership Theory, Self Organization, Leadership, Culture, and the Market, Information Flow and Leadership

Chapter #4: Media Ethics

Chapter #9: Ethics of Whistleblowing

Chapter #10: Privacy in the Workplace

Chapter #11:  Discrimination

Chapter #12: Discrimination in the Workplace

Chapter #13:  Affirmative Action

Chapter #14: Sexual Harassment

Chapter #15: Fairness in Compensation: Minimum-Wage and Executive Compensation

Chapter #16: Health and Safety in the Workplace

Chapter #17: Marketing Ethics

Chapter #18: Consumer Health and Safety

Chapter 19: Price Fairness

Chapter #20: Consumer Privacy

Chapter #21: Business Ethics in a Global Context: Objectivism v. Relativism

Chapter #22: Sweat Shops

Chapter #23: Bribery and Corruption


APPENDIX: What is Ethics?

Discrimination in the Workpace

The concept of "discrimination" is rooted in the formal principle of justice: "treat equals equally and unequals unequally." Unfortunately, the principle of equality often bumps heads with other moral principles; especially: the Liberty Principle, Utility Principle, and the Principle of Merit. 

Suppose that John Smith owns a store that sells guitars and hires only family members and close friends, all of whom happen to be young, guitar-playing, white heterosexual males. Stockholder Theorists argue that if John "owns" the store, then he has the liberty to hire whomever he chooses. However, one of the side-effects of exercising one’s liberty is that sometimes we make poor decisions and generate disutility. If John’s family and friends turned out to be incompetent, irresponsible thieves that know nothing about the guitar business, he would soon go bankrupt. That would be good news for all the other guitar stores that chose their workers based on impartial criteria such as job experience, knowledge of guitars, and honesty. Moreover, stockholder theorists argue that most of the time, discriminatory hiring and firing practices are punished by the free market, and therefore we do not need laws to enforce non-discriminatory business practices.

Stakeholder theorists argue that many corporations can survive and even thrive, for a long time despite discriminatory practices, therefore some government involvement is necessary to protect workers from discriminatory hiring and firing practices. Some job qualifications are regarded as bona fide occupational qualifications (BFOQs) in the sense that they represent legitimate lines of meritorious competition. In at least some  contexts, the ability to play a guitar might be regarded as a bona fide requirement to sell guitars; while requiring that salesman to be a white, male guitar player might be discriminatory. In either case, the distinction between bona fide and discriminatory qualifications is contextual, and contingent upon moral argument.   

However, over the years some occupations have been monopolized by females such as: nursing, primary education, and sales. Some occupations have been monopolized by males, such as: manufacturing, mining, engineering, and professional football. Some professions are monopolized down racial lines such as professional football (blacks), baseball (Latinos), basketball (blacks), and hockey (whites). It is difficult for males to compete in occupations dominated by females, and it is difficult for females to compete in occupations dominated by males. But why?

Critics also observe that most of the highest paying jobs have been long monopolized by old, white males. Since the 1960s, the pay scales have certainly changed, but females and blacks still encounter that "glass ceiling" that prevents them from advancing to the higher paying jobs in many industries.

For the ethics of discrimination, there are several descriptive (factual) questions. Do at least some skills and aptitudes cluster around categories such as race, gender, age, nationality, or sexual preference? If so, why does this happen? Is it a bad thing? Do men and women, blacks and whites, oldsters and youngsters, heterosexuals and homosexuals (at least occasionally) bring different skills and/or aptitudes to the workplace; or are our beliefs about those skills and aptitudes based on false cultural beliefs and/or subtle, discriminatory cultural traditions? What role, if any, should government play in breaking down these cultural barriers? Should corporations be forced to hire based on sex, race, age, or sexual preference, even if that practice violates the liberty principle, the utility principle, or the principle of merit? 

Discussion Questions

 

1. Which of the following job descriptions seem to be obviously bona fide or discriminatory. Wanted: Good looking women with large breasts: strippers for a strip bar, secretary jobs, professional women's basketball team, brassiere salesman. Explain why.

2. Is job discrimination sometimes subtly brought about by unfair and or dis-utilitarian recruitment strategies? Would there be more males in nursing, if nursing schools recruited more male nursing professors, and recruited more male nursing students?

3. Is it discriminatory to refuse to hire workers that are unhealthy, morbidly obese, ugly, or smelly? Explain.

4. Should the WNBA hire at least some male players? Should the NBA hire at least some female players?

5. What is "reverse discrimination" in the workplace. Give an example.



   

Privacy in the Workplace

To what degree is it morally and/or legally justifiable for corporations to access private, personal information about their stakeholders and/or share that information with others? 

First of all, the concept of "information" is epistemologically complex. The distinction between "public information" and "private information" is deeply rooted in Adam Smith's original distinction between "property" and "information." If there is a such thing as "private property," then why not "private information?" In what sense do individuals "own" information pertaining to their "private lives?" If there is a "right to privacy" is it a moral right or legal right? If there is a legal or moral right to privacy, then is that right a Positive Right or a Negative Right?  

In business ethics, privacy is usually approached via two competing theories of management: Stockholder Theory and Stakeholder Theory. 

Stockholder Theorists argue that all "rights" are negative moral rights. Corporations are cooperative enterprises comprised of various stakeholder groups who voluntarily cooperate in pursuit of their own individual and/or personal and collective interests. Those stakeholder groups include: stockholders, employees, consumers, suppliers, financiers, and local communities. Corporations thrive, survive, or go bankrupt based on the degree to which corporations satisfy the interests of those competing groups. For Stockholder Theorists, the Liberty Principle is fundamental; that is the various groups must have freedom to enter and/or exit from any given corporation. Thus, the CEO (or owner) of any corporation is bound by a moral agreement or contract that binds the various stakeholder groups. If any one stakeholder group is dissatisfied with that agreement they can refuse to sign that contract. If enough stakeholders from any one group refuse, the corporation may bankrupt. Therefore, on the issue of privacy, Stockholder Theorists argue that contracts must contain clear statements concerning what kind of information is required out of each stakeholder group, how that information will be gathered, and who will have access to that information. In short, corporations that unnecessarily pry into the private lives of their employees and/or consumers will pay the price in the free market.  

Stakeholder Theorists argue that contractual moral agreements are insufficient guarantors of the right to privacy (or any other right!). They tend to support government regulations that limit what kinds of information can be collected by corporations, what corporations can do with that information, and who can have access to that information.  

Corporations can secure information about stakeholder groups in many different ways. The most common source of information procurement is via surveillance: that is by observing the behavior of the various stakeholder groups. Throughout most corporate history, surveillance entailed direct observation by an owner or a designated overseer. In recent years, surveillance has been expanded via technologies such as video cameras, computers, and a variety of tests. Today most corporations use technology to observe the behavior of their employees and consumers. Once this information is gathered, then ethicists ask: "What is to be done with that information?" and "Who ought to have access to that information?"

For Stockholder Theorists the main ethical issues are utilitarian: "Do the costs for of surveillance outweigh the benefits?"  Some surveillance technologies are very expensive to purchase from sellers. Some technologies are inaccurate and therefore yield false or misleading information. According to Stockholder Theory it's up to the stockholders to decide whether the benefits of any surveillance technology outweigh the costs.  

Drug tests are both notoriously inaccurate and expensive. Many laboratories that process the tests employ underpaid incompetent workers. And of course, many employers, no doubt, alienate a lot of good workers by asking them to submit to drugs tests or honesty tests.

The overall utility of drug testing is questionable from many perspectives.  Highly accurate drug tests, for example, may detect lingering quantities of illegal drugs, that do not (in fact) affect work performance. It’s one thing to smoke a joint just before flying a passenger plane and another thing to smoke a joint a week before takeoff. Doe employers really have a moral right to monitor employees behavior after work, that does not affect their productivity? Is it really my employers business if I choose to smoke a joint on my day off? There may also be a big difference between a rock star smoking joint before a performance and pilot smoking a joint before flying. But, unfortunately, due to the ongoing drug war, it is illegal for scientists to conduct clinical trials that might determine whether smoking pot really impairs one’s ability to fly a plane. What would happen if research shows that pot smoking is (in fact) performance enhancing, and enhances one’s ability to fly a plane? Could airlines justifiably require all airplane pilots to smoke pot?

Another privacy issue questions whether corporations have a duty to protect private information. When personal information on employees and/or consumers is stored on computers, the question arises "who owns that information" and "who ought to have access to that information?" How secure must that information be kept? How much should corporations invest in protecting the security of information on their employees and consumers?

The use of social media in the workplace is also problematic in the workplace. Many employees expend time at work checking their private, non-work-related e-mail, Facebook, and Twitter accounts. Hence, corporations end up paying for wasted time. From a moral or legal perspective, what can a company do to minimize this behavior? Should corporations hire employees or hire a corporation to monitor employee computer use? But who will monitor the monitors? How much should a company pay those monitors? Is it easier to justify testing one class of workers rather than another? For example, should we test airline pilots, physicians, and college professors to the same degree? If so, what kinds of tests?

 

QUESTIONS FOR DISCUSSION

1. Do employers have a moral right to access private information of their employees or consumers? If so, under what conditions might that access be justified?

2. If your employer discovers via a required physical that you have a serious, contagious disease such as AIDS, does your employer have a moral duty to tell your wife, spouse, or children?

3. If your employer fires you for unauthorized use of your computer at work, does that employer have a duty to inform future employers of that transgression? 

4. What do you think about employers requiring each of the following tests: honesty tests, IQ tests, or AIDS tests?

5. Discuss the use of performance enhancing drugs (steroids) and illegal recreational drugs (pot) in Major League Baseball and The National Football League. What are the privacy implications? 
 

Affirmative Action

Another public policy issue in business ethics that involves discrimination is affirmative action. Actually this is another rather vague term that refers to a variety of strategies adopted by the United States government to "correct" the fact that, white males are disproportionately represented in many of the most lucrative professions. This includes: lawyers, surgeons, corporate CEOs, engineers, and college professors. Even when women or minorities do manage to break into these white male-dominated professions, they are often disproportionately compensated for doing essentially the same work that their white male counterparts. Based on stakeholder theory, one might argue this particular distribution in favor of white males is evidence of injustice toward women and minorities; that is, sexism and racism. They then argue that the government must intervene. Despite the shallow rhetoric you often hear in the media, the issues involved in affirmative action are both philosophically complex and of great social and political importance. The complexity arises from its association with the concept of "justice" and its importance stems from its fundamental influence upon social and political institutions. For this course, my question for you is whether the government ought to force businesses to hire more women and minorities.

Affirmative action refers to a set of public policies adopted by government, beginning in the 1960s. The perceived need to level the playing field arises from the basic condition of biological existence; namely, scarcity. In the state of nature, all organisms are thrust into life or death competition. Nature distributes resources unequally by blindly doling out competitive natural advantage and disadvantage. Among human beings, competitive advantages such as good health, physical appearance, and intelligence are all unevenly distributed. In general, organisms and species that benefit from this natural lottery, survive, and those who are disadvantaged do not survive. In short, nature distributes resources based on "survival of the fittest!" Fortunately for us humans, the vast majority of us have a stockpile of talents.

Natural advantage and disadvantage are also unevenly distributed throughout the lifespan of most organisms. The very youngest and very oldest individual organisms are usually disadvantaged in the competition for scarce resources and frequently end up in the food chain, as prey to other more "fit" organisms. With the evolution of human social tendencies, culture, and/or intelligence, human beings have managed to escape much of the struggle for survival through reciprocal altruism; that is, by helping one another through the creation of and by social and political institutions that shelter the youngest, oldest, and the otherwise disadvantaged members of our species.

The first collectivist systems of social redistribution were, no doubt, based on the principle of partiality; that is, certain individuals and groups of individuals were favored over others. In primitive times this probably involved redistributing resources based in familial or tribal association. Since then, other forms of partiality have evolved along with new systems of redistribution based on age, sex, nationality, racial characteristics, and sexual preference. As philosophers began to examine the social redistribution of resources among persons the concept of justice became the battleground. Aristotle noted, that there are two spheres of justice: justice in the distribution of resources and justice in retribution. Both involve the formal principle of justice, which states that "Individuals ought to receive no less nor more than they deserve." or "Treat equals equally and unequals unequally." As a formal principle, this does not tell us much about which individuals are to be considered equals. Arguments involving affirmative action may invoke either or both.

AFFIRMATIVE ACTION BASED ON DISTRIBUTIVE JUSTICE

Justice in the distribution of resources requires that we make some material determination of who deserves what. This entails material principles of distributive justice, or "patterns" which include: merit, need, equality and utility.
Unfortunately, it is not often clear which of these "patterns" ought to govern the social redistribution of any given resource and different individuals benefit from adopting any of these redistribution schemes. For example, merit scholarships are awarded to the best students, but not necessarily the neediest and scholarships based on need do not necessarily reward the best students. 

Much of the debate over affirmative action can be traced to philosophical differences between stockholder theorists and stakeholder theorists. Stockholder Theorists argue that all human beings naturally seek ownership of private property. This often precipitates competition for the most coveted and therefore most valuable resources. Hence, in order for an individual to privately own any resource, it is often necessary to expend one's own time and/or already held resources. Welfare Liberals acknowledge that economic competition for most scarce resources is probably unavoidable. However, they believe that, at least some very important resources (needs) ought to be distributed equally and not simply awarded as prizes in open economic competition. They often argue that all competition occurs under naturally unequal circumstances.
  
If I were to play chess against the world champion, even though the rules of engagement seem impartial, I cannot reasonably expect to win. Indeed, some of us are naturally advantaged with unearned genetic and/or social advantages such as intelligence, speed, agility, and even good looks. Others are disadvantaged. As long as the champ and I are competing for some trivial award, there is no problem. However, if the stakes include needs, or those resources essential to the preservation of life, then competition between us might be considered to be unfair. Even though we play by the same rules, we come to the game with unearned and unequal natural attributes. Stakeholder theorists argue that the primary function of government is to redistribute some resources, rather than merely preside over a mediated form of Darwinism, where the naturally advantaged win and the naturally disadvantaged lose. Therefore, while stockholder theorists favor small government with minimal interference in voluntary choices of individuals, stakeholder theorists favor intervention by government on behalf of the least advantaged segments of society: the poor, the sick, the elderly and children. Since any one of us can become disadvantaged at any time, even those of us who are presently greatly advantaged, it is in our rational self-interest to agree to contribute toward welfare. But for stock holder theorists, the rights of individuals are generally construed as negative rights, which guarantee only a right to compete for scarce resources without coercive interference from others or the government, unless that pursuit harms others.

Stakeholder theorists claim at least some positive rights for all citizens, which guarantee actual possession of at least some resources, without being subject to competition. Welfare liberals, therefore, must necessarily use the power of the government to forcibly take resources away from advantaged individuals (usually through a progressive income tax) and redistribute some of those resources to the least advantaged. Some commonly proposed positive rights or entitlements include: the right to basic health care, the right to competent legal assistance, the right to a sufficient quantity of food, and the right to basic shelter.

So in the United States, the argument over affirmative action has been staged primarily between the stockholder theorists,  who loath all forms of social redistribution of resources, and stakeholder theorists who generally defend it. Much of their debate is over the concept of "equality of opportunity." At the level of common sense, the concept of an "opportunity" refers to the conditions under which an individual competes. It stands midway between a mere chance and a guarantee. A lottery ticket is less than an "opportunity" to become a millionaire. On the other hand, if that lottery were rigged so that my winning was inevitable, that would be more than an "opportunity" for me, and much less than an "opportunity" for you! An equal opportunity , then, suggests that impartial rules govern the competition. However, if I won the Ohio Lottery three times in a row, you might suspect that the lottery was rigged or that the rules governing it were less than equal and impartial. Stockholder theorists argue that the highest paid jobs ought to be distributed based on merit; that is, the person best suited for the job ought to get it. Impartiality entails that public policy be blind to those attributes that have nothing to do with the determination of merit, such as sex, race, ethnicity, or age. Stakeholder Theorists do not believe that competition for the good jobs is, in fact, impartial. After all, white males overwhelming occupy the most prestigious and high paying professions such as corporate executives, surgeons, college professors, and U.S. senators. If the rules of competition for resources consistently yield results that reward white males, then either a.) men are naturally better at doing those things. Or, b.) those rules must be biased in favor of men. In other words sexism and/or racism must have surreptitiously entered into rule making process. They argue that government has an obligation to revise the rules of competition and reshape our culture until women and minorities are represented in the highest paying jobs proportionate to their numbers. In short, an end state that reveals a predominance of white male winners, must be either the product of unfair rules or an unfair application of those rules. In order to change patterns of unequal distribution, some defenders of affirmative want to require companies to hire a certain number of women and minorities. This is called a quota.

Many of the best jobs require many years of education. That's why many affirmative action programs target educational opportunity. Some African Americans, for example, say that they are denied access to an equal education because tax supported urban public schools are inferior and under-funded, while white suburban schools are superior and funded lavishly. In other words, educational opportunity is not equal. Some critics of affirmative action admit that we ought to improve inner-city schools, but not by reducing the quality of suburban schools or by lowering the standards for admission in professional schools for African Americans.

Although white middle class women are typically afforded better educational opportunities than African American or Latino males, some professional programs are still dominated by white males, especially in engineering and business. But even when women do receive the necessary education they find advancement in these professions difficult. Stakeholder theorists say that it is because male prejudice in the workplace, the "glass ceiling."

Some stockholder theorists say that this is because women generally lack either the professional commitment, or the natural abilities necessary to become engineers or business leaders. Because of the perception that many of these occupations do not afford equal opportunities for women and minorities, many women ,African Americans, and Latinos have simply chosen not to compete for these high paying jobs; which also has also tends to perpetuate white male dominance in those professions.

Other defenders of affirmative action point out that, even well-intentioned systems of merit often harbor covert racism, sexism, and other forms of partiality. Hence, even though we might intend to devise impartial procedures for distributing a merit scholarship, those procedures might actually end up unfairly rewarding entire classes (or groups) of individuals. That's why many of us doubt that I.Q. tests, ACTs, SATs, and Civil Service Exams are impartial measures of merit.

Stockholder theorists defend meritocracy and insist that merit is objective and measurable. Merit, they argue, is indeed often tied to natural attributes associated with age, sex, and race. All of us are naturally advantaged and disadvantaged in certain respects. I am a naturally disadvantaged basketball player because of my advanced age, lack of athletic ability, and short stature. It would make no economic sense for the NBA to level the playing field, just so I can play professional basketball. If the NBA has no moral or legal obligation to hire short, middle-aged, white guys then why should engineering firms, fire departments, and major corporations be forced to hire disadvantaged women and minorities? They say that in some areas "White men may simply more `fit' to compete!"

Although civilized society must set the rules for the competition for scarce resources, it must not interfere with nature's own distribution, even if it consistently rewards white males. Libertarians consistently argue that the role of government consists in preserving open competition. The principle of equality, they say, refers to the right to compete not the right to win. So when social scientists point out that the best jobs are held down by white males, libertarian economic conservatives respond by saying that , as long as the rules of competition did not a priori exclude women and minorities from competition, society ought to let the results of that open competition stand.

AFFIRMATIVE ACTION BASED ON RETRIBUTIVE JUSTICE  

The principle of retributive justice is often also applied in the context of retribution. If, distributive justice "looks forward" to correcting a future unjust distribution, retributive justice "looks back" in time and attempts to "pay back" those who have suffered unjustly through the actions of others. Retribution, serves as the basis of our criminal justice system.

The victims of crimes receive just or fair retribution when the perpetrator is justly punished by society. Historically many disadvantaged groups have suffered unjustly at the hands of the most advantaged groups. In the United States the best examples include: Native Americans, African Americans, Japanese Americans (during WW II), women, and homosexuals. Many welfare liberals argue that some of these groups and are entitled to retribution to make up for the injustices inflicted by white men over the past centuries. 

Affirmative action, then, can be seen as one attempt to pay back groups for historic discrimination. Historically, African Americans have been the victims of unjust distributional schemes based on racism. How do we make up for these transgressions? Retributive affirmative action programs might "pay back" present African Americans for past injustices against their ancestors. Or we might "pay back" more recent individual victims of injustice. There is much philosophical ambiguity over whether retributive affirmative action ought to operate at the level of individuals, racial or ethnic group, gender group, or social class.

Some argue that given our long history of racism and sexism, retributive affirmative action is impractical. After all, how far back into the past should we go in redressing past injustices committed against racial minorities? Moreover, why should I now bear responsibility for past injustices committed by my white ancestors when I played no part in those decisions? Two problems here: I cannot be held responsible for what other white guys have done collectively; and how far back can the present generation be held responsible for what past generations have done? One might, therefore, conclude that if retributive affirmative action can be justified at all, it should merely "pay back" individuals for recent or existing injustices and reform redistribution schemes so that future individuals do not become victims.

Affirmative action based on retribution attempts to correct historic injustices by repaying the descendants of those who have been treated unjustly. Typically this means compensating contemporary African and Native Americans. However, critics of retributive affirmative action object to the principle of requiring innocent individuals in the present generation to "repay" the descendants of those who were victims of injustice committed by previous generations. Justice, they argue, entails the reconciliation of the actual victims and perpetrators, not their descendants. How can I be held personally responsible for the unjust acts committed by previous generations of white men against native Americans? Not only was I not there, but my descendants, who came over from Italy, weren't either!

UTILITY BASED AFFIRMATIVE ACTION

 Some stakeholder theorists reject arguments based on distributive and retributive justice and embrace the principle of utility. They say that any given social policy can be justified if society as a whole benefits from it. Hence, affirmative action, they argue, is justified because the overall social benefits of having it outweigh its cost. For example, one utilitarian argument in favor of affirmative action is that, in the United States, women, African Americans, and Latinos are more likely to live in poverty than white men. Since poverty has a high social cost (welfare, crime etc.) it makes sense to force companies to hire more women and minorities. Of course, utilitarian critics of affirmative action say that the costs of affirmative action outweigh the benefits, if companies become loaded down with less competent women and African Americans. 

Most utilitarian critics of affirmative agree that public policy ought to be impartial; that is, "color blind" and or "gender blind." But they also say that by elevating the significance of race and gender in public policy, affirmative action has encouraged Americans to think of themselves as primarily white, black, male and female. This has led to widespread race and gender consciousness and discrimination. Deontological defenders of affirmative action say that when the government remains colorblind or gender-blind, it becomes a partner in perpetuating already existing forms of prejudice that stack the deck in favor of white males.
 Discrimination is a violation of the formal principle of justice because it gives some individuals more than they deserve and others less than they deserve. But if we do adopt affirmative action policies, then some previously advantaged groups become disadvantaged: in particular, white males. Some stockholder theorists argue that reverse discrimination also violates the formal principle of justice and therefore it is equally wrong.

QUESTIONS FOR DISCUSSION

1. In terms of public policy, should government treat persons as individuals or as group members? If, we are fundamentally group members, which group determines our identity? Am I essentially unique individual or am I simply a white male? In other words, should public policy be based on "impartiality" and be blind to the attributes of particular individuals such as race, gender, age, or sexual preference; or should it exercise "partiality" and help the disadvantaged?

2. What role should government play in mediating the competition for employment opportunities between groups and individuals? Should government simply guarantee the freedom of individuals to compete, or should government redistribute resources based on moral principles such as merit, need, equality, or social utility? Do individuals or groups have only a negative right to compete for resources, or do they also have a positive right to secure at least some job opportunities? 

3. What role should government play in fighting economic effects of racism, sexism, and other forms of prejudice?

4. Should Affirmative Action aim at utility (preventing future injustice) or retribution (paying back) groups and individuals that have suffered injustice in the past?   
 

Sexual Harassment

One form of sexual discrimination is sexual harassment. To what degree are corporations responsible for working conditions that are harmful and/or offensive to female employees? In recent years, sexual harassment on the job has become a major issue for many companies and workers, mostly because of increasing governmental involvement. The root of the problem is that in the vast majority of workplaces worldwide, men hold positions of power over women. Power means the ability to coerce. Moreover, in most cultures there is a strong body of tradition in support of sexist beliefs and practices; including belief in the inferiority of women in economic spheres and the practice of sexual exploitation. Therefore, when you combine the fact of power with sexist tradition we end up with sexual harassment.

Some evolutionary psychologists explain both the dominance of men in economic spheres and their predatory nature on the basis of evolutionary principles. Hence, they argue that in the state of nature unencumbered by sexist tradition, we would still find male economic dominance and sexual predation. Some even argue that this genetic predisposition is so powerful that it is extraordinarily difficult, if not impossible for culture to eliminate it. In other words, it is natural for men to exercise coercion over women. However, in this course I have tried to argue that there is a difference between descriptive facts and normative values. Alleged  fact that men are naturally prone to exploit women (not to mention other men, children, and animals!) does not morally justify it.

Although libertarians and stockholder theorists eschew almost all forms of personal coercion, utilitarians, sometimes morally justify it based on utility. Utilitarians might justify the use of coercive power in the advancement of company interests (wear that hard hat!), and/or might paternalistically intervene in the workplace to prevent harm to workers (wear that hard hat). However, when powerful men use that same coercive power to advance their own self-interest, especially sexual interest, then injustice, utility, and even harm may enter into the equation. But what exactly is sexual harassment? Do companies have a moral obligation to actively prevent it by instituting rules governing the hierarchical interaction of males and females? Or, should women simply exercise their own liberty by either accepting or rejecting these offers?

Contemporary discussion on sexual harassment focus on two forms: quid pro quo (you scratch my back…); and hostile work environment (unwanted sexually oriented workplace).

In quid pro quo, sexual harassment in the workplace involves offers and threats imposed upon subordinates by superiors in hierarchical social structures. In our society (and almost all other societies) sexual harassment involves men making offers and/or threats to women. The offers associated with sexual harassment typically involve trading sexual favors for advancement opportunities (benefits) within the corporation. Offers are more or less enticing. Threats typically involve retaliatory harms for non-compliance such as withholding opportunities, or demotion. Threats are more or less harmful. On the surface, quid pro quo sexual harassment may seem to have the same basic logical structure as reciprocal-altruism: "You scratch my back and I' ll scratch yours" or "tit for tat." But sexual harassment potentially violates at least four moral principles: harm, liberty, utility, and justice.

First of all, sexual harassment violates the harm principle if retaliatory threats are involved, which makes those offers coercive and therefore also a violation of the liberty principle. However, in the libertarian tradition, if a female worker freely chooses to advance her career by sleeping with the boss, in the absence of any retaliatory threats, then it is hard to argue that the offer is either harmful to her or coercive. Therefore, at least some sexual offers made by superiors may not violate the liberty of female employees and therefore would not necessarily constitute harassment. But that’s not to say that promotion based on sexual prowess makes for a successful corporation. Stockholders would sell their shares if they knew that promotions are based on sexual favors.

Promotion based on sexual prowess may also violate utility and justice. Obviously, a company can be harmed financially when either inefficient workers get promoted because of exemplary non-work related skills, or when efficient but non-compliant women get passed over for promotion. Of course, based on libertarian policies, corporations have a right to harm themselves, as long as they do not threaten those non-compliant women.

The principle of justice requires that all employees (male and female) be treated equally and that promotions ought to be based on merit, and not on factors unrelated to job performance. If women who do great work, but get passed over for raises and promotion because they refuse to "play ball," then it is obviously unfair to those non-compliant women. (Incidentally, it is also unfair to the other competent male workers, who ordinarily do not benefit from offers like this.) Quid pro quo sexual harassment is rejected by both stockholder theorists and stakeholder theorists. However, stockholder theorists argue that companies that tolerate it will eventually go bankrupt. We don’t need government.

The other form of sexual harassment relates to the presence of a hostile work environment, usually toward women. Part of the problem here is differentiating between hostility and mere unpleasantry. Hostility can mean various form of physical abuse such as unwanted touching, even rape. Or it can mean unpleasant language such as telling dirty jokes. This can involve a wide range of unpleasantries from crude language to outright physical threats. Of course all humans have different thresholds when it comes to being offended. Some women (and men) are easily offended, while others are impossible to offend. So where’s the standard? Stockholder theorists say that the market place will set the standard. If the women in your corporation always complain about hostility in the workplace, and quit, then the CEO might want to set some higher standards. Stakeholder theorists argue that government has to get involved.

But the main problem is how to regulate the workplace in such a way as to maintain efficiency without turning the workplace into a sterile, non-human environment. For example, a corporation could protect itself against hostile work environment by forbidding social interaction between workers. No talking in the workplace? But who wants to work in a place like that!

Some theorists do not generally employ the principles of liberty and justice in dealing with sexual harassment because they do not believe that human beings possess atomic free will nor do they necessarily accept the principle that all human beings should be treated equally. Instead, they rely on tradition to justify policy. Hence, some corporations might accept sexism as a corporate tradition, while others might seek to re-engineer that tradition.

Because of the many moral and legal problems raised by sexual harassment, most companies have implemented rules governing the social interaction of male and female employees in the workplace. While everyone today agrees that sexual harassment is morally wrong, utilitarians often argue that it is notoriously difficult to regulate human sexual activity. After all, many of these personal "on the job" relationships also take place outside of the workplace, and therefore are inherently difficult to regulate. Indeed, companies that attempt to eliminate all sexual relationships from the workplace run against the force of tradition. The workplace has always been a great place to meet members of the opposite sex, and much more efficient than cruising bars!
Of course, there's a big difference between sexual harassment and dating on the job. Few women who seek to cultivate long-lasting friendships with their bosses actually exchange job benefits in for sex. (But then again, men and women do not always seek long-term friendship in their dating preferences!) But even if the boss merely dates a subordinate, that fact alone tends to raise issues of distributive justice in the workplace. Remember, we do tend to treat our friends better than we do strangers. Would the boss be capable of acting impartially toward a woman he is dating? Did she really deserve that raise? Of course, co-workers tend to grumble when the boss treats his girlfriend better than all other workers. This might even affect corporate efficiency.

Stakeholder theorists argue that we need laws to regulate sexual harassment. Again, libertarians and stockholder theorists argue that sexual harassment can be most effectively controlled by the self-interested, personal decisions of men and women on the job. If a woman is harassed, she ought to complain to a superior, if nothing is done, then she ought to quit and work for a company that treats women better. (If she's raped she ought to prosecute!) After all, one would think that in the long run companies that sexually harass women would not be very successful in the market place, since they often promote incompetence.

However, stakeholder theorists argue that if you are not a particularly valuable female worker (an easily replaced secretary) and if you refuse your bosses sexual advances, and if the boss subsequently fires you, the cost to the company would be negligible. And because women tend to occupy the lower rungs of the corporate ladder, where replacements are easy to find, companies may not be particularly motivated to regulate sexual harassment. Moreover, if all the companies in a given industry routinely harass women, it may be difficult (if not impossible) for targeted women to find a less hostile work environment. Therefore, stakeholder theorists argue that because sexism (like racism) is unjust, yet deeply entrenched in our culture, some form of governmental involvement is justified. Stockholder theorists argue that any attempt to limit what men say to women is a freedom of speech violation and that we're all better off letting individual men, women, and corporations deal with sexual harassment. No laws are necessary.

Finally, corporations can always hire other corporations and/or entrepreneurs to teach workers how to comply with the law, and how to avoid expensive lawsuits. Sexual harassment training is a growing industry. I was not impressed with the quality of the training I had. It’s a good thing I’m not prone to sexually harass anyone. 

















































 

Media Ethics

 Although philosophers have long inquired into the nature of meaning, truth, and value, Media Ethics is a fairly recent domain within Applied Ethics. Obviously, the first question is: “What is Media?” Based on what we’ve covered so far in this class, the term “The Media” can refer to either a collective institution or an individual “professional journalist.” Both have descriptive and prescriptive dimensions; that is, we can inquire into the facts of how and why the Media behaves in various contexts; and the values that dictate how and why it ought to behave one way rather than another.   

Let’s agree from the outset that, aside from various Pleistocene grunts and gestures, the first “medium” for human expression was the spoken word. However that initial mode of mass communication was limited by: the distance the human voice can travel, by the number of possible listeners, and by the limits of human memory. So for the most part, Media Ethics became an issue with the invention of the written word and a series of successive technological innovations (clay tablets, paper, radio, telephone, television, and Internet), all of which allowed for the increasingly efficient transmission of information (Truth) and disinformation (Falsehood) within and between communities and between generations. These innovations also exerted a profound influence on the size, scale, and nature of both business and politics.

Today, what we call “The Media” can be either a publically owned (political entity) or privately owned (business entity). The primary purpose of the modern media is to employ information and/or disinformation in order to shape the relationship between public institutions, private institutions, and individuals.  In this course we will focus on Media Ethics as a subset of corporate Business Ethics; and subject to moral analysis via Stakeholder Theory and Stockholder Theory.

So what is a “good” privately-owned Media outlet? According to stockholder theory ,

corporate success involves both cooperation and competition between stakeholders: stockholders, employees, consumers, sub-contractors, financiers, and the local community. Profit for the owners is earned based on competition between buyers, between sellers, and between buyers and sellers. Profit for most news outlets is contingent upon selling advertising to other corporations. Profitability is ultimately based on how many buyers experience any given news show, and how much of the advertised products and/or services are purchased by buyers. Therefore, the most profitable media outlets must attract and retain buyers who habitually experience their programs, and respond to those commercials.

Entertainment of buyers is psychological, which inevitably involves both reason and emotion. Some forms of news entertainment invoke rationality or rational arguments; however, most rely on the cultivation of emotions, especially stories that incite laughter, sex and/or violence.  But news outlets are also in the business of selling information (Truth), which often fuels conflict between Truth Value and Entertainment Value. The lead news stories in both local and national news shows are almost always “bad news.” World news shows are usually headlined by natural disasters (earthquakes, hurricanes etc.) or warfare (especially terrorism). In Cincinnati, local news shows usually emphasize: gang-related shootings, police violence, murders, domestic violence, automobile accidents, and fires. According to Stockholder Theory, if this is what consumers want to see on the news, then this is what the market demands. Media ethics, according to stockholder theory refers the morality of the owners. Ethical corporations are more likely to survive and/or earn a profit.   

Stakeholder theory argues that it’s the editor’s job to pursue (blend) the interests of all of the various stakeholder groups, not just those of the stockholders. Utilitarian critics of news shows might argue that even if “bad news” sells, excessive emphasis on bad news leads to negative social utility ratios; especially fearful communities that are prone to exploitation by those who sell safety and/or security. Journalists who dutifully expose business ineptitude run the risk of alienating corporate sponsors. 

“Good journalists” possess a specific skill set that allows them to uncover the Truth, and another skill set that allows them to present that Truth clearly and accurately. The most skilled journalists possess both, however many others lack one or the other. Being a less-skilled researcher or presenter is not immoral. An immoral researcher deliberately fabricates the known Truth or deliberately presents it unclearly; usually to incite fear, protect a crony or punish an enemy. In the recent past, journalists were expected to focus on researching and presenting the Facts; but not the moral interpretation of those facts. Today journalists are also expected to interpret at least some Facts and express moral judgments. Most news media outlets and journalists also endorse various political candidates, which ultimately raises the specter of conflict of interest.

Finally, since the time of Plato, totalitarian political regimes seek to control the media; often under the guise of advancing the “greater good.” However, there is also a long tradition in Western Liberalism that values Freedom of the Press. Hence, a “Good Press” limits the power and growth of government, by exposing governmental incompetency and/or corruption. Unfortunately, this Western Liberal mandate is often in conflict with its mandate to entertain and earn a profit. So, should the “news” be monopolized by government (for the greater good), or should it be exposed to free market competition? Is there a credible third option?

 

Discussion Questions

1. Does the “Media” really serve multiple purposes and do those purposes often conflict? Give examples.

 2. Would the “free market” weed out the “good media” or the “bad media?” Explain. Give examples.

 3. Do media outlets that provide a platform for “free speech” but do not contribute content have any rights or duties? Should government regulate Facebook and Twitter? If so what should those regulations be?

 4. Would you buy stock in a financially profitable Media corporation that frequently publishes bogus news articles and wallows in sensationalism? Think stockholder ethics.